Published by Jessica Weisman-Pitts
Posted on October 10, 2024
3 min readLast updated: January 29, 2026
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LONDON (Reuters) -Britain’s Labour government set out its plans on Thursday for the biggest change to employment law in a generation, including plans to end fire-and-rehire practices and increase sick pay.
LONDON (Reuters) -Britain’s Labour government set out its plans on Thursday for the biggest change to employment law in a generation, including plans to end fire-and-rehire practices and increase sick pay.
The Employment Rights Bill was generally welcomed by trade unions, who traditionally fund the Labour Party, as well as business lobby groups and the bosses of companies including BT, Sainsbury’s and Centrica.
While Britain has one of the highest minimum wages in the world compared to average salaries, it has been a laggard in the area of minimum employee benefits, according to the Organisation for Economic Co-operation and Development.
The bill being laid before parliament on Thursday proposes a raft of protections for millions of workers such as granting new rights on parental leave and sick pay from day one of employment, as well as banning “exploitative” zero-hours contracts, which give workers no guaranteed hours.
But some key details are still to be worked out, and the government appeared to back away from some pre-election promises.
Instead, the government said it would consult on employees’ right to ignore work outside of normal hours, and on introducing a single status of worker. This would end the practice of labelling some staff as self-employed, which allows companies to save on costs such as social security payments.
The law will be Prime Minister Keir Starmer’s biggest reform since Labour’s landslide election victory in July. The government framed the plans as the best way to avoid the widespread industrial action that has disrupted services over the last two years.
SOME REFORMS STILL SUBJECT TO CONSULTATION
The best employers know that employees are more productive when they are happy at work,” business minister Jonathan Reynolds said in a statement.
This upgrade to our laws will ensure they are fit for modern life, raise living standards and provide opportunity and security for businesses, workers and communities.
Last month Reynolds, who has been a key figure in repairing Labour’s relationship with the business community, sought to give reassurance that “day one” rights for workers would not remove employers’ ability to use probation periods for new recruits.
The exact length of probation periods will also be subject to consultation.
The government said the majority of reforms will take effect no earlier than 2026.
“It’s important the government builds on the good engagement to date to ensure we get the detail right on this decisive piece of legislation,” said Rain Newton-Smith, CEO of the Confederation of British Industry, which speaks on behalf of 170,000 businesses.
The British Retail Consortium (BRC) and UKHospitality, which together represent sectors employing 7.5 million people, said the government had recognised the importance of flexibility to both workers and businesses.
“We look forward to engaging the government on the details, including around seasonal hiring and the use of probation periods,” said BRC CEO Helen Dickinson.
However, the Unite union said the bill did not go far enough, failing to ban zero hours contracts completely and watering down rules allowing workers to have access to trade unions.
“The bill still ties itself up in knots trying to avoid what was promised,” said Unite leader Sharon Graham.
(Reporting by Andrew MacAskill and Alistair Smout; additional reporting by James Davey;Editing by Alexandra Hudson and Kevin Liffey)
The Employment Rights Bill is a proposed legislation in the UK aimed at improving workers' rights, including protections against unfair dismissal, sick pay, and parental leave.
Zero-hours contracts are employment agreements that do not guarantee a minimum number of working hours. Workers are only paid for the hours they work, leading to uncertainty in income.
Parental leave is a period of time that parents can take off work to care for their newborn or newly adopted child. It allows parents to bond with their child while ensuring job security.
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