Real estate and the new employment Bill

The Labour government’s Employment Rights Bill was published, as promised, within 100 days of Labour winning power, on Thursday 10 October. The Bill, when fully implemented, will amount to the biggest changes in the world of work for more than a generation. Employees will certainly get more rights. In due course, agency workers and contractors may also get more rights. It will certainly affect employers in the property sector across the board as well as increasing costs for developers and businesses involved in construction. Brace for impact These are the biggest changes proposed for the property industry: Probable “day one” rights for employees against unfair dismissal: although this will be subject to consultation. There will likely be a reduction in the current two-year qualifying period to nine months and, in addition, a statutory probationary period when there should be a “proportionate assessment of an employee’s suitability”. The right to statutory sick pay, parental leave and bereavement leave from day one. Zero-hour contracts haven’t been banned, but employers must offer zero-hour workers a guaranteed hours contract at the end of a (likely 12-week) reference period, subject to consultation. In addition, there are rights to reasonable notice of shifts and to payment for shifts cancelled or curtailed at short notice. The right for all employees to request flexible working and any rejections to such a request will have to be “reasonable”. More redundancy rights: abolishing the single “establishment” test for collective redundancy consultation, meaning any business making redundant 20-plus employees in the business must consult. The right for shift workers to be told in advance the details of their shifts. Significantly increased rights for unions, including a right for all employees to be told they have the right to join a union, making it easier for unions to access workplaces and a raft of other new rights, including balloting and recognition procedures. Effective banning of “fire and rehire” for employers unless the employer is about to go bust. Increased duties to prevent sexual harassment and harassment by third parties. All to be enforced by a new Fair Work Agency. On 21 October, the government published a summary impact assessment of the economic analysis of the introduction of the Bill, costing it at £5bn, but making certain blithe assumptions that had all the hallmarks of marking one’s own homework. Under consultation The following day, the government launched four consultations on various provisions contained within the Bill, which had had a second reading in the House of Commons on 21 October. The consultations, which run until early December 2024, seek views on the Bill’s measures relating to a new right to a guaranteed hours contract for zero or low hours workers, collective redundancy consultation and “fire and rehire” practices, trade union legislation and statutory sick pay. The government notes that responses to the consultations may result in amendments being made to the Bill during its passage through parliament. In particular, the consultation seeks views on how to apply these measures to agency workers, a key concern for the construction and development industry. Looking ahead The introduction of some new rights will be delayed until later in parliament. The government has published a “next steps” document which outlines further reforms to employment law that it will look to implement in the future, without committing to any dates. These include: a move towards single status of worker and transition towards a simpler two-part framework for employment status; a “right to switch off” preventing employees from being contacted outside of hours, unless in exceptional circumstances; a requirement for large employers (employing 250-plus employees) to report their ethnicity and disability pay gap; and reviews to parental leave and carers’ leave systems. There is no doubt that what the government decides on the potential alignment of worker and employee status will be the single most impactful measure on the property and construction industries. Will agency workers and contractors get unfair dismissal, redundancy and other employment rights (unless they are genuinely self-employed)? This massive potential change will now be subject to a detailed round of consultation and the property industry and business lobbying organisations should play their part. What to make of all this? Even given the introduction of the Bill, the UK will still be left with the best employment law in the world, in the eyes of this author. It remains far easier to hire and fire people in the UK than it is in all major European economies. Equally, we do not have the “red of tooth and claw” American model, where employees have far less rights overall. Whether that remains the case at the end of this parliament remains to be seen. For now, the changes promised in the Bill can probably more or less be absorbed by property businesses. The really impactful developments – the liberalisation of the business immigration rules and the deferred employment status changes – are still to be fought for. Of far greater concerns to the property industry than the introduction of the Bill will be employment-associated costs: for example, the touted rise in employer’s national insurance contributions (not a tax on “working people”, apparently) and the potential taxation of employers’ pension contributions. These payroll-associated costs are absolute costs, compared to the contingent costs, for most employers, of treating employees unfairly. Let’s see what to what extent Labour’s promises for “growth” and to get “Britain building again” compensate the sector for the additional costs imposed by the Employment Rights Bill. John Hayes is managing partner of employment and regulatory at Constantine Law Image © James Veysey/Shutterstock