Employment Rights Bill

The LGA is keen to work with Parliament and government to ensure the Employment Rights Bill is workable for local authorities and that resulting costs do not exacerbate the stretched budgets of the sector. As an organisation with a history of sectoral and national collective bargaining, we have significant experience in many areas covered by the Bill.

‘Fire & Rehire’ (dismissal for refusing to agree a variation of  contract)                                                                                                 

• The use of what is often termed fire and rehire is rare in councils and is very much treated as a last resort. Councils will approach the option of fire and rehire with great care and will make every effort to avoid it.
• Removal of the possibility of fire and rehire, without a replacement mechanism for making contractual changes, will impact on councils’ ability to implement equality proofed pay structures or deliver local government reorganisation.

Zero hours contracts and guaranteed hours

• Zero hours arrangements are not common in the majority of local authority jobs. However, we are concerned for the impact of the guaranteed hours provisions on the use of firefighters working the retained duty system (commonly referred to as ‘on call firefighters’). The LGA believes that the “excluded workers” provisions are an important feature of the Bill and should be explicitly used for the fire service.

School Support Staff Negotiating Body (SSSNB)

• The LGA has a key role to play in the reinstatement of the SSSNB, having been involved in the previous SSSNB and currently managing the collective bargaining apparatus and employer sides for authorities in England and Wales.
• While many of the details of the SSSNB have yet to be finalised, it is important that existing national collective bargaining arrangements in the local government sector are given due consideration.
• Should the SSSNB result in school support staff roles being paid more or less than other roles in the same employer who were previously carrying our work rated as equivalent, the potential scope for equal pay claims could result in considerable costs and litigation expense that would ultimately be reflected in higher costs for the local taxpayer and/or reduced services.
• Councils could incur other costs through SSSNB/SoS ratified agreements that are not backed by funding or could conflict with elected Councillors’ overarching duty to exercise “their relevant education functions with a view to… promoting high standards” (Education Act 1996, s.13A). There will also be implementation costs for councils for which there is no funding currently committed.
• It is imperative that no agreements are forced on councils for which funding would be required but not provided by central government. To help prevent this, the LGA suggests that provision is made to ensure that local authority employers hold the majority of seats on the SSSNB employer side, as is currently the case for relevant collective bargaining mechanisms in the sector.
• As drafted, the Bill only provides for support staff from England to transfer into the SSSNB. There is a concern that in making provisions for England only, the Bill risks decoupling existing collective bargaining arrangements across two nations that currently provide for consistency in negotiations and terms for school staff in England and Wales. Should there be increasing disparity between terms and conditions of school support staff in England and Wales, additional issues will be created in areas such as recruitment and retention, particularly for local authorities on the English and Welsh border. Therefore, we believe the SSSNB provisions in the Bill should be amended to cover school support staff in Wales.

Adult Social Care Negotiating Body (ASCNB)

• While many of the details of the ASCNB have yet to be finalised, it is important that existing national collective bargaining arrangements in the local government sector are given due consideration. There is also no funding committed to cover the implementation costs for councils or for councils to pass through to other employers in the commissioned sector.
• A particular concern in this respect is that the SoS could make regulations on pay which don’t consider the wider reward packages available to local authority staff, including access to the Local Government Pension Scheme and local government NJC sickness scheme.
• It is important that local authorities can input to, and make representations on, proposed agreements. Clause 37 contains no requirement for the SoS to consult the ASCNB before making regulations in the absence of ASCNB agreement.
• There is risk that any increased costs resulting from the ASCNB are passed back to councils, and that some providers may terminate contracts resulting in service disruption.

The introduction of the Employment Rights Bill is a key area of interest for councils, fire services and schools. With 1.4 million council employees in the sector and more than half a million teachers, firefighters and other local authority related personnel, local government can be said to be the largest workforce in the country and a pioneer of sectoral bargaining.

The LGA manages the collective bargaining arrangements for around two million employees in the UK. Elected councillors and trade unions (and other employer representatives where appropriate) work together to reach collective agreements on key employment issues such as pay, terms and conditions. There are many areas of the draft legislation to which the LGA and our member councils can provide insight and assistance as the Bill continues its passage.

