Reform of UK Employment law may be coming back onto the agenda with new announcements on “fire and rehire” practices and the proposed single enforcement body, in addition to suggestions of a summer consultation on flexible working rights.

Despite the current Conservative government promising UK employment law reforms in the previous Queens speech and its election manifesto, there was no reference to new employment law in this years’ Queen’s speech. However, the government has updated the UK House of Commons that it plans to respond to “fire and rehire” practices and establish a new body to enforce workers’ rights. Also, there are reports that the government may consult on the introduction of the right to flexible work this summer.

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“Fire and rehire” practices

During the Covid-19 pandemic employers who “fire and rehire” – i.e. change employee terms by dismissal and re-engagement – have come under criticism for these practices. Companies such British Gas and British Airways have come under public scrutiny and trade union condemnation, and the cereal company Weetabix has been threatened with strike action if it needs to fire and rehire employees this summer.

The UK government asked the public body ACAS to investigate fire and rehire practices in October 2020, following the increase in public awareness. ACAS found that this practice has not drastically increased during the pandemic. However, this investigation prompted calls for tightening up the law around unfair dismissal and employee consultation.

Although the government describes these as “bullying” practices, it has confirmed it will not legislate to regulate this practice in response to the ACAS investigation. The government has asked ACAS to produce further guidance to encourage good workplace practices when employers are negotiating changes to their employees’ contracts, and the government will face further pressure when the Labour MP Barry Gardiner introduces another bill on this issue.

Employers will be relieved by the government not prohibiting fire and rehire practices.  Generally, employers only use this as a “last resort” when they need to change terms and conditions for businesses reasons – often due to cost pressures.  If they were unable to do this, businesses would have no option but to make cost savings by way of redundancies. With the UK furlough scheme approaching its end, it is likely the government wants to avoid further legislation which could lead to more people losing their jobs altogether.

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Single enforcement body

The government’s announcement on the single enforcement body for employment rights is nothing new. The primary intention of this is to merge various government bodies into one and expand the remit to the enforcement of statutory sick pay, holiday pay and the regulation of umbrella companies (a form of staffing intermediary / supplier – umbrella companies are often found to be operating in a legally non-compliant way).

The new body will provide technical guidance on UK employment law and will have a compliance notice system and the ability to apply civil penalties.

There is no detail about when the new body will begin to operate or how it will be funded.  

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Consultation expected on flexible working

The UK government committed to making flexible working the “default” in its 2019 manifesto. A consultation ahead of the Employment Bill is expected this summer which will cover flexible working.

There are no details on this new right and how it would work, but it is likely to cover all types of flexible working – not just working from home.

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Summing up – what do employers need to know?

• Expect guidance on the practice of “fire and re-hire” but no new legislation.
• The single enforcement body is still a long way off. Assuming it eventually gets up and running, employers will need to be aware of the new regulatory attention on holiday pay and statutory sick pay. On the other hand, expanded enforcement powers may drive up industry standards as non-compliant staffing providers come under greater scrutiny.
• The expected consultation on flexible working may provide extra fuel for the debate over what the post-Covid “new normal” working looks like, but the timescale for any planned legislation remains unknown.
• Employment law reform could be inching its way back onto the political agenda, but it remains unclear whether there will be any real progress in the near future on the changes under consideration.

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If you have any specific questions you would like advice on, then please contact: Abi Frederick Abi.Frederick@lewissilkin.com or Koichiro Nakada koichiro.nakada@lewissilkin.com of Lewis Silkin LLP.