Making Work Pay

The Government’s plan to make work pay is a core part of our mission to grow the economy, raise living standards across the country and create opportunities for all. It will tackle the low pay, the poor working conditions and the poor job security that have been holding our economy back. The landmark Employment Rights Bill will benefit more than 10 million workers in every corner of the country.

We have committed to working with all stakeholders on how best to put these measures into practice. As trailed in the Government’s “Next Steps to Make Work Pay” document, published on 10 October, the Deputy Prime Minister, the Work and Pensions secretary and I are today launching four six-week consultations. Subject to the outcome of these consultations, we will consider whether there is a need for any Government amendments to the Employment Rights Bill.

The Employment Rights Bill includes measures to deliver our commitments to end exploitative zero-hours contracts by introducing:

A right to a contract with guaranteed hours that reflects the number of hours regularly worked, based on a 12-week reference period; and

a right to reasonable notice of shifts, and proportionate payment for short-notice shift cancellations and curtailment.

The Government believe that all workers, including agency workers, should have the right to guaranteed hours that reflect the hours they regularly work. The Government’s intention is that agency workers should also have a right to reasonable notice of shifts and receive payment for shifts that are cancelled or curtailed at short notice. The unique tripartite relationship between agency workers, employment agencies and hirers makes the application of these measures to them particularly complex. The zero-hours contract measures create new responsibilities for employers. For agency workers we need to decide whether these responsibilities sit with the employment agency, the end hirer or both. The first consultation being launched today seeks to understand how these measures can best apply to agency workers.

The Government are committed to a new partnership approach of co-operation and negotiation that sees employers and trade unions working with Government to tackle the challenges affecting our economy. Workplaces and working practices have changed significantly over the last decade and the trade union legislation that underpins industrial relations is in need of modernisation. Poor industrial relations have held the UK back from reaching its potential. In 2022, 2.5 million working days were lost due to strikes in the UK. In 2023 it was close to 2.7 million—the most in any year since 1989.

We are committed to developing a framework for industrial relations that will stand the test of time. This consultation is taking those first steps forward, to help us build a positive, modern framework for our industrial relations.

The Government are seeking views on a number of changes to modernise and hardwire negotiation, engagement and dispute resolution into industrial relations. The consultation includes proposals on: simplifying the amount of information that unions are required to provide in industrial action notices; strengthening provisions to prevent unfair practices during the trade union recognition process; securing a mandate for negotiation and dispute resolution; requirements on political funds; extending the expiry of the strike mandate; reducing the industrial action notice period; updating the law on repudiation and prior call; and seeking views on the enforcement mechanism for right of access.

The Employment Rights Bill expands protections for employees in fire and rehire and collective redundancy scenarios. It does this by banning fire and rehire practices other than when the employer genuinely has no alternative and by ensuring that the right to collective consultation is determined by the number of people impacted across the entire business, rather than in one workplace.

The Government are also committed to reforming the law to provide effective remedies against abuse of the rules on fire and rehire and collective redundancy. The third consultation being launched today seeks views on doing that by increasing the maximum period for the protective award for scenarios where employers have not complied with their collective redundancy obligations, and adding interim relief to collective redundancies and unfair dismissals in fire and rehire scenarios.

The Employment Rights Bill includes measures to strengthen statutory sick pay for those who need it most, by removing the existing requirements to serve waiting days and extending eligibility to those earning below the lower earnings limit. The Department for Work and Pensions is therefore launching a consultation to support this ambition, and to ensure that the safety net of sick pay is available for those who need it most.

The changes introduced within the Bill will mean that for some lower earners, including those earning below the lower earnings limit, their rate of statutory sick pay will be calculated as a percentage of their earnings instead of the flat weekly rate. This consultation is seeking views on what this percentage should be, to ensure that it provides a fair earnings replacement when these employees need to take time off work. A copy of the relevant equality impact assessment will be deposited in the Library of the House once available.

This package represents the first phase of formal consultations on how best to put our plans into practice.

As is typical with employment legislation, further detail on many of the policies in the Employment Rights Bill will be provided through regulations, and in some cases codes of practice, after Royal Assent. We expect to begin further consultations on these reforms in 2025, seeking significant input from all stakeholders, and anticipate that most reforms will take effect no earlier than 2026.

As outlined in “Next Steps to Make Work Pay”, there are also commitments in the plan to make work pay that we will deliver via existing powers and non-legislative routes, as well as those which will take longer to undertake and implement. We will begin consulting on some of these measures before the end of the year, including launching a call for evidence on tightening the ban on unpaid internships. The Government continue to work closely with stakeholders to ensure that they can plan their contributions to calls for evidence and consultations as they arise.

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