The Employment Rights Bill

2025 is already looking likely to be another busy year on the employment law front, with the Government pushing ahead with its plan to overhaul workers’ rights and reshape workplace protections in the UK.

Focussing on one of the Government’s most well-known planned reforms, the Employment Rights Bill (“the Bill”), which was introduced to Parliament on 10 October 2024, is the first step in delivering the Government’s commitment to ‘Make Work Pay’.

So, what changes are going to be introduced and how will these changes impact employers across the retail sector?

Day 1 Unfair Dismissal

Arguably the most notable change being proposed by the Bill is the removal of the requirement for employees to have two years’ service before being able to bring a claim for unfair dismissal, making this a ‘day one’ right. There are around nine million people in the UK with less than two  years’ service that could be given the right to claim unfair dismissal as a result of this change.

This is a significant change, particularly within the retail sector where operational flexibility is important. To reduce the risk of being drawn into lengthy and costly tribunal claims, employers will no doubt have to spend more time and effort to ensure better management of its employees’ performance from the first day of their employment. Employers may wish to start upskilling their employees with line management responsibility now, by providing training such as performance and absence management.

Whilst unfair dismissal is set to become a ‘day one’ right, it is expected that the Bill will introduce a statutory notice period (predicted to last nine months), during which employers will be able to apply a lighter-touch dismissal process and the standard of reasonableness for dismissals will be less stringent.

There is still a lot that remains unknown about the proposals such as the length of the statutory probation period, how the ‘lighter touch process’ will operate and whether compensation for successful claims for unfair dismissal during the statutory probation period will be lower than in ordinary unfair dismissal claims. The changes aren’t likely to take effect until 2026, but key consultations are expected to take place in 2025 that employers may want to keep an eye out for.

Harassment

A recent report on retail crime indicated 70% of retail workers experienced verbal abuse, and 46% were threatened by a customer.[1] In response, the Bill proposes to amend The Equality Act 2010 so that the duty to prevent sexual harassment will require employers to take “all reasonable steps” rather than just “reasonable steps.” More drastically, the Bill also proposes that there will be a statutory duty on employers not to permit a third party to harass an employee, plus a duty to take all reasonable steps to prevent it. This will have a notable impact on the retail industry given that the sector is predominantly customer-facing. Employers will have an increased responsibility to take more pro-active steps to protect their staff from harassment by customers. Otherwise, they will see an increase in costly legal actions being raised against them.

In advance of the changes taking effect, it is recommended that employers take action now to make sure that firstly they are complying with the current preventative duty to prevent sexual harassment in the workplace but also to ensure that they are ahead of the game and are well prepared to comply with the changes on the wider harassment front once they come into force.

Living Wage Extension and Zero Hour Contracts

The Bill proposes to extend the national living wage to include 18 to 20-year-olds.

Zero-hour contracts will remain, however, the Bill proposes that employers will be required to offer guaranteed hours to zero-hours workers and workers who are on ‘low’ guaranteed hours but regularly work beyond them, which reflects the hours they regularly work over a 12-week reference period. Workers will have the right to refuse them. Additionally, workers will be compensated for shifts that are cancelled or end early.

Across the board, employers in the retail sector will be subject to higher labour costs due to the changes, and whilst a lot of the precise detail behind the Bill’s proposals to reshape the use of zero-hour contracts are still to be published later this year, employers may wish to start reviewing their use of zero-hour contracts now. This will put them in a good position to understand what impact the changes will have on them and plan accordingly.

If you need support in navigating these changes in employment law, our expert team are able to offer personalised solutions for your business needs.

[1] Retail crime: Impact on workers, the community and local economies – House of Lords Library

How can we help?

Get in touch with a member of our expert team or contact Craig McCracken at Craig.McCracken@andersonstrathern.co.uk

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