Up to £600 cash boost for Britain’s lowest paid to help kickstart the economy

Ten million working people across the country will benefit from an overhaul of workers' rights as the Government's landmark Employment Rights Bill returns to Parliament today (Monday 21 October).

The Bill will support employers, workers and unions to get Britain growing again as shown by its Impact Assessment published today, setting out how it could boost productivity, create better working conditions and move more people into secure work while improving living standards for families and communities across the UK.

The analysis shows “many of the policies within the Employment Rights Bill could help support the Government's Mission for Growth.” It concludes 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.”

Poor productivity, insecure work, and broken industrial relations have been holding back the British economy for too long. Last year the country saw the highest number of working days lost to strikes since the 1980s – costing the economy millions of pounds. This has entrenched a culture of brinkmanship that only serves to damage public services, public finances, and public faith in institutions. Today is a significant step in putting an end to that – as the Employment Rights Bill reaches its second reading, alongside a package of consultations to help inform its next steps. This includes a consultation on our new approach to Statutory Sick Pay, where the Bill will be removing the waiting period and the Lower Earnings Limit.

The Bill is expected to benefit people in some of the most deprived areas of the country by saving them up to £600 in lost income from the hidden costs of insecure work. Around 2.4 million people in the UK work irregular patterns like zero or low hours contracts or agency jobs, where insecure hours can mean forking out on expensive childcare or transport to cover last-minute shifts - or losing out altogether if work is changed or cancelled at short notice.

New protections like guaranteed hours and giving reasonable notice or compensation for lost work will help shift workers keep up to £600 a year, including workers in the North and Midlands where irregular work is highest.

For a cleaner working night shifts on an average annual wage of £21,058, a £600 saving would be worth over £250 more a year than the last two national insurance cuts.

Deputy Prime Minister Angela Rayner said:

We're delivering real change for working people across the country, while driving our mission for growth and making people better off.

Successful firms already know that strong employee rights mean strong growth opportunities. This landmark legislation will extend the employment protections given by the best British companies to millions more workers.

We said we would get on and deliver the biggest upgrade to rights at work in a generation and the growth our economy needs – and that is exactly what we are doing.

Speaking in the House later today, Business Secretary Jonathan Reynolds will say:

From our very first day in office, this Government has moved to restore security for working people.

That principle runs throughout this legislation and ensuring that employee rights are fit for a modern economy, empower working people, and contribute to our central mission of economic growth.

Make no mistake - a pro-worker economy is a pro-business economy. This legislation will deliver a new deal for working people. It will help fix our broken labour market. And it will tackle the poor pay, poor working conditions and poor job security that have been holding our economy back.

The Plan to Make Work Pay was developed in partnership with both businesses and trade unions, and the Government will continue to work closely with all stakeholders on how best to implement these commitments. The Impact Assessment sets out further details on how the new measures will:

• Create a level playing field for all businesses, raising standards and helping stop the undercutting of good employers. 

• Make flexible working the default, helping people achieve a better work life balance, which can lead to happier, healthier and more productive employees, which benefits both workers and businesses.

• Provide a boost for business by supporting higher workforce participation and more opportunities to employ a wider pool of talent, thanks to increased flexibility and employment rights.   

• Bring 1.5 million workers into scope of the right to unpaid parental leave. 

• Allow payments to workers for short notice shift cancellation or curtailment as high as £120 million per year

• Offer benefits to workers in sectors such as hospitality, which makes up around 20% of low-paying jobs and accounts for a disproportionate amount of economic activity in areas of central Scotland, North Wales and Southwest England.
• Create a right to bereavement leave following the death of a loved one, which could benefit up to 2 million people a year.

The analysis also confirms costs to business will represent under 0.4% of total employment costs across the economy. The majority of this will be transferred directly into the pockets of workers – helping raise living standards and give people more money to spend on the high cost of living, which has driven up over the past 14 years.

Through new consultations launched today, the Government will be seeking views on the following four areas: 

Strengthening Statutory Sick Pay through setting a new rate for those on lower earnings

As part of the Government's Plan to Make Work Pay the waiting period for Statutory Sick Pay (SSP) will be removed as well as the Lower Earnings Limit. These changes will ensure SSP is available to employees from day one of their sickness absence and is available to all employees, regardless of their earnings. A consultation will seek views on what percentage rate should be paid for those earning below the current rate.

The UK currently has one of the least protected labour markets in the OECD and these changes will mean up to 1.3 million employees who are currently excluded from SSP will now be eligible. Further detail is available here.

Ensuring the provisions on Zero Hours Contracts apply effectively to agency workers

The Government is committed to ending one-sided flexibility for all workers, which is why this consultation wants to fully understand how the zero hours contracts measures in the Employment Rights Bill can best be applied to agency workers without causing unintended consequences. Further detail is available here.

