‘Significant’ changes to employment law in Northern Ireland move closer

The proposals – set out under four themes of terms of employment, pay and benefits, voice and representation and work-life balance – will align Northern Ireland’s employment laws with those applicable in Great Britain in a number of areas, but will also leave significant divergence between the laws in both jurisdictions.

Below, we look at what employers in Northern Ireland can expect from the reform package, which has emerged from the consultation exercise last year, including how policymaking in this devolved area will align or diverge with upcoming changes in the UK government’s Employment Rights Bill (ERB), which will largely not apply to Northern Ireland.

Terms of employment

The Department for the Economy wants to ensure that terms of employment bring job security, stability and clarity in a world of work that has changed significantly in recent years.

Zero hours contracts

Proposals for a new bill begin with the commitment to introduce measures to “end the use of exploitative and inequitable zero hours contracts”. It will introduce rights for zero-hour and low-hour workers to: reasonable notice of shifts; payments for shifts cancelled, moved and curtailed at short notice; and a right to move to a contract that more accurately reflects their working pattern that will be called a banded hours contract. 

Northern Ireland will also align with the rest of the UK by banning exclusivity clauses in both zero and low hours contracts that do not guarantee an income above the lower earnings limit. This protection, which ensures such workers can look for additional work elsewhere to boost their income, has been in place in the rest of the UK since 2015 for zero-hour workers and since 2022 for other low-income workers.

Many of the proposals mirror those that are either already in place in the UK or are bring proposed in the ERB, including the right to reasonable notice of shifts and compensation for cancellation or curtails of shifts at short notice. However, there is potential divergence in that the Department has confirmed that they intend to follow the approach of policymakers in Ireland of allowing zero or low hour workers to request a move to a banded hours contract that more accurately reflects the hours they are regularly working. This differs from the proposal in Britain of providing “guaranteed hours” to those workers. In addition, the proposed 26-week qualifying period would be notably longer than the 12-week period envisaged under the ERB.

Employment status

Having sought information as to the nature and extent of the challenges around employment status, the Department for the Economy has decided against going faster than the UK government in terms of introducing a simpler, single status, framework, but will develop new guidance on employment status.

The decision to work alongside the UK government on any legal reform of employment status is not surprising given the overlap with reserved matters such as tax. Given the complexity of the existing framework and status guidance and tools already available from UK government, it may be challenging to produce new guidance for Northern Ireland that is a real practical innovation. If it can be done, it will of course be welcomed.

Fire and rehire

Department for the Economy has also indicated it intends to align with the UK government’s approach to restrict the use of ’fire and rehire’ to change terms and conditions in the absence of workforce agreement.

The ERB will restrict employers’ ability to use ‘fire and rehire’ by amending the law on unfair dismissal. If employees are dismissed for failing to agree to a change in their contract of employment, those dismissals will be treated as automatically unfair unless the employer can show evidence of financial difficulties and demonstrate that the need to make the change in contractual terms was unavoidable.

Fire and rehire restrictions in the ERB do leave many questions unanswered, especially around the test of financial distress. Employers are concerned that redundancies may be a legally safer route than changing terms and conditions. Employers in Northern Ireland will join employers across Britain in pressing for clear guidance around when fire and rehire will be a feasible option under new rules.

Collective redundancies

Employers are currently required to notify the Department for the Economy of proposed redundancies exceeding 20 or more employees. Failure to do so is a corporate offence with a fine of up to £5,000. The Northern Ireland Bill will strengthen this further by introducing personal liability, which already exists in Great Britain, and in consultation with the Department for Justice will look to increase the maximum fine which is already unlimited in Britain.

Written statement of particulars

The Northern Ireland Bill will also align with 2020 changes that were made in Britain to the right to a written statement of employment particulars, with the additional requirement that the employer provide information on a worker’s right to join a trade union – something that is also part of the ERB proposal.

