The Employment Rights Bill is a landmark attempt to “make work pay”. British workers suffered the longest fall in real wages since the industrial revolution,^[1] and income inequality is back at pre-war levels.^[2] Labour is cheap, capital is not being invested and productivity is stagnant. This follows the 2008 bank crash, austerity, Brexit and Truss, but also the “rules of the game” in the workplace tilting power ever further away from working people.  

The Bill is a “crucial first step” as the TUC says,^[3] and “a significant step forward” as the CBI puts it,^[4] but will it achieve economic success and fulfil human rights standards? Successful economies set a floor of universal labour rights for dignity at work, promote union rights to sector-wide bargaining and action, tackle inequality’s structural causes, guarantee that at least one-third to one-half of directors on boards are worker-elected, and protect job security strictly with voice in governance.^[5] The Bill moves in the right direction, but can be significantly improved with small yet impactful changes.  

This briefing sets out twelve key reforms (in numbered sections below) in the Bill, explains their details and limits, particularly in contrast to internationally-recognised labour rights, adds three policies key to international standards that are not yet in the Bill, and recommends amendments.

[.green]1[.green] Zero Hours Contracts

[.subtext]Zero hours contracts should be replaced with a right to regular hours, and maximum twenty per cent variation, with notice.[.subtext]

Everyone has the rights to fair pay and hours,^[6] and these rights are undermined if the law lets employers vary hours unilaterally, and workers have no choice but to accept. One-sided power is restricted by law in contracts between businesses and consumers,^[7] but not yet in employment. The Bill’s attempt to tackle this problem, in clauses 1 to 6, covers 24 pages of byzantine complexity. They state in essence that employers should offer a “guaranteed hours” contract at periodic intervals, and give notice of changes. It does not yet say when, with more Regulations of unknown volume still to come.^[8] Clause 27BV may exempt agency workers.  

A simpler approach is to build on the existing right to a written contract, including terms on hours,^[9] and adapt existing legal models, not reinvent the wheel. This would require that employers specify regular hours in a contract, that default hours are those actually worked over 12 weeks, and that variable hours may be no more than 20 per cent in a week with reasonable notice unless agreed.^[10] This will ensure predictable pay through predictable hours. It may be achieved in 240 words, not 24 pages. Agency workers should not fall under different rules, as the current draft may allow. Rights are harder to enforce if rules are not succinct and clear.  

The Bill does not yet address the main cause of zero hours contract numbers soaring after 2012 from under 250,000 to over 1 million:^[11] Jobcentres requiring that workers accepted contracts without regular hours, or face benefit sanctions.^[12] To fix this, the Bill should restore jobseekers’ right to refuse offers where regular hours each week are not agreed.  

Amendments

• Give a right to regular hours, variable by a maximum of 20 per cent, on fair notice, reducing 24 pages to 240 words.  
• Restore a right to reject any contract without regular hours in Jobcentres; codify in the Jobseeker’s Act 1995.

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[.green]2[.green] Qualifying Periods for Rights  

[.subtext]Day one rights are the international norm and probation must have no effect on fair dismissal rights.[.subtext]

Qualifying periods for rights undermine universality and entrench poor work, so the Bill is welcome in removing a four day wait to qualify for sick pay, 26 weeks for unpaid paternity or parental leave, and two years for unfair dismissal protection. A two-year qualifying period removes around 20% of the UK workforce from protection, while 10% never have jobs longer than a year.^[13] The Bill does not yet abolish the two year qualifying period for redundancy protection, which accrues at (just) 1.5 weeks’ pay per year worked from age 41,^[14] or the one month qualifying period for notice before dismissal.^[15] It does not yet abolish the 26 week qualifying periods for pay during maternity leave or paternity leave, even though government funds it.^[16] These qualifying periods should go.