It is vital that councils are properly resourced for the reforms in the Bill to be effective. LGA analysis shows that due to inflation and wage pressures alongside cost and demand pressures, English councils face a £2.3 billion funding gap in 2025/26 rising to £3.9 billion in 2026/27. This is a £6.2 billion shortfall across the two years. Chief among the wage related costs is the impact of the National Living Wage where funding from central to local government needs to fully reflect its commitment to the National Living Wage policy. Costs flowing from the proposals in this Bill will exacerbate this issue if not matched by increased funding to councils; in addition, if the legislation is not adapted to be workable in the local government context, the resultant bureaucratic and legal burdens will mean public money is diverted from service delivery.

The Government needs to give due regard to the extra cost pressures on local authorities from the increases to employer National Insurance contributions both for directly employed and contracted out services. Our Spending Review response welcomed the additional resources for the Employers’ National Insurance but noted it falls short of the £637 million we have estimated it will cost councils for directly employed staff next year. We are also concerned that indirect costs due to employer National Insurance Contributions, through commissioned and other outsourced providers, could cost councils an extra £1.13 billion next year.

The LGA will work with partners and parliamentarians on the issues set out in this briefing, as well as on other points in the Bill. We are keen to work with the Department for Business and Trade to ensure the voices of councils, schools, fire authorities and other employers in the sector are heard.

Dismissal for failing to agree to variation of contract, etc. (‘fire and rehire’): Clause 22

• Clause 22 inserts a new section 104I into the Employment Rights Act 1996 to provide that a person will be regarded as automatically unfairly dismissed if they are dismissed due to the fact that the employer wanted to vary their contract but the employee refused or the employer wished to employ another person, or re-engage the employee, on a varied contract to carry out substantially the same duties as before the dismissal.
• There is an exception to this where the employer needs to vary the contract so that it could deal with any financial difficulties that were affecting (or imminently likely to affect) the employer’s ability to carry on the business as a going concern or to continue to carry on the activities constituting the business, and the employer could not have reasonably avoided the need to make the changes.

LGA view:

• The use of what is often termed fire and rehire to effect changes to terms and conditions is rare in councils, and it is very much treated as a last resort.
• In councils, the reason for making such changes will typically be driven by the pressing need to address, for example, equal pay and equality issues though the introduction of a new pay and grading system, or as a consequence of factors outside the control of the employer, such as need to implement changes in the way that vital public services need to be delivered or local government reorganisation.
• Changes may also be needed sometimes to ensure financial budgets can be met. Underpinning this will be the need to deliver value for money to the taxpayer.
• Councils typically recognise trade unions for collective bargaining purposes and so terms and conditions in councils will normally be collectively agreed with unions. Therefore, where changes are required, councils will always seek to make them through agreement with recognised trade unions. Extensive efforts will be made to do that, involving often lengthy consultations processes with unions and employees, in some cases with Acas involvement.
• If agreement to the changes cannot be obtained through agreement with the union/s, then councils might consider whether agreement could be obtained directly with individuals. However, that carries risks, particularly in terms of s.145B of the Trade Union and Labour Relations (Consolidation) Act 1992, which makes it unlawful for employers to bypass the union by offering new terms and conditions directly to employees who are union members.
• Therefore, councils will approach the option of fire and rehire with great care and will make great efforts to avoid using it. Nevertheless, in limited circumstances, it may be the only option left if one or more trade unions refuse to reach agreement to changes. Removal of the possibility of fire and rehire, without a replacement mechanism for making contractual changes, could discourage trade unions from engaging in meaningful negotiation around proposed changes leading to the retention of working practices. It could also stymie agreements reached with some trade unions, who may represent the majority of employees, because of the action of another union that may refuse to reach an agreement.
• We are concerned that the limits which will be placed on the use of fire and rehire through the new clause 22 will in effect make the use of it in councils almost impossible. This is because the circumstances in which the exception to the right to claim automatic unfair dismissal applies in cases of fire and rehire are very limited. It appears to apply only where businesses are dealing with severe financial difficulties, and they need to make changes to employment contracts to allow them to cut costs to keep the business afloat.
• Those circumstances are very unlikely to apply in the case of councils. This is because while many councils are under severe financial pressures, it will be rare that they would be able to demonstrate that the financial pressures were such to fall into the category covered by the exemption. For them to do so, it is likely that the council would need to have issued a section 114 notice, which is a notice indicating that the council’s forecast income is insufficient to meet its forecast spending for the next year, and that it must take swift action to address the budget shortfall. The issue of such a notice carries serious consequences and, therefore, they will only be issued where absolutely necessary. Even if s.114 notice was to be added to the exemption, this would not help councils in the majority of cases but would encourage unproductive or unequal situations to persist until the finances are affected to such a degree that a s.114 notice was issued – this would be a very poor use of public money and resources.
• As currently drafted, fire and rehire will no longer be an option for councils, as it might still be for other employers in the private sector. Importantly, it would impact on councils’ bargaining positions when they were seeking to agree changes in the first place, rendering practical agreements even harder to achieve.
• Instead, sub-section 104I(4) of the Employment Rights Act 1996 inserted by clause 22(3) of the Bill should be amended to insert a new provision providing that the automatic unfair dismissal protections will not apply where the reason for the variation of the contract was to ensure compliance with equality law duties, effect local government reorganisation or to ensure value for money in the delivery of public services. A suggested amendment is shown at Annex A of this briefing. It should be noted that if such an amendment was made, the protections currently at subsections 104I(4)(b) and (5) would remain in place.