Agency workers

Since 2020, Agencies have been required to provide a key information document to new workers in Britain and enhanced protection for agency workers was provided through the abolishment of the so-called “Swedish derogation”. That derogation allowed agency workers to exchange their right to be paid equally to permanent counterparts after 12 weeks in return for a contract guaranteeing pay between assignments. This was considered susceptible to exploitation and Northern Ireland will also now abolish it.

Many employers and employment agencies that operate across the UK may have already changed practices in Northern Ireland to reflect obligations in the rest of the UK, but many still do use the Swedish derogation in their arrangements and these will now need to be reviewed in readiness for this change.

Pay and benefits

Right to disconnect

There will be notable divergence around the introduction of a ‘right to disconnect’ in Northern Ireland now that this proposal has been dropped by the UK government for the rest of the UK.

A ‘right to disconnect’ allows workers to disengage with work and not be contacted by their employers outside normal working hours. The Department for the Economy has pledged to introduce a statutory code of practice for the right to disconnect, following the approach in Ireland where a code of practice is already in effect around ‘switching off’.

Workers in Great Britain will find it difficult if colleagues in Northern Ireland are switching off when a bit more connectivity is expected from them. Employers with operations across the UK will need to think through how to comply with the Northern Ireland code in a way that is sensitive to workers in the rest of the UK.

Minimum wage

The Department for the Economy also has ambitions to secure a devolved right to set a minimum wage for Northern Ireland. Currently, the same rate across the UK is set by the UK parliament and there are no plans by the UK government to relinquish control of this power to the devolved nations. That would be a major development. Otherwise, proposals under this theme are largely designed to bring Northern Ireland into line with the position that applies, or will apply, in the rest of the UK.

Holiday pay

The most notable change planned under this theme is to the holiday pay reference period, where workers do not receive fixed pay, from 12 weeks to 52 weeks. This was implemented in the rest of the UK in April 2020, and since then employers with workforces in both Britain and Northern Ireland have had to implement two different calculation methods. This alignment will represent a welcome simplification to payrolls operating across the UK.

Record keeping

As one aspect of holiday pay divergence with the rest of the UK closes another will, however, open. Employers in Great Britain will have enhanced record keeping obligations in relation to holidays under the ERB. Employers with employees across the UK are likely to adhere to the more stringent ERB provisions in Northern Ireland rather than operate two systems.

Allocation of tips

From 1 October 2024, new British legislation and a statutory code of practice came into force to ensure tips go to workers in full. That new framework prohibits deductions from tips and requires a written policy on tip distribution. The Department for the Economy is proposing to introduce similar legislation, though it is unclear how closely the detail will align with the rest of the UK. The ERB will also make it mandatory for employers to consult with their staff in deciding how tips are distributed.

Payslips

A British change implemented in April 2019, that requires employers to provide payslips to all workers and show hours on payslips where the pay varies by the amount of time worked, will also be replicated in Northern Ireland.

Employers in Northern Ireland should note that although the UK government’s ERB generally doesn’t apply to Northern Ireland, provisions on statutory sick pay (SSP) will apply to the whole of the UK. The ERB will remove the three-day waiting period for SSP and the requirement for an employee to earn the lower earnings limit (LEL), £125 per week, to be eligible for SSP. To ensure the new system provides a fair earnings replacement, employees will receive 80% of their average weekly earnings or the flat rate (£118.75 per week), whichever is lower.

Voice and representation

The plans outlined under this theme focus on the reform of industrial relations as well as TUPE reform.

Industrial relations

Proposals for Northern Ireland are a mixture of alignment and slight divergence with the rest of the UK, which mean employers with industrial action strategies across the differing jurisdictions will need to continue to be alert to differences.

In line with the ERB, a right for trade unions to request access to the workforce, including digital access, will be introduced in Northern Ireland. The detail of this right has been considerably fleshed out in the ERB but how closely the Northern Ireland bill mirrors the ERB is not yet clear.