Schedule 2 creates a new Secretary of State power of “modifying” the right to unfair dismissal protection during an “initial period of employment2, which the Secretary of State must still define. Currently, government moots a nine month period of probation, and says this will mean a “lighter touch” process, amending ACAS codes.^[17]  

Whatever this government considers fair, new powers for “modifying” the law would give future hostile governments a free pass to tear up unfair dismissal protection by order, without Parliament. It is unnecessary because there is already a power to change ACAS dismissal codes to allow simpler processes for capability or conduct if people do not pass probation.^[18] Since dismissal rights were first proposed, Conservative governments raised qualification times, while Labour governments put them down, bouncing back and forth like ping pong.^[19] Wealthier, more equal countries in the OECD have no qualifying period and do not let probation affect the need for fairness in dismissal. An unsuccessful probation based on capability or conduct is already a fair reason for dismissal. If the UK adopted a nine month qualifying period, we would move from being the third worst in the OECD to merely the seventh worst (to Canada’s level, where many provinces have no protection).^[20] We should join wealthier countries with day one rights, and remove the “modifying” power in Schedule 2.  

Amendments

• Remove power to modify unfair dismissal law and use existing powers to change ACAS Codes for probation.
• Remove qualifying periods for redundancy, notice before dismissal and paid paternity and maternity leave.

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[.green]3[.green] The Minimum Wage  

[.subtext]The minimum wage needs to be regional, sectoral and with pay scales, to not be a low-pay economy.[.subtext]

The right to fair pay includes an “adequate standard of living”, sharing in the “fruits of progress” and working time related to increases in productivity.^[21] Recognising this, the government wrote to the Low Pay Commission to require that it takes account of the “cost of living”.^[22] However, the National Minimum Wage Act 1998 section 2(8) currently prevents different wage scales based on areas, sectors, or types of job. This is a problem because although the UK has raised its minimum wage relative to average wages, an exponential number of people have had their wages crushed to the minimum, as fair pay scales have been lost. Britain is a poor, low-pay economy.

The minimum wage cannot truly take account of the cost of living unless there can be higher minimum pay in regions or cities such as London or Edinburgh, as states and cities may have in the US.^[23] Further, where people’s work creates more value in some sectors, or with the experience in their job, there remains a single minimum wage, instead of pay scales, as is found in the award system in Australia,^[24] or under the English Agricultural Wages Board until its abolition in 2013. To achieve pay that matches the cost of living, and the value of work, section 2(8) should be removed, and regional authorities should be empowered to set higher minimums.

A problem related to low pay is that holidays were abolished for many workers in 2023, with the reincarnation of “rolled-up” holiday pay, after human resource lobbying. This is where employers say to workers they get 12.07 per cent pay for holidays “rolled” into their wage calculations, but do not actually get paid holidays. In practice employers reduce the wages they would otherwise pay by the same amount. This is unlawful in EU law, as it deprives vulnerable workers of the right to paid holidays.^[25] It violates the post-Brexit EU-UK Trade and Cooperation Agreement, against weakening labour rights.^[26] It should be scrapped by regulations, but also forbidden in a primary Act of Parliament to prevent a future hostile government abolishing holidays again.  

Amendments

• Empower the regional authorities or the Secretary of State to set higher minimum wages in regions or cities.
• Empower the Fair Work Agency to set minimum pay scales by sectors, job types and experience.  
• Restore paid holidays for everyone by removing the loophole of so called “rolled-up” holiday pay.

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[.green]4[.green] Sectoral Collective Bargaining

[.subtext]Fair pay in social care is a start but powers are needed now for sectoral bargaining generally.[.subtext]

The right to fair pay is realised most effectively with full collective bargaining coverage. Since 2022, the European Union has required member states to implement plans to reach 80 per cent cover.^[27] The UK’s cover is 28 per cent, because most bargaining is done within single enterprises, not across sectors.^[28] The Bill’s welcome innovation is to launch a “fair pay agreement” on pay and all terms in the adult social care sector. Unlike the clauses on zero hours contracts, clauses 29 to 44, in eight pages, are admirably succinct and clear.

The Bill, however, does not yet make provision for other sectors. One extra subsection could enable fair pay agreement processes to begin in any sector if an independent union or employer group requests it. There are already sector-wide agreements, albeit problematic, for universities, schools, the NHS, engineering construction, and electrical contracting. The government has promised to assess where sector-wide bargaining outside care may work and rightly stated it does not wish to interfere with existing collective agreements that work well, yet 72% of UK workers currently have nothing. A useful lesson comes from New Zealand, which passed a Fair Pay Agreement Act 2022 after five years of reviews and delays. The Act was repealed the moment the Labour party lost an election a year later. The former New Zealand Minister for Workplace Relations recommends that we “move with speed and confidence and get [fair pay agreements] implemented” because they “will prove popular” and become “difficult for future conservative governments to unpick”.^[29] To enable this, the power to begin sector-bargaining should be in the Bill, without the need for further legislation.  

