A quarterly column by the Chartered Institute of Personnel and Development (CIPD) on the people issues shaping UK workplaces.
Against a backdrop of rising operational costs, the Employment Rights Act (ERA) is poised to have significant implications for organisations’ HR strategies and policies as key measures come into force from next month.
The CIPD’s recent Labour Market Outlook survey shows most employers expect the ERA to increase their employment costs while many anticipate its measures to reduce hiring and increase workplace conflict.
Organisations that review the implications of the changes for all their HR policies and practices across the employee lifecycle are likely to be in the best position to comply and manage risk. This will enable HR practitioners and teams to take a more holistic approach to responding to the changes and ensure people strategies continue to deliver value for the business.
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Workforce planning and resourcing
Employers should take a step back and consider how to maintain workforce flexibility in light of changes being introduced. Organisations should review their use of atypical working arrangements ahead of new rights for zero-hours contract and short-hours workers to minimum guaranteed hours contracts and to advance notice of work schedules.
Organisations using zero-hours contracts to provide workforce flexibility may want to consider alternative forms of atypical working arrangements, such as introducing annualised hours contracts or increasing the use of temporary workers or self-employed contractors.
Recruitment and hiring decisions
A number of changes being introduced by the Act, including Statutory Sick Pay rules and the reduction in the unfair dismissal qualifying period, increase the cost of employers making poor hiring decisions. Consequently, now is a good opportunity to review recruitment processes to ensure new recruits are a good fit for the business and less likely to lead to problems over capability or conduct.
HR practitioners should ensure recruitment policies and guidance follow best practice, while providing support to help time-poor or inexperienced recruiting managers follow this when making hiring decisions. For example, conducting structured interviews and asking candidates the same, pre-defined questions to explore the competencies needed for the role and scoring them against consistent criteria.
This may sound fairly basic but research shows that nearly half of managers have reservations about recent hiring choices and a similar proportion worry about whether they are asking the right questions in interviews.
Induction, onboarding and probation
Another key part of the employee lifecycle which needs to be considered in light of ERA changes are the crucial first days and weeks after a new employee starts work.
Given that from 1 January 2027, the unfair dismissal qualifying period will reduce from two years to six months, employers will have to get used to ensuring new starters are a good fit and performing as expected over a shorter period of time than they have been used to.
The new, reduced unfair dismissal qualifying period will apply immediately from January next year to anyone with at least six months’ service. So HR practitioners should be starting to review induction processes, onboarding and contractual probation periods now.
Employers may want to consider shortening the length of contractual probationary periods to five or five and a half months. It ensures a decision can be made on whether an employee has passed their probation comfortably within the six-month period and avoid potential unfair dismissal claims.
Just as important will be reviewing and improving how new starters are managed during their probationary period. This means ensuring managers set clear, achievable objectives and have regular check-ins to discuss progress and how new starters are settling in.
They will need to provide regular constructive feedback and where necessary additional coaching or training to help employees to get up to speed. Concerns over progress, and actions to address this, should be documented. Then there is a record of what has been done to support the employee if a decision has to be made to dismiss them before or at the end of their probationary period.
People management capability
A third of employers expect the Employment Rights Act to increase conflict at work, which is perhaps not surprising given the multiple changes to legislation being introduced over such a short period of time.
The best defence against conflicts and disputes arising out of new employment rights is not just ensuring line managers understand any specific new legal obligations arising from the changes but supporting them to improve their people management skills.
CIPD research shows that line managers who are consistent and fair in how they manage people and take steps to proactively address issues such as poor performance, absence and conflict as soon as they arise are more likely to resolve issues and prevent them from escalating. These are the core manager skills that underpin effective trust-based employment relations.
There is no doubt the scale of change facing the HR profession as a result of the ERA is considerable. However, it also presents an opportunity for HR practitioners to make the business case for the necessary investment in HR and people management capability. This will ensure organisations comply with the new laws while supporting efforts to improve workforce motivation and productivity at the same time.
Ben Willmott
Ben heads the public policy function at the Chartered Institute of Personnel and Development, the professional HR body that aims to influence public debate, government policy and legislation in support of improved work and working lives. His particular interests span industrial strategy, skills policy, labour market regulation and enforcement, as well as employee relations and wellbeing.