Zero hours workers: Clauses 1 to 6

• Clauses 1 to 6 of the Bill deal with zero hours workers issues and will provide rights to guaranteed hours, reasonable notice of working hours and rights to compensation in some cases where shifts are cancelled, moved or curtailed. The right to guaranteed hours though will not apply in the case of an “excluded worker”, to be defined in further regulations (see new sub-sections 27BA(3)(d) and (10) of the Employment Rights Act 1996 at clause 1 of the Bill).

LGA view:

• Our specific concern is the potential impact on the use of firefighters working on the retained duty system (commonly referred to as ‘on-call firefighters’) in fire authorities. There are over 16,000 on-call firefighters in the UK, representing approximately 36 per cent of total uniformed staff. They provide vital emergency cover for smaller towns and rural communities operating 60 per cent of total UK fire engines and covering 90 per cent of the country geographically. Those firefighters work on the basis that they are paid a basic annual retainer to provide a certain level of hours availability to work, but apart from regular training sessions and similar, they will then only be called upon to work at very short notice to deal with emergencies. Therefore, work is unpredictable, making it very difficult to see how guaranteed hours could be provided, at anything other than very short notice. We are of the view that the “excluded workers” provisions are an important feature of the Bill so that on-call firefighters and similar workers should be explicitly excluded from the zero hours worker requirements.
• Zero hours arrangements are not otherwise common in the majority of local authority jobs but where the new rights are to apply, they will create considerable administrative demands on managers, Human Resources (HR) and payroll. Further, where they are used, it may be to fill roles where demand for work fluctuates over the year, for example in the case of school holiday clubs. It is important that the requirements both now and in future regulations, will be workable for councils and other employers, overall.

The School Support Staff Negotiating Body: Clause 28 and Schedule 3

• Clause 28 and schedule 3 will reinstate the School Support Staff Negotiating Body (SSSNB) for school staff in England and sets out the remit, powers and process for how it will work.
• An SSSNB was first introduced under the previous Labour government. However, that SSSNB was abolished before any such framework was implemented.
• The reinstated SSSNB will be comprised of representatives of employers (expected to include the LGA amongst others), representatives of support staff (unions), an independent chairperson and Secretary of State (SoS) representatives.
• The details of the SSSNB’s remit will be set out in secondary legislation, which may provide for any specific categories of school support staff to be excluded. Unlike the previous SSSNB, the re-instated SSSNB will also apply to school support staff based in academies in England, as well as in local authority-maintained schools. The SSSNB will cover remuneration, terms and conditions, training, and career progression.
• Broadly speaking, where the SSSNB and or the SoS determine that provisions within that remit should apply to school support staff, regulations will be made to implement the relevant provisions. Where an existing term is prohibited or inconsistent with an SSSNB/SoS provision, the Bill provides that the relevant term will no longer have effect. However, an SSSNB/SoS provision cannot be made which would retrospectively reduce pay or be detrimental to existing terms and conditions.
• As currently drafted the SSSNB provisions do not apply to school support staff in Wales. This could lead to increasing disparity between terms and conditions of support staff in England and Wales. 