The Department for the Economy will facilitate statutory recognition requests by reducing, from 21 to 10 employees, the current threshold size of workforce before recognition can be sought. This is not mirrored in the ERB, which facilitates union recognition in other ways. For example, the threshold for statutory recognition of applications to the Central Arbitration Committee, currently requiring 10% of the bargaining unit to be union members, may be reduced as low as 2%.

The ERB will reduce the notice unions need to give employers of industrial action from 14 days to 10 days. There is already a shorter period of seven days in Northern Ireland and the Department for the Economy will not shorten it to five days as had been contemplated in its consultation. Its approach is in line with the position in Ireland. However, the legal mandate period for industrial action will be extended for Britain, but not Northern Ireland, from six to 12 months. The 12-week limit on the protection against dismissal for employees taking part in industrial action will be abolished. This goes further than the proposals in Britain, where protection is set to be extended for the duration of industrial action.

The ERB also simplifies aspects of balloting notices by reducing information requirements. Northern Ireland will likewise introduce “reasonable changes” to the administration of the balloting process, but the detail around this is awaited. E-balloting will be introduced across the UK, but implementation in Northern Ireland could yet differ from the rest of the UK.

The Department for the Economy has proposed to introduce a code of practice to establish an agreed set of principles and expected behaviours on which employer representatives and trade union officials can establish and build a productive working relationship. There is no equivalent code in place in Britain, though the Department’s proposals are reflective of a similar code in New Zealand.

The UK government’s ERB has a whole suite of further industrial relations changes that will not be replicated in Northern Ireland. For example, sweetheart deals, i.e. recognition agreements with non-independent unions, will not stop a recognition process. New rights and protections for trade union reps to undertake their work, extensions to the laws around unfair practices, repeal of the 50% industrial action ballot turnout threshold, and strengthening of protections and facilities for trade union representatives, are further examples of where there will be divergence.

The Northern Ireland bill will reform information and consultation of employees (ICE) mechanisms that do not involve trade unions. It will replicate an April 2020 change made to the British position which reduced the threshold required for a request to set up ICE arrangements to 2% of employees in the undertaking, but this will be subject to a lower minimum threshold of 10 employees instead of the minimum threshold of 15 employees that still applies in Britain. The Northern Ireland bill will also make requesting an ICE agreement easier than in Britain, by changing the definition of an undertaking to ensure that the right to request an agreement will apply to smaller establishments and satellite offices within larger organisations.

TUPE

In Britain, the law was changed in 2014 to allow employers to inform and consult directly with their employees about employee transfers between undertakings if they had fewer than 10 employees. From 1 July 2024, this position was expanded to cover employers with fewer than 50 employees or employers of any size if they are transferring more than 10 employees.

Other than information and consultation requirements, TUPE legislation in Britain differs in several ways to the position in Northern Ireland. For example, the following British provisions do not apply in Northern Ireland:

• collective redundancy processes may start before the transfer date;
• changes in the location of a workplace may be an economic, technical or organisational reason entailing a change in the workforce – this avoids an automatic unfair dismissal claim under TUPE;
• flexibility around changing terms and conditions;
• employee liability information to be delivered 28 days before the transfer date – instead of 14 days as in Northern Ireland.

Employers in Northern Ireland may have hoped that the new bill would open the possibility of closer alignment with the UK on these issues. However, the Department for the Economy has confirmed that it does not intend to make any changes to the TUPE at this time and will await the outcome of further TUPE consultation planned in Britain.

Work-life balance

Proposals falling under this theme are largely aimed at bringing the law in Northern Ireland into line with changes implemented or pending in the rest of the UK.

Flexible working

In April, changes were made to British flexible working legislation. Most of these changes will now be replicated in Northern Ireland. Those changes include:

• removing the current 26-week qualifying period before a flexible working request can be made, thereby making this a ‘day one’ right available to both new and existing employees;
• allowing an employee to make two statutory requests in any 12-month period rather than one request; and
• removing the requirement that the employee must explain what effect the change would have on the employer and how that might be dealt with.