Amendment

• Enable fair pay agreements outside adult social care on application of independent unions or employers.

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[.green]5[.green] Collective Bargaining

[.subtext]Collective bargaining recognition should mean a duty to bargain on all terms and conditions.[.subtext]

The right to collective bargaining in international law includes state support for machinery to ensure voluntary negotiations between employers and unions, across sectors.^[30] The Bill’s clause 47(3) ensures an employer will recognise a union to bargain if there is a ballot with majority support of workers, removing an arbitrary 40 per cent voting threshold. The government may also use existing powers to allow e-ballots, which will get high turnout. This is vital because as collective bargaining declined and union membership atrophied, income inequality has risen again to pre-World War Two levels.^[31]  

However, the Bill does not yet address three key problems First, recognition only applies to a workplace ‘bargaining unit’, not sectors, where effective bargaining must take place to reach international standards. Second, there is not yet a duty on employers to bargain in good faith with a view to agreement, by requiring meetings in a reasonable time, with managers that have decision authority. Third, there is currently only a right to recognition to bargain on “pay, hours and holidays”’^[32] not all terms including equality, governance, and job security. This means recognition rules are narrower than to the right to strike,^[33] which encourages employers to refuse to bargain, run down the clock, gamble with strike ballots, and destroy production and growth. The Bill should have a sectoral duty to bargain on all terms and conditions.

Amendments

• Require employers recognise unions for bargaining across sectors, not merely bargaining units.
• Require employers to negotiate in good faith with a view to agreement.
• Change recognition to cover bargaining on all workplace terms or issues of common interest.  

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[.green]6[.green] Equal Pay Rights

[.subtext]Make equality action plans include equal paid childcare leave and enforceable equal pay rights.[.subtext]

The right to equal pay for equal work is universal,^[34] and yet fifty years after the Equal Pay Act 1970, the UK gender pay gap remains at 14 per cent. Women are paid on average 86 pence in the pound compared to men. The Bill has a welcome provision requiring employers with over 250 staff (covering about half the UK’s workforce) to publish equality action plans to address the pay gap. The Bill does not yet require measures that address the pay gap.  

The evidence shows that the top three structural causes of gender pay inequality are unequal parenting, outright discrimination and occupational segregation.^[35] These problems can be solved. First, paid childcare leave should rise to the same levels for men and women, to ensure women are not forced to take on an unequal childcare burden, and spend more time out of careers than men. Childcare leave rights should (like holidays) not be tradeable, because private choice in “shared parental leave” reproduces social stereotypes.^[36] Leading workplaces give equal paid childcare leave for at least 26 weeks, or 52 weeks, regardless of gender.^[37] Second, the law should ensure sex-based pay claims are not harder than for other kinds of discrimination claims, by raising all time limits to claim to Tribunals to an extendable six months and enabling a hypothetical comparator to bring a claim of less favourable treatment.^[38] Third, to reduce occupational segregation, the law should support sectoral collective bargaining on all terms at work, including equality, to ensure overall fair pay scales across a range of jobs.  

Amendments

• Ensure equality plans raise and equalise paid maternity and paternity leave, and statutory rights do also.
• Equalise pay claims with six-month extendable time limits, and with hypothetical comparators.
• Ensure fair pay agreements can begin in all sectors, and unions may bargain on all terms including equality.

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[.green]7[.green] Fire and Rehire

[.subtext]End fire and rehire in full by removing broad or undefined exceptions.[.subtext]

“Everyone, as a member of society, has the right to social security”,^[39] which includes job security against arbitrary dismissals or unilateral changes to pay and working conditions. The Bill rightly restricts unilateral variations of contracts in clause 22, but then allows an exception if employers aim to “mitigate the effect of, any financial difficulties” which they could not avoid, taking into account consultation with employees and unions.

