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Significant changes in employment law are envisaged in the new public consultation released by the Department for the Economy. In this insight, we highlight the key developments that employers should consider before the consultation closes on 30 September 2024.

Having analysed all the proposals in the 'Good Jobs Employment Rights Bill' consultation, we rated various proposed changes as potentially being “high impact” developments for employers, meaning that the proposed change could require significant resource to manage or result in significant change, or both. In this insight, we highlight these high impact developments.

Proposed changes to zero hours contracts

As a reminder, a zero hours contract is type of casual worker contract under which someone is engaged without there being a minimum level of guaranteed work or pay. In some situations, the individual worker is obliged to accept any work offered, but this is not always the case. In 2015, the Conservative government in GB banned exclusivity clauses in these types of contracts, meaning zero hours workers were free to work for other organisations. Exclusivity clauses have not been banned in NI, although this was proposed before this current consultation, which we covered here.

This type of contract provides significant flexibility for both parties, enabling employers to manage fluctuating demand and individuals to fit work around other commitments. However, in recent years they have been the subject of scrutiny and debate. As we explored here, the reasons for this are wide ranging but largely boil down to the potential for uncertainty and insecurity for the individual worker.

What's proposed? Why we rated this a high impact development 

The Department for the Economy is considering introducing specific legislation to limit or restrict the use of zero hours contracts.

In the consultation, views are sought on:

  • an outright ban on zero-hours contract or restricted use;
  • the ability for some workers to transition to banded hour contracts;
  • the ability for some workers to request a more stable/predictable contract;
  • a requirement for employers to give reasonable notice of work;
  • a potential code of practice on the use of zero hour contracts;
  • an obligation to pay compensation to workers when they don’t receive work they expect; and
  • whether there should be a ban on exclusivity clauses.
We covered these proposals in more detail here.		  The potential impact of the proposed changes could be significant for employers who regularly engage staff on zero hour contracts.

Removing the flexibility around this form of engagement could:

  • increase labour costs: zero-hour contracts can be a cheaper alternative to other arrangements such as agency workers, permanent part-time contracts or annualised hours;
  • present resourcing challenges: employers may have less ability to flex resourcing to meet demand, particularly when business demands fluctuate throughout the year; and
  • increase employment mis-classification: some businesses may engage people on a self-employed basis even if this does not reflect the reality of the working arrangement in practice, exposing them to employment and tax liabilities.

Recommended action:

Employers who are impacted by these proposals may wish to respond to this part of the consultation. 

Proposed change to the holiday pay calculation reference period

An employee or worker is entitled to receive 5.6 weeks’ paid holidays in each leave year, consisting of four weeks leave based on EU law and 1.6 additional weeks provided under domestic law. For many workers, the amount of pay received for their holiday depends on their hours worked and how they are paid. Pay received during leave should reflect what the worker would have earned if they were working, e.g., this is expected for workers who receive fixed pay. This becomes more complicated for workers with irregular hours and variable pay, who do not receive the same amount in each pay period.

In NI, the current position for workers with variable hours and pay is that employers should look back at the worker's previous 12 weeks’ pay (known as the holiday pay reference period) to calculate their pay for a week’s leave. This method can be burdensome for employers and may result in incorrect entitlements which do not reflect an employee’s normal pay, especially for workers with seasonal or irregular hours. Using the 12 weeks’ pay approach also goes against the Supreme Court’s findings in the Agnew case that the reference period “is a question of fact” and the “pragmatic reasons” for a 52-week reference period.

What's proposed? Why we rated this a high impact development 

The Department is seeking views on extending the holiday pay reference period for workers with variable hours from 12 weeks to 52 weeks, which would bring NI in line with the corresponding reference period used in GB.

The consultation asserts that using a 52-week reference period, instead of a 12-week one, is recognised as a more robust and fair approach.

Some employers in NI have payroll systems that operate a 52-week payroll period in line with the law in GB. This is particularly the case where an employer has workers in both GB and NI.

Confirming the use of a 52-week reference period could result in significant change for the better for these employers, and ease current practical difficulties for employers in calculating and administering holiday pay entitlements using a 12-week reference period or indeed, different holiday pay reference periods for staff in GB and NI.