LGA view:

• The LGA was involved in the previous SSSNB and currently manages the collective bargaining apparatus and employer sides for both support and teaching staff in schools across England and Wales, as well as other local authority employees. As such, it has a key role as the representative of councils in the reinstatement process, and as an employer side representative member of the SSSNB itself.
• School support staff are currently collectively bargaining nationally as part of the local government sectoral collective bargaining framework. This sets pay awards and some terms and conditions and other provisions for more than 1.4 million people and in addition to maintained schools, a significant majority of academies and MATs also follow the agreements reached by the National Joint Council for local government.
• While many of the details of how the SSSNB will operate have yet to be finalised, it is important to note that due consideration of the consequences of the SSSNB on existing national collective bargaining arrangements in the local government sector is an important requirement, including in relation to equal pay. This is because school support staff in councils are currently performing roles in councils which have been rated as equivalent for equal pay purposes to other non-school support staff in the council, and so are being paid the same under existing collective bargaining arrangements.
• To illustrate, should the SSSNB result in school support staff roles being paid more than other roles in the same employer who were previously carrying our work rated as equivalent, without any substantive change in the support staff roles meaning that the work was then of ‘higher value’, it could provide scope for equal pay claims from those in the other non-school support staff roles. In such a claim, the fact that roles had previously been rated as equivalent would be strong evidence of equal value, on which the claimant(s) could rely. While there may be some potential defences to those claims which could be considered, including whether the different rates of pay are justified, the fact that two or more groups of employees’ terms and conditions, including pay, are governed by different collective bargaining structures would not ordinarily provide a defence of itself. It is also important to note as well that since the case of North & Ors v Dumfries and Galloway Council (Scotland) [2013] UKSC 45, it is easier for employees working in different parts of an employer to bring an equal pay claim, using a comparator in another part of the employer.
• As well as those risks, councils could incur other costs through SSSNB/SoS ratified agreements that are not backed by funding. There will also be implementation costs for councils for which there is no funding currently committed.
• It is imperative that no agreements are forced on to councils for which funding would be required to be transferred from local authority budgets which are already severely stretched or that expose councils (and therefore local taxpayers) to legal risk. To help prevent this, the LGA suggests that provision is made to ensure that local authority employers hold the majority of seats on the SSSNB employer side as is the case for the existing collective bargaining mechanism for school support staff (through the National Joint Council for local government services).
• If school support staff in Wales are not covered by the SSSNB that will decouple existing collective bargaining arrangements across England and Wales which currently provide for consistency across those nations in negotiations and terms. This risks creating increased disparity between pay, terms and conditions for school support staff in England and Wales. The impact of any differences, particularly in pay, will be felt more acutely in border authorities, where staff regularly commute between both nations for employment purposes. The workforce is transient, and the border permeable, and councils would be competing for staff on what could be significantly different terms, which will create issues with recruitment and retention in schools. Therefore, the SSSNB provisions in the Bill should be amended to cover school support staff in Wales. This would be the most cost effective, pragmatic and simplest option to protect the consistency afforded by current collective bargaining arrangements. Suggested amendments to the SSSNB provisions to achieve this are shown at Annex B of this briefing. 

The Adult Social Care Negotiating Body: Clauses 29 to 44

• Clauses 29 to 44 will establish an Adult Social Care Negotiating Body (ASCNB) and set out the broad remit, powers and process for how it will work. It will operate in a similar manner to the SSSNB, and it will cover the remuneration of social care workers terms and conditions of employment; and “any other specified matters relating to employment as a social care worker”.
• The details will be set out in secondary legislation, but clause 31 defines a social care worker as “a person who is employed wholly or mainly in, or in connection with, the provision of adult social care in England”. Subject to some exclusions, adult social care is then defined as including “any form of personal care or other practical assistance provided for individuals aged 18 or over who, by reason of age, illness, disability, pregnancy, childbirth, dependence on alcohol or drugs, or any other similar circumstances, are in need of such care or other assistance”. Potentially therefore the ASCNB will cover a wide range of employees and their employers, including local authorities and their directly employed staff.
• Broadly speaking where the ASCNB and or the SoS determine that provisions within that remit should apply to social care workers, regulations will be made to implement the relevant provisions. Where an existing term is prohibited or inconsistent with an ASCNB/SoS provision, the Bill provides that the relevant term will no longer have effect. However, an ASCNB/SoS provision cannot be made which would retrospectively reduce pay or be detrimental to existing terms and conditions.

