How will the Employment Rights Bill impact the property asset management sector?

The Government’s Employment Rights Bill continues to wind its way through both houses of Parliament.  When it is finally implemented it will make some radical changes to employment right in the UK.  For property asset management businesses it will increase employment protection, costs and complexity.

For employers, the most notable features are:

1. Significant reduction in the qualifying period for unfair dismissal, currently two years
2. Strengthened limits on “fire and rehire”, making unilateral changes to employment terms almost impossible
3. Restrictions on zero-hours and casual arrangements, through a right to a contract reflecting regular hours, and compensation for short notice shift changes.

The Bill’s changes will affect groups of employees typically employed by a property asset management business differently.

For professional, office based staff, such as asset managers, surveyors and administration, the reduced unfair dismissal qualifying period risks litigation around performance exits and restructuring.

At the time of writing the Government has just announced that it will reduce the qualifying period to six months, rather than making unfair dismissal a day one right, which was in the Labour 2024 manifesto.

The significant reduction in the qualifying period will making it much riskier to take a chance on a new recruit. Business will have just six months to decide if the employee is the right fit.  As after six months the employee will have protection from unfair dismissal.

Business can mitigate this risk by formalising the probationary process, with SMART objectives set at the start and interim probation reviews. This can help employers identity early on whether the employee is right for the job / company. These steps can also help employers justify any performance management that takes place after six months of employment.

The limits on fire and rehire reduces businesses’ ability to adapt to a changing market.  Changes to contractual terms relating to hours, incentive arrangements and place of work will be much more difficult to achieve.  Businesses needing to make such changes will need to engage in extensive consultation if such changes are to be achieved.

In respect of operational and site based staff, the flexibility currently achieved through the use of zero hours contracts, or permanent contracts with variable hours, for example event staff, grounds maintenance teams, will be restricted.   Employers must will have to which workers are ‘low hours workers’, and then offer them a new contract that guarantees hours based on average hours worked in the previous 12 weeks.

There are some limited exceptions, such as where the worker is only needed to perform a specific task and the contract provides that it will be terminated when the task is performed, for example staff taken on for a specific event.

The Bill will reduce the waiting period for statutory sick pay (SSP).  Instead of being payable from the fourth day or absence it will be payable from the first day of absence.  This will increase costs of frequent short terms absence.  SSP is mandatory and there is no ‘workaround’.  The additional costs will have to absorbed the business, which could mean less generous across the board pay rises in the future.

Overall these changes will lead to increased costs for property asset managers.  These may be passed on via higher management fees or service charges.  In respect of the workforce, employers may consider shifting to a smaller, more stable core workforce, supplemented by increase use of contractors.

The Bill is still being finalised in the Houses of Parliament.  Once passed, the provisions will start to come into force in 2026. If you have any questions about the topics raised in this article, our expert team is here to help.