Pending UK Gov Employment Law Changes: Insights for Finance & Accounting Professionals & HR Teams
The Government’s plans to ‘Make Work Pay’ are likely to change multiple aspects of employment law, impacting many businesses and their employees, including finance & accounting professionals & HR teams.
From the right to claim unfair dismissal from day one of employment, to the right to disconnect are just two examples of planned changes. Our Co-Founder, Andy Lee provides some important insights to support our Finance & Accounting, HR and Talent networks.
The Employment Rights Bill was originally introduced to Parliament in October 2024. Since then, MPs have started to launch consultations on some of the most impactful proposals.
The bill is the first phase, and although some changes are already in affect, most of the proposed reforms are not likely to take effect until 2026, with reforms of unfair dismissal taking effect no sooner than autumn 2026.
So, what’s being considered, and how will it affect businesses and professionals?
Unfair Dismissal – Day One Right
The Labour Party has promised to give employees protection from unfair dismissal from the first day of their employment. This is a massive shift in employment law, as current protection from unfair dismissal only kicks in after two years of continuous employment.
This is good for employee security and will undoubtably make businesses recruit with greater scrutiny, to ensure the right hire really IS the right hire.
Longer and more intense interviews & referencing, extended probation periods, changes to recruitment TOBs & rebates, interim hires for newly created or non-business critical roles are just some of the changes we expect to see when sourcing and securing finance & accounting professionals.
Right to Flexible Working – Day One Right
Cheating slightly here, as the right to request flexible working became a day one right on 6 April 2024.
Flexible working will be made the default for all workers, except where it is not reasonably feasible, from the first day of employment. The aim is that workers could benefit from flexible arrangements, such as term-time options, with a particular emphasis on flexibility for workers with responsibilities or dependents e.g. elderly relatives, children etc.
“They can also make two requests for flexibility within a year.” advices HR Magazine. “Employees no longer have to detail the business impact of their request, and employers are now required to consult with them on their decisions.”
All decisions also need to be completed within two months, requiring efficient and timely processes and support HR professionals and teams managing these new legal obligations.
Statutory Sick Pay – Day One of Sickness Right
There are plans to remove the four-day waiting period so that statutory sick pay (SSP) must be paid from day one of sickness.
This is not only impact HR processes and company protocol, but will also increase employers’ costs, when employees make a claim.
“Employers will [also] need to update their payroll systems to comply with the new rules and ensure that employees are paid accurately.” advises Advisor Plus, which in turn also affects our finance & accounting colleagues!
Increased Protection from Sexual Harassment (from October 2024)
Having just come into affect, employers will have a new proactive duty to take ‘reasonable steps’ to protect employees from sexual harassment.
However, the Government plans to further extend the protection by requiring employers to take ‘all reasonable steps’ to stop sexual harassment, including harassment by third parties, such as customers.
“It presents an important opportunity to build awareness and encourage compliance to prevent sexual harassment in workplaces,” says CIPD, which again directly impact our HR colleagues, who will be responsible for implementing and sharing changes to existing policies and processes.
Right to Switch Off
The Government has said it will introduce the ‘right to disconnect’ to promote healthier working practices. Looking to more flexible European models for inspiration, it plans to give workers and employers the opportunity to collaborate on the development of policies or contractual terms that benefit both parties.
“It’s expected the code will place a responsibility on employers to agree with its workforce when they can be contacted outside their contractual hours” states Employment Law Review. “Although breaching the code will unlikely give rise to new employment tribunal claims, it could influence decisions and the compensation awarded in other claims, like unfair dismissal.”
Again, this will mean a change in policy and a possible greater focus on recruitment processes, to ensure employers and employees are aligned in their expectations.
Family Leave Changes
The Labour Party are due to review the current parental leave system, wanting to make ‘parental leave’ another day one right. It’s unclear if this means parental leave only or other kinds of right for parents to take family leave.
Changes were already introduced in April 2024, with more flexibility offered for new parents looking to take parental leave.
Bereavement Leave
Although many companies will already have this policy in place, there is currently no legal requirement for Bereavement Leave, unless it involves a dependent or child under the age of 18.
The Government wants to make this a statutory entitlement. A summary of changes to the Employment Rights Bill can be found on Gov.uk here.
Equality (Race and Disability) Bill (for Employers with 250+ Employees)
In addition to gender pay gap reporting (which is going to be extended to include outsourced workers), the Government also plans to make ethnicity pay gap and disability pay gap reporting compulsory.
“How employers try to collect the data will require careful consideration,” advises People Management. “Clear communication and engagement with employees are going to be critical to ensure as comprehensive data collection as possible. This increased transparency is intended to help identify pay disparities across organisations and encourage employers to address the reasons behind these gaps, and to reduce them.”
There are also plans to enact ‘dual discrimination,’ as part of the bill.
“Dual discrimination ‘seemingly’ expands protections to cover individuals who, in theory, would not have been found to have been discriminated against based on two individual protected characteristics, but could arguably be found to be discriminated against based on a combination of those protected characteristics, e.g. being an older woman rather than age or sex independently” states Worknest.
An undoubtable step in protecting employees, this will require further resources, time and expertise spent on employee data handling, diversity and inclusion reporting, discrimination rights (Protected characteristics) and HR compliance management.
New Single Status of “Worker”
Following consultation, the Labour Party plans to simplify the current multisystem for employment status. It wants to implement a new system where people are designated as either workers or self-employed, eliminating the current legal distinction between ‘employees’ and ‘workers.’
“Labour’s proposals aim to abolish “insecure employment” and ensure that all workers have adequate job security,” explains People Management. “The proposal follows a series of high profile cases involving gig economy workers, including Uber v Aslam and IWGB v CAC and Roofoods Ltd t/a Deliveroo, in which the key issue before the courts was whether the claimant was a worker or self-employed.”
What does this mean for finance & accounting professionals & HR teams?
The planned Employment Law changes will impact all businesses and employees in some shape or form, both from a working responsibility, but as individuals.
Specifically for our clients and candidates - most of which are finance and accounting professionals and/or HR professionals - it may mean a shift back towards interim and self-employed workers, references becoming a more critical part of the recruitment process, longer probation periods and different T&Cs on rebates.
As experts in accountancy recruitment, and with clients across Industry & Commerce, Financial Services and Not-for-Profit organisations - our team’s work may change in multi-faceted ways, whether that’s how we engage with and support our clients, to what services we offer and our candidate screening processes.
If you have any questions or would like to find out how we can support you as these changes develop, please reach out to Andy directly, or get in touch with the Trace Recruitment team here.