LGA view:

• Many of the issues we have set out on the SSSNB will apply to the ASCNB. If it will cover directly employed council staff, then due consideration of the consequences of the ASCNB on existing national collective bargaining arrangements in the local government sector is an important requirement, including in relation to equal pay. A particular concern in this respect is that the SoS could make regulations on pay which do not consider the wider reward packages available to local authority staff, including access to the Local Government Pension Scheme and local government NJC sickness scheme.
• As well as those consequences and risks, a major concern is that councils could incur other costs through ASCNB/SoS ratified agreements that are not backed by funding.
• It is important that local authorities can input on and make representations on proposed agreements. They should in many cases be able to do this through representation on the ASCNB. However, a concern we have is that in the absence of ASCNB agreement, the SoS will still be able to make regulations binding the relevant employers (see clause 37). We recognise in some cases that might be necessary, but clause 37 contains no requirement for the SoS to consult the ASCNB again before making the regulations. We submit there should be such a requirement, as there is for the SSSNB (see new section 148K(5) of the Education Act 2002, inserted by Schedule 3 at page 121 of the Bill).
  • Text: 37(8) - "(8) Before making any regulations under subsection 37(2) the Secretary of State must consult the Negotiating Body."
• There will also be implementation costs for councils for which there is no funding currently committed.

Finally, where social care services are commissioned by councils, there is the risk of any increased costs resulting from the ASCNB being passed back to councils, and some providers may terminate contracts resulting in service disruption and increased demands on local authorities.

The LGA have raised points about other parts of the Bill through separate consultations, including on collective redundancy requirements, industrial action ballots and statutory sick pay. Therefore, our comments and issues on those parts of the Bill are being addressed through those consultations. Should you wish to see the LGA responses to those consultations you should contact [email protected]. 

We are also engaging with the government on clause 25 of the Bill. That will enable the establishment in England of a ‘two-tier code’ in public sector procurement processes, where employees of a contracting public authority (which includes local authorities) are transferred to a contractor in an outsourcing process. In such cases a Minister of the Crown may by regulations specify that the outsourcing contract must ensure that: 

• the transferring workers are treated no less favourably than they were as workers of the contracting authority; and
• the contractor’s workers “of a specified description” (to be confirmed) who did not transfer from the contracting authority are treated no less favourably than the contracting authority’s workers.

If a new two-tier code is to apply to councils, it is important that its requirements are clear, workable and proportionate. To help ensure this, the LGA should be involved in the drafting of regulations and any code of practice or guidance.

It is anticipated the two-tier code will result in additional costs for councils. It is important that those costs are funded, otherwise service delivery will be adversely affected.

Contact: Archie Ratcliffe, Public Affairs and Campaigns Advisor | Email: [email protected]   

A: PROPOSED AMENDMENTS TO CLAUSE 22(4) (SEE PAGE 33 OF THE BILL)

Amendments bold italics.

“(4) Subsection (1) does not apply in relation to an employee if the employer shows that — 

(a) the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which at the time of the dismissal were affecting, or were likely in the immediate future to affect, 

(i) the employer’s ability to carry on the business as a going concern or otherwise to carry on the activities constituting the business; or 

(ii) a public authority’s ability to perform its functions within budget, or

(b) the reason for the variation was to reduce inequality between terms of work in accordance with the requirements of the Equality Act 2010,

(c) in the case of a public authority the reason for the variation was to ensure value for money is provided to taxpayers, or

(d) in the case of a local authority the reason for the variation was due to local government reorganisation, and

(e) in all the circumstances the employer could not reasonably have avoided the need to make the variation.”

B: PROPOSED AMENDMENTS TO CLAUSE 28 (SEE PAGE 40 OF THE BILL),SCHEDULE 3 HEADING AND EDUCATION ACT 2002 NEW PART 8A OF THE EDUCATION ACT HEADING (SEE PAGE 115 OF THE BILL)

Additions are in bold italics.

“28 Pay and conditions of school support staff in England and Wales 

Schedule 3 contains provision establishing the School Support Staff Negotiating Body.”

“SCHEDULE 3

PAY AND CONDITIONS OF SCHOOL SUPPORT STAFF IN ENGLAND AND WALES 

The School Support Staff Negotiating Body

1. In the Education Act 2002, after Part 8 insert— 

“PART 8A SCHOOL SUPPORT STAFF IN ENGLAND AND WALES”

New sub-section 148(C)(3)

“(3) The condition in this subsection is that the person — 

(a) is employed by a local education authority in England or Wales, or the governing body of a school maintained by a local education authority in England or Wales, under a contract of employment providing for the person to work wholly at one or more schools maintained by a local education authority in England or Wales, or 

(b) is employed by the proprietor of an Academy under a contract of employment providing for the person to work wholly at one or more Academies.”