Creating a modern framework for industrial relations

Over recent years, trade union laws have been a barrier to effective, positive industrial relations in this country.  Alongside reforms in the Bill, the Government is consulting on several changes to the industrial relations framework, hardwiring a series of fundamental principles including collaboration and accountability, and enabling trade unions to represent and deliver on behalf of their workers. Further detail is available here.

Strengthening remedies against abuse of the rules on collective redundancy and fire and rehire

This consultation will ask for views on increasing the maximum period for the protective award in cases where employers haven't complied with collective redundancy rules, and adding interim relief to collective redundancies and unfair dismissals in fire and rehire scenarios. Further detail is available here.

Work and Pensions Secretary Liz Kendall MP said:

Millions of employees across the UK who can't immediately get sick pay if they are too unwell to work deserve better.

People should not have to choose between earning a living at work or getting better at home – the changes we want to see will allow employees to do both and businesses to get on.

We are now asking for your views on the rate of sick pay for low earners, as we fix our broken labour market and the poor pay and working conditions that have been holding our economy back.

As set out in Next Steps to Make Work Pay, this package is just the first step as we look to engage all stakeholders on how to best put our plans into practice, with further consultation to come in the months ahead. The majority of reforms are expected to take effect no earlier than 2026.

TUC General Secretary Paul Nowak said:

Everyone who works for a living deserves to earn a decent living – and to be treated with dignity and respect. The Employment Rights Bill is an opportunity to make work pay for millions and to give working people vital rights and protections.

We urge MPs from all parties to support this Bill and to be on the right side of history. It's time to turn the page on the low-pay, low-rights and low-productivity economy of the last 14 years.

Driving up employment standards is good for workers and good for business. It will allow people more control and predictability over their working lives – and stop decent employers from being undercut by the bad.

Michelle Ovens CBE, Founder of Small Business Britain

Small business owners are rarely against additional rights for their staff, so this is unlikely to deter them from hiring. Indeed they often exceed regulations to offer flexible local employment opportunities that deliver value beyond simply creating work. It must be remembered that the proposed Employment Rights Bill does include protections for employers – such as a lighter-touch process for fair dismissal so employers can continue operating probation periods.

However, any changes must consider the squeezed budgets and resources small businesses have. We look forward to working with the Government to ensure owners have the support they need to navigate new processes and feel confident that they can meet the costs over the long term.

Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), said:

The Government consultations on the Employment Rights Bill offer a crucial chance for business and labour market experts to engage on the detail of how the proposals will impact flexible work.

In particular, we welcome the opportunity to offer feedback on how agency work interacts with zero hours contracts. We asked for this and the Government have listened.  

In delivering the Government's plan to Make Work Pay, we must ensure the views of the full range of workers are taken into consideration and that the protections and opportunities currently afforded to many, for example to agency workers, are in no way jeopardised or put into conflict with future legislative changes.

NOTES TO EDITORS

• 10 million employees benefitting is based on:
  • ‘Making Unfair Dismissal a Day One' right which will strengthen protections for all of the 9 million employees who have been with their employer for less than two years.
  • The 2.4 million employees on variable hours contracts that will benefits from a right to guaranteed hours and a right to payment for shifts cancelled, moved or curtailed at short notice.
  • ‘The right to Bereavement Leave' following the death of a close family member which would benefit between 900,000 and almost 2 million people a year depending on the definition of the scope
  • Bringing an extra 30,000 fathers or partners into scope of Paternity Leave and 1.5 million workers into scope of the right to Unpaid Parental Leave.
•  Following the consultation on Statutory Sick Pay, the government will specify the percentage rate in law and will seek to make this change through a government amendment to the Employment Rights Bill.
• Employee will be entitled to a percentage of their weekly earnings or the current SSP flat rate, whichever is lower.   

• More information on the Plan to Get Britain Working is available here: Back to Work Plan will help drive economic growth in every region - GOV.UK (www.gov.uk)

• The government's Impact Assessment shows that around 2.4 million people in the UK are in irregular work such as zero hours or low hours contracts or agency work. This is a total 8.3% of the UK's workforce who will benefit from strengthened basic protections like guaranteed hours and reasonable notice and compensation for cancelled or changed shifts. These changes will also benefit people in more deprived areas of the country, including the North and Midlands where oa greater proportion of employees are in irregular work.
• Research by the Living Wage Foundation finds that many shift workers end up forking out on expensive childcare or transport to cover last minute shifts or losing out on this money altogether after short notice changes or cancellations. The Living Wage Foundation estimates that these workers may each save up to £600 a year on lost income, thanks to new protections in the Bill. For a cleaner working night shifts on the median wage of £21,058, a £600 saving would be worth over £250 a year more than the last two national insurance cuts.