Much has been speculated on since Labor first published its manifesto promising ground-breaking legal changes but without details about what it would mean for employers. So what does the draft law say, and how do we prepare for it and when?
Perhaps the most notable reform is that arbitrary dismissal from work will one day become his right. This will change the employment relationship landscape, as employers (except in very special circumstances) currently do not need to worry about employees complaining of unfair dismissal until they have been with their employer for two years. The current position gives employers enough time to evaluate whether the employee is a good fit for the job.
In a busy IT industry where specialist knowledge is key, staff turnover can be high and project work can facilitate the need for short-term contracts. However, the bill, which is likely to come into force in 2026, will mean that employers need to be more careful with their lives. Recruitment processBecause then terminating employment without just cause and due process is likely to leave employers in the lurch.
This means that the job market will become a more difficult place, as companies become less keen to hire new, untested talent. Employers may also look to AI solutions to carry out core business functions where possible, to reduce overall employee needs, all in the hope of avoiding costly court claims.
There will be consultations on a new legal probationary period (which is likely to be nine months), but as yet there is no indication what this will mean for the new day. We hope that this will mean that it is more difficult for an employee to bring a claim for unfair dismissal during the probationary period, so as to restore some of the flexibility of the current system.
In the meantime, it makes sense to improve hiring processes and ensure that those interviewing potential candidates are well-armed with the knowledge they need to identify the best candidates. Companies should consider introducing other stages into their recruitment processes (such as more interviews and skills tests) to mitigate the risk of eventually hiring someone who is not a good fit. Reasonable employers will start looking at this, and the talent of their existing workforce, at an early stage rather than waiting for the new law to come into effect.
IT companies that use a flexible workforce with no working hours or flexible shift workers are also in for a surprise. The proposed changes are complex, but in essence, if a worker has a zero-hours contract, employers will soon be forced to offer them a guaranteed hours contract, reflecting the number of hours they have worked during a certain reference period.
For shift workers, there will also be the right to receive reasonable notice about the shift, and any changes to or cancellation of it. A “reasonable” notice will likely be equal in length to the shift itself. To prepare, employers should consider the extent to which they rely on zero hours or flexible workers, and whether they need to restructure these arrangements at this early stage. When employers run shifts and project style, improving the system for tracking and notifying shifts will be key – finding technical solutions to manage this, or ensuring managers are well trained in this area is essential.
Flexible working
Further change is also coming to flexible working.
This has been a hot topic for some time, with changes introduced just a few months ago. However, the Bill states that employers must be very clear about their reasons for refusing any flexible working request and why they consider it unreasonable. This puts a greater onus on employers to consider which of the eight reasons for refusal most readily apply and whether they can in fact justify it when flexible working has become an expectation for the lion’s share of the workforce.
This will be more prevalent in the IT industry, where technology means it can actually be difficult to justify why employees cannot work remotely or flexibly. As such, although advance preparation is not necessarily necessary for this change, employers should start thinking about how to evaluate existing requests, how to document this and whether requests that they may have considered in the past to be inappropriate can actually be accommodated.
Ultimately, when combined with the difficulties in recruiting new employees due to other changes, allowing a slightly more flexible work style for existing and probationary employees may be considered the lesser of two evils for companies.
Public sector contracts
An area of particular concern for the IT sector is the reintroduction of the two-tier law for public sector contracts. This is intended to prevent the emergence of a two-tiered workforce, often a result of current rules where the terms and conditions of former public sector workers are protected when they move into the private sector, meaning they can be on more favorable terms compared to their private sector counterparts.
The effect of the changes will be that any transferred former public sector employees must be treated no less favorably by the supplier than they were in the contracting authority, but more importantly, existing workers at the supplier who will be performing similar roles to the transferred workers must be treated in a way that Less favorable than their former colleagues in the public sector.
As such, in most circumstances, this could result in the supplier having to offer enhanced terms and conditions (most likely wages and benefits) to all of its employees working under the transferred public sector contract.
The last major change is collectivization reform Repetition process.
For IT companies where employees may be working in multiple locations, it may come as a surprise to note that the new system will mean that when 20 employees are made redundant in a given reference period, even if they are in different offices or geographical locations, they are pooled together. , rather than treating them as different institutions. The legal requirements for collective consultation are much more difficult than a normal redundancy consultation, and employers often seek to avoid reaching the twenty mark where possible.
Businesses must look again to their current and future needs. If layoffs are likely to occur in the next eighteen months, it makes sense to look at this sooner rather than later, and plan ahead for layoffs after the bill comes into effect, to avoid a lot of administrative time and risk in a collective process.
Although there are a host of other changes, for which we await further details, including reform of the statutory sick pay regime, protections from third party harassment and increased rights to parental leave and bereavement leave, the focus for many employers will be On the impact of reforms on the stability of their workforce.
It is time to review your current processes, contracts, staffing arrangements and overall business model. If the bill is left to become law, IT companies will have increasing difficulty making what may by then be necessary changes.
Astin Hawkes is a Senior Associate in the Employment Law team at BDB Batemans.
