Employment Rights Bill to boost productivity for British workers and grow the economy

The Government will today [Tuesday 4 March] table amendments to the Employment Rights Bill following weeks of consultation and responses from business groups, trade unions and wider civil society. 

These amendments demonstrate the Government’s commitment to working in partnership with businesses and trade unions to ensure the plan to Make Work Pay is firmly pro-business and pro-worker. 

Responses to five consultations ranging from zero-hours contracts to Statutory Sick Pay will also be published which show how the Government has listened to the views of stakeholders. 

The Government’s Plan to Make Work Pay is a core part of the mission to grow the economy, raise living standards and create opportunities for people across the country. These amendments will deliver on the Plan for Change by tackling the low pay, poor working conditions and poor job security that has been holding the UK economy back. 

This landmark Bill will extend the employment protections already given by the best British companies to millions more workers. This will put the UK back in step with competitors in other advanced economies, who are already acting to adapt to the changing world of work. 

The Bill’s impact assessment, which was published last year, showed that many of the policies within the Employment Rights Bill could help support the Government’s Mission for Growth.” It concluded that that the package could have “a positive but small direct impact on economic growth” and will “help to raise living standards across the country and create opportunities for all.” This is the result of a pro-business, pro-worker, approach which is going to help usher in a decade of national renewal. 

The Deputy Prime Minister Angela Rayner said:

For too long millions of workers have been forced to face insecure, low paid and irregular work, while our economy is blighted by low growth and low productivity.   

We are turning the tide – with the biggest upgrade to workers’ rights in a generation, boosting living standards and bringing with it an upgrade to our growth prospects and the reforms our economy so desperately needs.   

We have been working closely with businesses and workers to progress this landmark bill and deliver our Plan for Change – unleashing growth and making work pay for everyone.

Business Secretary Jonathan Reynolds said:

Past Governments’ low growth and low productivity economy simply did not deliver what the UK needs, which is why we are choosing stability, investment and reform, not chaos, austerity and decline. This is why our mission to grow the economy as part of our Plan for Change is based on putting more money in working people’s pockets by making wages fairer and work more secure.  

Many businesses already have worker friendly practices in place and can attest to the positive impact they have on retention, productivity and job satisfaction. We want to go further and untap the UK’s full potential by attracting the best talent and giving business the confidence to hire to help the economy grow.

The amendments set out later today carefully consider different views and needs of workers, businesses and the whole economy and looks to deliver measures that support the mutual interests required to drive a growing, modern economy. We are delivering reform through our Plan for Change to create a decade of national renewal, meaning increased living standards across every part of the UK and putting politics back in the service of working people. 

They come following responses received to five Government consultations: 

• Application of zero hours contracts measures to agency workers

  All workers, including up to 900,000 agency workers in the UK, should be able to access a contract which reflects the hours they regularly work. These amendments will ensure that agency work does not become a loophole in our plans to end exploitative zero hours contracts. They will offer increased security for working people to receive reasonable notice of shifts and proportionate pay when shifts are cancelled, curtailed or moved at short notice – whilst retaining the necessary flexibility for employers in how they manage their workforces.  

• Strengthening remedies against abuse of rules on collective redundancy

  The Government will increase the maximum period of the protective award from 90 days to 180 days and issue further guidance for employers on consultation processes for collective redundancies. Increasing the maximum value of the award means an Employment Tribunal will be able to grant larger awards to employees for an employer’s failure to meet consultation requirements. We want to enhance the deterrent against employers deliberately ignoring their collective consultation obligations and ensure it is not financially beneficial to do so. 

• Creating a Modern Framework for Industrial Relations

  The government is updating the legislative framework in which trade unions operate to align it with modern work practices. We are ensuring industrial relations are underpinned by collaboration, proportionality, accountability, and a system that balances the interests of workers, businesses and the wider public, with further details in the consultation response.   

• Strengthening Statutory Sick Pay

  The Government will ensure the safety net of Statutory Sick Pay is available to those who need it the most, making it a legal right for all workers for the very first time.  Up to 1.3 million employees on low wages who find themselves unable to work due to sickness will either receive 80 per cent of their average weekly earnings or the current rate of Statutory Sick Pay – whichever is lower. We are also ensuring employees have a right to Statutory Sick Pay from the first day of sickness absence, so they are able to take the time off they need to recover and stay in work rather than risk dropping out altogether. The changes will also reduce the amount of people going to work when ill and therefore the spread of infections in the workplace – boosting productivity and benefiting businesses. 

• Tackling non-compliance in the umbrella company market

  The Government will act to ensure that workers can access comparable rights and protections when working through a so-called umbrella company as they would when taken on directly by a recruitment agency. Enforcement action can be taken against any umbrella companies that do not comply.  