The ERB will require employers that reject a request to explain why their decision is reasonable. This will be replicated in Northern Ireland. However, divergence will remain in the timescales within which flexible working requests needs to be considered – Northern Ireland will retain a shorter and more prescriptive timeframe than Britain in this respect.

Family-related leave

In April, a right to one week’s unpaid carers’ leave was introduced in Britain. The Department for the Economy will replicate this in Northern Ireland but plans to lobby the UK government to support the costs of introducing a paid entitlement. The UK government’s ‘new deal’ also commits it to examining the introduction of paid carers’ leave.

In April 2025, a ‘day one’ right to 12 weeks’ neonatal pay and leave was introduced in Britain and this will also be replicated in Northern Ireland.

Northern Ireland will also replicate changes made in Britain in April 2025 that enhanced existing maternity-related redundancy protection. This gave women a preferential right to any suitable available vacancy while pregnant and for up to 18 months after the birth.

Further new protections around adoption leave and shared parental leave redundancy were introduced in Britain too. The UK government’s planned ERB will go even further and strengthen protections for new mothers by making it unlawful to dismiss a woman who has had a baby for six months after her return to work. The Department for the Economy will align the position in Northern Ireland to this extension too.

British paternity leave rules were also changed in April 2025 to allow fathers and partners to claim their entitlement in non-consecutive blocks at any point in the first year after the birth or adoption of their child. The Department for the Economy wants to replicate this but will also make paternity leave a ‘day one’ right in Northern Ireland which will mirror the new position in Britain under the ERB – currently, the employee needs to have been continuously employed for at least 26 weeks before they can start qualifying for paternity leave rights.

Under the ERB, further changes – the creation of a ‘day one’ right to unpaid bereavement leave for all workers; making unpaid parental leave a ‘day one’ right; and a new right to miscarriage leave – will be introduced. These rights will not be replicated in Northern Ireland.

What’s not included for Northern Ireland?

One of the most significant and newsworthy proposals in the ERB – the introduction of a ‘day one’ right to unfair dismissal – will not be introduced in Northern Ireland. Neither is there any sign that Northern Ireland will follow the British proposals to increase time limits for bringing most employment tribunal claims from three months to six months. Enforcement of employment rights will further diverge: in Britain, a new Fair Work Agency will be able to take tribunal action on behalf of workers and legal aid will be reintroduced for workers wanting to bring tribunal claims.

Very significant changes to equality laws are also being proposed for the rest of the UK. The ERB will introduce an obligation on employers to not permit the harassment of their employees by third-parties – it will cover sexual harassment and harassment on the grounds of all protected characteristics. The UK will further particularise an enhanced requirement to take “all reasonable steps” to prevent sexual harassment.

Major changes to collective redundancy rules are being implemented for Britain in the ERB. Collective consultation will be required if a fixed number of dismissals are proposed across more than one site or establishment, and protective awards limits will increase from 90 days’ actual pay to 180 days’ actual pay. This is a major dis-alignment of restructuring rules across the UK, as Northern Ireland has announced no plans to follow suit.

Next steps

Many of the changes outlined will require primary legislation and cross-party support in Northern Ireland. The Department of Economy has indicated that it expects the draft ‘Good Jobs’ Employment Rights Bill to be put before the Northern Ireland Assembly by January 2026, with the aim of it passing before the end of the current mandate in early 2027.

Some of the changes which only require secondary legislation, such as the reduction of the threshold for trade union recognition, may be passed much quicker, but it is likely to be some time before employers see the details of many of these proposals.

Once passed, it is likely that whilst some changes might be immediate, many will have a transition period, with time for employers to adjust their practices accordingly.

Co-written by Gemma Herbertson of Pinsent Masons.