This exception treats employment contracts differently to other contracts. Contracts may only be varied by consent, not unilaterally. The Bill should limit variations in financial difficulty to those responsible: to manager pay, to shareholder dividends or to bank interest. Treating workers’ contracts differently is unjustified. The Bill also does not yet address employers using express clauses in contracts that reserve a power to vary all terms without limits, or the loophole that employers may drive through changes against employees for “some other substantial reason” who then become unprotected from dismissal. Finally, the Bill does not yet address the weak duties of UK employers to consult with unions before dismissals including redundancies.  

To fix these problems, and ensure workers cannot be fired and rehired, the Bill should treat employment contracts the same as others. It should further prevent contracts varying other employment terms, unless a union or workers agree. It should clarify the definition of “some other substantial reason” for dismissal, as suggested by the former president of the UK Supreme Court, to be restricted to misconduct outside the contract, not opposing unilateral variations.^[40] The essential problem is the lack of collective voice to negotiate flexible responses in changing businesses. Existing powers may amend the ACAS code to require that unions or elected workers must approve dismissals, as is found in wealthier countries,^[41] to ensure employers consult and negotiate.  

Amendments

• Remove exceptions for employers to change employee contracts under financial pressure, and make explicit the power to cut manager pay, cease dividends to shareholders, or renegotiate bank loans.  
• Define “some other substantial reason” as misconduct outside the contract, not rejecting unilateral variations.
• Update the ACAS codes to ensure unions or elected worker bodies must approve dismissals.  

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[.green]8[.green] E-ballots and Union Voting

[.subtext]Electronic balloting should be enabled in the Bill, with details for regulations.[.subtext]

The right to fair pay depends on the right to take action, because collective bargaining without the right to strike ends up as “collective begging”.^[42] The Bill expresses a welcome endorsement of electronic balloting for strike action referring to a power in force, but never used, in the Employment Relations Act 2004 section 54. Ballots by post are mandated for strikes, union recognition and union elections,^[43] even though it suppresses voter turnout. The Bill does not yet state that electronic ballots are allowed, rather than leaving this to further regulations from the Secretary of State. The Bill should simply enact the right, because even if the law stays discretionary, a future hostile government can take e-ballots away without Parliament, grinding union rights for fair pay to a halt again.  ‍

Amendment

• Make the right to secret, secure, and verifiable e-ballots explicit in section 56 of the Bill.  

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[.green]9[.green] Unfair Dismissal for Union Action

[.subtext]Protection from unfair dismissal for union action, like detriment, should exist for all workers.[.subtext]

Everyone’s right to freedom of association includes being free from detriment or dismissal by employers. The UK has lost cases on this issue in the European Court of Human Rights,^[44] yet our legislation still restricts the right to protection from unfair dismissal to a narrow scope of “employees”. By contrast, protection against detriment exists for the larger group of “workers”, and even this group currently excludes some of the most vulnerable people in our workforce, for platforms.^[45] The Bill does not make the simple change of ensuring protection against unfair dismissal for industrial action applies to all workers.^[46] The Bill also does not yet enact a “single worker status” that nearly all other countries have, defined by law and bargaining power, not a contract. It should, because this limit of protection is openly contrary to our duties under the European Convention.  

Amendments

• Ensure all workers have protection for dismissal for union action, along with establishing a single worker status

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[.green]10[.green] Restore Secondary Action

[.subtext]Secondary action should be allowed for the purpose of achieving a good faith collective agreement.[.subtext]

The right to take collective action is a universal right because it is the vanguard of democracy and a final weapon against dictatorship. It is enshrined for unions in case of any “conflict of interest” for “ensuring the effective exercise of the right to bargain collectively”.^[47] All wealthier, more equal countries protect the right to take collective action, not only against a direct contractual employers, as in the UK, but also in solidarity with workers across an employer’s corporate group, in solidarity with workers for competitors, or across sectors, in order to get a collective agreement. The UK’s ban on solidarity action puts it at the bottom of the OECD in this respect.^[48] Because the Bill envisages sector-wide collective bargaining, it should enable sector-wide action for the purpose of achieving sector-wide collective agreements.