This approach could also limit the risk of paying incorrect holiday pay entitlements which do not reflect an employee’s normal pay, especially for workers with seasonal or irregular hours.

Recommended action:

Employers who agree with this may wish to respond to the consultation on this point.

Proposals regarding a right to disconnect

As we previously explored here, the right to disconnect or switch off from work is a growing trend around the world, originating in France when it introduced legislation in 2017, followed by countries such as Italy and Spain. Ireland introduced a Code of Practice on the right to disconnect in 2021, which aims to create a culture of good work-life balance and break bad habits where people feel obliged to respond to messages out of hours.

In GB, introducing a right to disconnect was first discussed in Labour’s 2021 Green Paper, with a promise to bring in the “right to switch off” which would be “a new right to disconnect from work outside of working hours and not be contacted by their employer”. Although the right to switch off was not mentioned in the King’s Speech on 17 July 2024, this is likely to remain on the agenda for GB legislative reform.

In NI, there is currently no specific legislation governing the right to disconnect outside of working times, rather, more general rules surrounding working hours and rest entitlements are set out in the NI Working Time Regulations.

What’s proposed?  Why we rated this a high impact development 

At this stage, the Department is not explicitly proposing any new legislation to formalise the right to disconnect, but rather, is seeking views on whether current legislation in NI is effective enough to promote a healthy work/life balance.

The Department is also seeking views on whether a potential new Code of Practice on the right to disconnect could provide a better balance between protecting employees and supporting economic growth. 

Whilst no significant legislative changes are currently being proposed, the right to disconnect is a hot topic with mounting pressure on employers to fully engage with employee wellbeing and work-life balance, with a global trend towards regulation in this area.

Recommended action:

As well as responding to the consultation on this point, employers may wish to consider some proactive steps to get on top of this growing issue such as:

  • reviewing time recording obligations to help assess how frequently and to what extent employees are working outside of their core hours;
  • assessing workplace culture and whether there are any toxic working habits in particular teams or departments;
  • potentially introducing a right to disconnect policy – while this isn’t legally required in NI, this can be a helpful document to set out your values, culture and expectations. This should be considered alongside a review of existing policies, such as any flexible working or time off policies; and/or
  • considering other measures to better improve an employee’s ability to switch off.

Proposed changes to trade union activity (workplace access and recognition)

In Northern Ireland, trade union officials have limited statutory rights to access workplaces such as during a collective redundancy process. They also do not have specific rights to access workplaces for the purpose of operating a trade union or to recruit and discuss membership. Trade unions have long complained that this position has constrained their ability to recruit and represent new members, which may ultimately be contributing to falling levels of trade union membership, particularly in the private sector.

Recognition of trade unions is also limited; they can request to be ‘recognised’ by employers so they can negotiate agreements on pay etc, but if employers don’t voluntarily recognise, they must apply to the Industrial Court for recognition. For the Industrial Court to accept an application for recognition, the employer must employ at least 21 workers.

The consultation sets out an intention to develop, enhance and modernise the operation of trade unions, and whilst the impact of some of the proposals may be relatively confined to specific and traditionally unionised sectors, some may potentially affect all employers in every sector. It will be down to the trade union movement to see if they can make the most of any potential reforms, but there is clearly scope for these proposals to add up to a shift in the legal and industrial relations landscape. We highlight the most significant proposals below.

What’s proposed?  Why we rated this a high impact development

Access

The Department states that increasing the role of trade unions is a priority area of the 'Good Jobs' agenda, and therefore seeks views on how best to do this. Reference is made to the model in New Zealand, where trade union officials have an automatic right of access to support a trade union member with an employment related matter, and to promote membership and ensure compliance with employment law in the workplace. Trade union officials can also request employer consent for access to workplaces in which they do not have members.

The consultation also seeks views on whether there should be a proposed exemption to the potential enhancement of trade union access for small (10-49 employees) and micro businesses (fewer than 9 employees).

