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The UK government needs to urgently rethink a key element of its flagship workers’ rights reforms to avoid inadvertently creating “a veto on all contractual change”, according to a leading trade unionist.
Mike Clancy, general secretary of the union Prospect, said provisions in the employment rights bill intended to stop employers using controversial “fire and rehire” tactics to impose worse terms and conditions on their staff could backfire unless the draft legislation was amended.
“It is essential to ban the practice of fire and rehire, but the government must be careful it doesn’t inadvertently create a veto against all contractual change,” he told the Financial Times.
Both business groups and employment lawyers are concerned that in its current form, the legislation could make it very difficult for employers to make routine organisational changes — such as a relocation from one city to another, where some employees did not want to move.
Unions including Prospect have fought hard for stringent curbs on fire and rehire to be included in the sweeping overhaul of employment law — which also encompasses a big upgrade of union rights — and have been adamant that ministers should not cede to business lobbying to water them down.
The aim is to stop employers using coercive tactics to cut pay or benefits, except where they face such acute financial difficulties that the changes are essential to keep operating.
Banning fire and rehire became a rallying cry for unions after a series of large employers used the tactics to force through restructurings during the pandemic, and after P&O Ferries sacked its entire UK crew and replaced it with cheaper agency staff in 2022.
Parliamentary debate on the employment rights bill is nearing its closing stages, giving ministers their last opportunity to propose amendments to the legislation before it reaches the statute book.
But debates have dragged on over key elements of the legislation and the bill now looks unlikely to reach royal assent before the autumn.
“When the bill comes into force, what is an employer seeking to relocate its business supposed to do? Does it just accept that any dismissals will be unfair?” asked Darren Newman, an employment lawyer, adding that this could put the government on the hook for compensation if it moved departments away from London and some civil servants refused to move.
Another big area of concern is the practicality of a ban on zero hour contracts, where businesses and unions are still wrestling with the difficulty of spelling out how a new right to guaranteed hours should be framed in regulations.
Business groups are also still fiercely opposed to proposals to give workers protection against unfair dismissal from the first day in a job. They say it remains unclear how a new statutory probation process will work and that the lack of clarity is already deterring hiring.
“Fear of the bill is influencing businesses’ behaviour,” said Neil Carberry, chief executive of the Recruitment & Employment Confederation, adding that even though it would take years to implement the legislation, clients were already citing it as a factor in their decisions.
Jonathan Reynolds, business secretary, told journalists on the sidelines of a conference on Thursday that he was “absolutely certain” of addressing businesses’ concerns over a statutory probation period, but that “I have to have the bill passed first before we go into the implementation”.
When it came to the details of offering workers’ guaranteed hours, there was “more than enough room” to reach agreement with businesses and unions, he said, adding that he recognised the need to avoid a “very onerous” process.
Clancy said that while some details could be settled through later consultation and regulation, key parts of the bill needed further work before it became law. “If you have set architecture that constrains further discussions, that will be a problem,” he said.
The Department for Business and Trade was contacted for comment on the calls to rethink the fire and rehire provisions.