Amendment

• Replace the prohibition on secondary action with the right to take action to get a collective agreement.  

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[.green]11[.green] Facility Time

[.subtext]Guarantee facility time for workplace governance reps, pension trustees and caseworkers.[.subtext]

To carry out union functions, and protect workers’ rights, representatives need paid time off, known as facility time. The Bill includes welcome provision for equality representatives to receive facility time, on top of existing rights for officials who conduct collective negotiations and consultation. Yet this leaves three gaps in facility time.  

First, workers become directors on boards, performing vital governance functions, for instance under the UK Corporate Governance Code, the National Health Service Act 2006, in schools or universities. Second, member-nominated pension trustees or directors are chosen by unions or elected by beneficiaries under the Pensions Act 2004 to co-manage pension savings. Third, individual caseworkers in most union branches ensure that rights are upheld without going to Employment Tribunals, saving the system time and money. The Bill should recognise these vital roles and extend facility time, to include governance, pension and casework, and for training.  

Amendment

• Guarantee facility time for worker directors, pension trustees and casework, plus the right to facility time for training.

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[.green]12[.green] Enforcement

[.subtext]Expand the Fair Work Agency’s remit to cover all labour rights laws.[.subtext]

Rights without a remedy are not really rights at all, and that is why in international law rights must be enforced.^[49] The Bill sets up a welcome new structure for the Secretary of State to delegate enforcement of “labour market legislation” to a public body, to be called the Fair Work Agency. The Fair Work Agency has powers to enter premises, seize documents, accept undertakings and apply to court for orders in relation to a “labour market offence”. This only covers offences in criminal law, not breaches of civil rights that affect the vast majority of workers, such as the right to a written contract, a fair dismissal, paid childcare leave, or equal treatment. Schedule 4 contains the list of laws,^[50] and allows the Secretary of State to add to the list. It does not yet include the Trade Union and Labour Relations (Consolidation) Act 1992, Employment Rights Act 1996, or Pensions Act 2008 that contain other key offences, such as P&O Ferries’ failure follow redundancy laws in its fire and rehire strategy.  

Amendment

• Empower the Secretary of State to pursue civil enforcement, as well as actions for all criminal offences.

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Policy areas not covered by the Bill

[.green]1[.green] Worker status

[.subtext]Enact single worker status based on law, not contract, to end rights and tax evasion.[.subtext]

All labour rights depend on falling within the scope of coverage, yet the UK has a three-tier system, which enables employers to contract out of rights. Currently “employees” have most rights, a smaller group of non-employee “workers” have fewer rights, and there are limited rights for the genuinely self-employed. Statute does not give clear definitions, leaving workers to rely on court cases that have contradicted each other at least back to 1983.^[51] Currently, courts define “employee” and “worker” to let employers insert contract terms that negate rights, such as denying an ongoing duty to provide work, or enabling workers to substitute others at work. This enables multi-billion corporations such as Deliveroo, Uber, Amazon or City solicitor firms, to evade rights and tax. This puts the UK at the bottom of the OECD,^[52] worsened in recent UK Supreme Court decisions.^[53]  

The Bill does not contain a “single worker status”, as the government promises to consult on “a simpler framework that differentiates between workers and the genuinely self-employed”. The issues are the best known in employment law, because they are the first topic discussed, and easily soluble. For example, the EU’s new rules on platform work say an employment relationship must be defined by law and collective agreements, not contracts,^[54] which are usually written by employers and workers are told to ‘take it or leave it’. The International Labour Organisation’s Employment Relationship Recommendation, 2006 (no 198) requires that rules “ensure effective protection to workers especially affected by the uncertainty” of the scope of rights, and take into account workers’ dependence or unequal bargaining position.^[55]  

Billions of pounds in tax and National Insurance Contributions will be raised if sham-self-employment is ended and a single worker status is restored. Uber, Deliveroo and their competitors probably account for over £1.1 billion in lost employer NICs receipts each year, which in 2024 stands at 13.8% of each wage. In addition, law firm partners, who currently count as workers, but not employees in the same way as company directors, probably avoid paying over £1.2 billion each year in employer NICs. This contradicts the progressive principle that as people get better jobs within firms, and are paid more, they should pay more tax, not pay less tax than the staff they employ.^[56] A further desirable reform is to equalise the rate of National Insurance paid by employees (currently eight per cent) and the self-employed (six per cent) so that there is no longer a two per cent incentive on workers to go along with sham-self-employment from their employers.  