Whilst it’s unclear whether these changes will be enough to result in a major increase in union membership and support unless unions are also able to prove their relevance and offer value to workers, trade unions could regard any new rights of access an opportunity to launch a major push for recognition in some sectors,  such as IT, which have previously not had much union involvement, and employers may want to be prepared.

Recognition

The consultation also proposes reducing the threshold for trade unions to seek formal recognition from 21 to 10 employees

These changes could make it easier for unions to secure recognition, particularly in combination with any new rights of access. This could result in an increase in the number of employers having to respond to statutory recognition applications from unions.

Recommended action:

As well as responding to the consultation on these points, it will be more important than ever for employers to adopt proactive industrial relations strategies, ensuring that they have effective ways of engaging their employees and addressing workforce concerns. Non-unionised businesses should also consider rolling out training and resources for managers and HR teams on dealing with unions, to help them manage challenging situations.

Proposed changes to TUPE information and consultation requirements

The TUPE Regulations require employers to inform and (if necessary) consult with ‘appropriate representatives’ of employees affected by the transfer of their employment to a new company. These ‘representatives’ are typically recognised trade unions or elected employee representatives.

As we previously explored here, 2014 reforms in GB permitted micro-businesses (those with fewer than 10 employees and no union/elected representatives) to inform and consult directly with employees rather than through employee representatives. Further to additional 2023 reforms, for transfers taking place on or after 1 July 2024, employers in GB are also now permitted to consult with employees directly when one of the following is satisfied:

  • the business employs fewer than 50 employees, irrespective of the size of the transfer; or
  • the proposed transfer involves fewer than 10 transferring employees, irrespective of the size of the business.

Neither the 2014 nor 2023 exemptions have been implemented in NI meaning that, strictly, all employers must comply with their information and consultation obligations with their union/elected representatives. In practice, some small employers in NI invite employees to agree that they will all be representatives, and all consulted together.

What’s proposed?  Why we rated this a high impact development 

The consultation seeks views on whether the GB changes outlined above are now required in NI.

The Department is also seeking views on whether more clarity is required in law that TUPE only applies to employees and whether there is a need to remove the obligation to split employment contracts between multiple employers where a service is transferred to more than one new business.

The Department also invites comments on whether any other changes to the TUPE legislation should be considered.

We believe that aligning the GB and NI position is a move for the better. The new approach to informing and consulting and removing the burden to elect representatives should, in theory, make transfers quicker and easier for employers to manage.

Various other 2014 GB reforms to TUPE aren’t included in this consultation. They include:

  • allowing the new employer to consult with the current employer’s employees about proposed collective redundancies prior to the transfer taking place, provided the current employer agrees to this. It is useful for new employers to begin their legally required consultations prior to the transfer to lessen their payroll burden post-transfer; and
  • confirming that a change in the location of the workforce following a TUPE transfer falls within the scope of an ‘economic, technical and organisational reason’ which prevents place of work redundancies from being automatically unfair under TUPE and which allows changes in contractual terms.

We wrote about this in more detail here.

Recommended action:

Employers who agree with the proposals in the consultation or who feel that further GB reforms should be replicated in NI may wish to respond to this part of the consultation.

What should employers do next?

Significant reforms to NI employment law are proposed in the consultation, which closes on 30 September 2024. Now is therefore an important time for you, as employers, to review and engage with the proposals and share views on how the proposed changes could affect your business.

The 'Good Jobs' Employment Rights Bill consultation is available here and on page 9 of the consultation document, details are included about how to respond to the consultation.

Our NI Employment Law Reform Impact Hub is available here and our full analysis of all the proposals (and not just these high impact proposals) is available here.

When will these changes happen?

Nobody can say with certainty when these changes (on the basis they proceed in their current form), will be implemented. The 'Good Jobs' Employment Rights Bill is only at the consultation stage. Once this closes on 30 September 2024, there will be a number of months during which the public’s responses will be reviewed and assessed, before a draft bill is produced. That may then be rejected, or more likely amended during passage through the NI Assembly. There may then need to be regulations and a period for implementation. So realistically, changes may not be implemented until 2025 or 2026 - however, given some of the proposed changes are significant, employers are advised to prepare well in advance.

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