A strong package of workers’ rights and protections goes hand in hand with a strong economy because a secure workforce will be more productive and have more confidence to spend in the economy. This contributes to growth – both through the work that people do, and the money that they spend. 

As well as creating protections for people at work, the Government is determined to create a modern economy that works for businesses and workers alike. We are delivering these reforms collaboratively, pragmatically, and in a reasonable timeframe where businesses can prepare.  

For businesses to thrive they must operate on a level playing field. The Fair Work Agency will take strong action against rogue employers that exploit their workers, and it will provide better support to the majority of businesses who want to do right by their staff. 

The Government will continue to hold continuous extensive engagement as we develop our Plan to Make Work Pay and as the details of these polices are developed. 

Paul Nowak, TUC General Secretary said:

Everyone deserves security and respect at work. These common-sense reforms will improve the quality of jobs in this country, boost growth and put more money into people’s pockets. 

Policies like banning exploitative zero-hours contracts, ensuring protection from unfair dismissal from day one, and tackling ‘fire and rehire’ are long overdue and necessary. 

This is about creating a modern economy that works for workers and business alike. Driving up employment standards in Britain will stop good employers from being undercut by the bad and will mean more workers benefit from a union voice.

Jane Gratton, Deputy Director of Public Policy at the BCC, said:

Employers will be relieved to see some amendments, at what is clearly a milestone moment for Government. It has consulted business – and this is reflected in some of the decisions on the future shape of the legislation. There is much here to welcome as sensible moves that will help ensure that employment works for both the business and the individual, including the nine-month statutory probation period and the promise of a light touch approach, as well as the return to the single establishment rule for collective redundancy. 

But businesses remain cautious, and it is important to continue ensuring the Bill strikes the right balance.  Employers will look forward to hearing, engaging with and shaping further detail. The government must continue its positive approach to engagement with firms and remain open to changes. Doing so will ensure this legislation is proportionate, affordable, and right for both firms and their employees.

Centrica Group Chief Executive, Chris O’Shea said:

We are fully supportive of this legislation. This isn’t just the right thing to do—it’s a foundation for the high-growth, high-skill economy the UK needs. While no one business has all the answers, our experience at Centrica shows that our business thrives when our people thrive – so stronger rights for workers mean stronger businesses, and that’s a win for everyone.  

As we look to invest billions in green energy, nuclear, and hydrogen storage, having a skilled and engaged workforce is critical to delivering on the UK’s energy security and net zero ambitions. The Government’s wider growth and energy missions rely on businesses and workers pulling in the same direction—I hope this Bill helps make that possible.

Julie Abraham, CEO of Richer Sounds said:

At Richer Sounds, we have always put the treatment and wellbeing of our colleagues at the forefront of everything we do.  Any responsible business will know that well-treated and well-paid colleagues will be beneficial in numerous ways.  

Happy colleagues are likely to be more productive. This also leads to reduced stock loss and higher staff retention, which in turn, minimises recruitment and training costs, not to mention disruption to established teams.  We support any government legislation that will help end exploitative working practices and improve the lives of working people.

Ann Francke OBE, Chief Executive Officer of the Chartered Management Institute (CMI), said:

The Employment Rights Bill represents a significant step forward in improving conditions for the UK’s workforce. Many of these measures reflect what successful, responsible and forward-looking employers are already doing.  

CMI has welcomed the Government’s collaborative approach in progressing this Bill, working alongside both businesses and unions to find the balance needed. The real key to success, however, will be the ability of skilled managers to implement these changes, ensuring they get it right and can deliver growth and productivity benefits for organisations whilst ensuring individuals are treated fairly.  

We look forward to working closely with the Fair Work Agency to ensure managers and leaders are equipped with the skills they need to navigate this milestone piece of legislation.

Simon Deakin, Professor of Law, University of Cambridge said:

The research we have done in Cambridge shows that on average, strengthening employment laws in this country in the last 50 years has had pro-employment effects.  

The consensus on the economic impacts of labour laws is that, far from being harmful to growth, they contribute positively to productivity. Labour laws also help ensure that growth is more inclusive and that gains are distributed more widely across society.

Claire Costello, Chief of People and Inclusion Officer – Co-op

The Co-op support the Government’s ambitions to strengthen rights for workers through the Employment Rights Bill. It’s our belief that treating employees well – a key objective of this Bill – will promote productivity and generate the economic growth this country needs.

Neil Carberry, CEO of Recruitment & Employment Confederation, said:

Regulating the umbrella market closes a loophole in addressing non-compliance. Recruiters have long called for regulations that ensure a level playing-field. Like all aspects of the Government’s changes, proper enforcement will be key to protecting both businesses and workers.