Amendments

• Restore single worker/employee status, defined purposively by control, reality, and power, not the contract.  
• End the two per cent disparity between employee and self-employed National Insurance to remove sham incentives.  

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[.green]2[.green] Workplace democracy

[.subtext]Update the Companies Act and Pensions Act for workers on boards.[.subtext]

There is a fundamental “right to take part in the determination and improvement of the working conditions and working environment”,^[57] in addition to collective bargaining and consultation, that means workers on boards of directors. The UK is in a minority of OECD countries that have no general laws for worker directors, which usually require one-third to one-half worker-elected directors. The UK has isolated laws requiring worker-elected directors in some universities, schools, NHS foundation trusts, and the UK Corporate Governance Code 2024 requires listed companies to “comply or explain” with three worker “engagement” options, which may include a worker-director. The Pensions Act 2004 requires that at least one-third of pension trustees or directors, who manage workers’ capital, must be union or beneficiary/worker elected. The Secretary of State may raise this threshold to one-half and remove exemptions for multi-employer plans, contract pensions and NEST.  

The Bill does not yet contain coherent requirements for workers on boards, although a new Corporate Governance Bill is promised, and Labour’s Manifesto promised to give “stronger voice in the governance and strategic direction of the company” at Royal Mail, to “make work pay”, to “improve security in retirement, as well as to increase productive investment in the UK economy”.^[58] The evidence suggests that rules for workers on boards lead to up to 1.5 per cent increase in wages, fewer redundancies and increased job satisfaction.^[59] With other labour rights they lead to higher productivity, higher employment, lower unemployment and a higher share of labour income.^[60] They are also strongly associated with greater innovation, measured by patent filings.^[61] They are likely to lead to less conflictual industrial relations, with fewer strikes and more trust. The UK should amend the Companies Act 2006 so that one-third of company boards with over 250 staff are worker-elected, raisable to one-half, and change the Model Articles for companies so that there is the same default in company start-ups.  ‍

Amendments

• Require one-third of worker-elected directors in companies with over 250 staff, raisable to one-half.
• Change the default rules in company Model Articles to require worker-elected directors.
• Raise member-nominated trustees in pensions to one-half using existing powers and remove loopholes.

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[.green]3[.green] Full employment

[.subtext]Guarantee full employment in law by updating the Bank of England and Treasury’s rules.[.subtext]

Labour law as a system only functions when there are jobs, which is why the right to work and full employment are universal rights.^[62] The UK’s unemployment rate is high historically, with under-employment and low pay even worse. Unlike other countries with better job security, the UK is more prone to sharp spikes of unemployment in crises, such as the global bank crash, or Covid. Full employment means around one to two per cent unemployment, at full hours and fair wages.^[63] However this has never been defined in law, leaving the door open to evidence-free theories that there is a “natural rate of unemployment” and that if government uses fiscal or monetary to go below this then “inflation accelerates” beyond control.^[64] There was a brief duty on government to report progress to full employment, but this lapsed at the 2017 election.^[65]  

The Bill does not yet include reforms for full employment, although Labour’s Manifesto is throughout committed to creating “good jobs and productivity growth”, and to “make work pay”. First, as well as restoring a reporting duty, full employment should be defined in law to mean one to two per cent unemployment, with fair wages and hours. Second, the monetary policy remit in the Bank of England Act 1998 should be updated to place the goals of price stability, maximum employment and growth on an equal foot, as they are for the United States Federal Reserve.^[66] Third, “price stability” should be defined in law to take account of escalating wage inequality, escalating housing costs, and volatile fossil fuels, all of which undermine price stability, and reduce real wages.  

Amendments

• Restore government’s duty to report on full employment, defined by one to two per cent, with fair wages and hours.
• Place the Bank of England’s goals for price stability, maximum employment and growth on an equal foot.
• Define price stability in law to take account of wage inequality, all housing costs and fossil fuel dependence.