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Last week, the government announced its proposed timeline for implementing the Employment Rights Bill (ERB) – see our article here for further information.
Just a week later, as part of the ERB’s journey through the House of Lords, a 64-page list of amendments to the ERB was published.
Some of these amendments represent significant changes and appear to be government-backed – for example, the introduction of a ban on non-disclosure agreements (NDAs), softening of the prohibition around fire and rehire and the extension of bereavement leave to miscarriages before 24 weeks of pregnancy. Other amendments – such as enhanced whistleblower protection and softening of the zero-hours worker provisions – do not appear to be government-backed, so may not progress.
Let’s look at the headline changes…
Ban on NDAs covering harassment and discrimination
A new clause has been introduced which will ban NDAs that attempt to prevent disclosure or allegations of work-related discrimination and harassment. This will also include disclosures on how an employer handled such allegations. This will apply to all contracts, including settlement agreements and employment contracts.
The scope is extensive, covering current and former workers, and can also be extended by Regulations to contractors, trainees and individuals on work experience.
The protection applies where the alleged discrimination is committed by the employer or another worker (but not a third party) and where the victim is the complainant or another worker.
At present, this ban covers disclosures of discrimination and harassment (not just sexual harassment) but does not extend to failure to make reasonable adjustments.
Impact on employers
This change will require employers to review and reword confidentiality obligations in their contracts and settlement agreements. Any clauses seeking to stop disclosures about harassment or discrimination will be unenforceable. While this change will be welcomed by many as a way to prevent cover-ups and allow victims to speak out about their experiences, in practice it may mean that employers are less willing to settle discrimination and harassment claims.
Fire and rehire provisions softened
The original fire and rehire provisions made it automatically unfair to dismiss an employee for refusing to agree to any change to their terms and conditions, subject to a very limited exception when the employer was in significant financial difficulty.
The proposed amendments pivot from a strict ban on any kind of variation to terms and conditions to only certain ‘restricted variations’. These restricted variations include pay, hours, pension and holiday. This list could however be extended by the Secretary of State in supporting Regulations. Significantly, the ban also covers dismissals to impose a new variation clause.
As such, if an employee is dismissed and then re-hired to implement contractual changes which are not restricted variations, then the dismissal will not be automatically unfair, and the usual test will apply.
Outsourcing as a redundancy substitute will also be banned unless the employer can establish serious financial distress. This will mean an employer cannot fire employees and replace them with self-employed contractors, agency workers etc. if the replacement is going to do substantially the same work. There is a clear expectation that strategies involving agency staff, IR35 arrangements or TUPE avoidance will come under larger scrutiny as a result.
Impact on employers
These changes soften the original fire are rehire provisions and will be welcomed by employers as more pragmatic. However, there is no doubt they are still very restrictive. Employers seeking to introduce variation clauses, or make other contractual changes, should consider doing so sooner rather than later (mindful of compliance with the Statutory Code of Practice).
Extending bereavement leave to include pregnancy loss
An amendment to the ERB will extend the new bereavement leave to include pregnancy loss before 24 weeks of pregnancy. This is likely to entitle the employee and their partner to one week of unpaid leave, though the length of leave is still to be consulted on.
The government will consult in the Autumn about the length of leave and how this will work in practice.
Impact on employers
This move has been welcomed by many and acknowledges the previous gap in protection. In due course, employers should consider updating their policies and contracts to account for these new rights. Some employers may wish to offer enhanced bereavement leave and pay to staff. Finally, any request to take bereavement leave should be dealt with confidentially and supportively.
Whistleblowing – increased regulation and potential liabilities
Although some of the proposed amendments on whistleblowing currently lack government backing and therefore are unlikely to become law, we have covered them below for completeness.
An amendment to the ERB proposes expanding the criteria of what counts as a ‘qualifying disclosure’ to include matters such as mismanagement of public funds and misuse or abuse of authority. It also requires disclosures to actually be made in the public interest, which is a higher test than the current requirement for the individual to ‘reasonably believe’ it is in the public interest.
To help facilitate the above, the ERB amendment proposes the introduction of a new ‘Office of the Whistleblower’ to act as an independent channel for disclosures and support. The Office of the Whistleblower will oversee whistleblowing processes and enforce compliance with reporting standards.
The amendments also propose creating an offence for those who intentionally or recklessly subject a whistleblower to detriment, with the potential of being fined up to 10% of gross annual income up to £50,000 if an individual, or up to 10% of annual global turnover for companies.
Finally, the amendments propose subjecting larger employers to statutory duties to take reasonable steps (defined by future Regulations) to investigate disclosures.
Next steps
If the amendments receive government backing and are included in the final version of the ERB, this will represent a significant shift and better protect whistleblowers. Employers will likely need to review and update policies, ensuring compliance with the standards set by the Office of the Whistleblower. Whistleblowing concerns will need to be investigated promptly and thoroughly and employers should ensure they have sufficient protection in place to protect whistleblowers, given the potential liability for subjecting a whistleblower to detriment will be significant.
Softening zero-hour contract regime
Like the proposed amendments to whistleblowing, the proposed changes to zero hours contracts do not currently have government backing.
Proposed amendments have been suggested to ease obligations relating to zero-hour contracts. The amendments include shifting responsibility so that the employee has a right to request guaranteed hours, rather than the employer being required to offer it. This would only be applicable to workers who average at least eight hours a week over a 26-week period.
The proposed amendments also call for lower financial exposure for ‘short notice’ cancellations and removing penalties for cancellations which are at least 48 hours in advance.
Next steps
If these amendments receive government backing and are included in the final version of the ERB, they will reduce the burden on employers and limit the proportion of the workforce in scope (i.e. by reference to the eight-hour threshold). However, the guaranteed hours provisions are still exceptionally complex and will no doubt cause a headache for employers in practice.
For more information on the key ERB changes and other employment law reforms, visit our Employment Law Updates Hub. The Hub provides a helpful overview of the key ERB proposals and the actions that employers should be considering taking to prepare for those changes. We are currently updating our roadmap to incorporate the amendments discussed in this article.
Should you wish to discuss how the ERB changes will impact your business and what you can do to prepare, please contact Robert Forsyth.