The Employment Rights Bill: Key Changes Recap
The Employment Rights Bill has now completed its passage through the House of Commons and had its second reading in the House of Lords on 27 March. It is likely to become law this summer, but there will be a phased approach to implementing its changes throughout 2025 and 2026.
The Bill is set to be the biggest shake-up in employment law in a generation. Originally outlining 28 key changes across 158 pages of legislation, there have been over 200 amendments since it was first published back in October, and it now stands at 310 pages.
Here’s a recap on what is changing and the new reforms that have been added:
Unfair dismissal
The Bill will abolish the service requirement for unfair dismissal, making the right to claim unfair dismissal a day-one right of employment. Employers will still be able to use probationary periods, but these will be limited to a period that has yet to be decided (the government is said to favour a nine-month cap).
It’s expected that the requirements around a safe dismissal will be relaxed to some extent if the notice to dismiss is given within the probationary period. However, employers will still need to have a fair reason to dismiss and follow a fair process (the requirements for this have still to be decided).
Statutory Sick Pay (SSP)
The Bill removes the three-day waiting period, making SSP payable from the first day of sickness absence.
It also abolishes the requirement that earnings should be above the Lower Earnings Limit, meaning that all eligible employees will be entitled to SSP, regardless of their earnings. Where the employee is a low earner, they will be entitled to 80% of their average weekly pay or SSP, whichever is the lower.
Zero-hours contracts
There are three important changes for zero-hours contracts. As part of the amendments to the Bill, these measures will now also apply to agency workers.
Right to guaranteed hours
The Bill introduces a new duty on employers to offer a “guaranteed hours” contract to workers once they’ve undertaken a certain number/pattern of hours in a “relevant period”. We still don’t know what this number/pattern of hours will be or the length of the “relevant period” (although it is rumoured that this will be 12 weeks).
This right will apply to people who are working under either a zero-hours contract or a contract with fewer weekly working hours than the specified maximum (which is still to be decided). Where the worker is an agency worker, it will be the responsibility of the hirer to offer the contract.
Right to reasonable notice of shifts
The Bill introduces a duty on employers to give reasonable notice of a shift (including the number of hours/day/time) if the worker is under either a zero-hours contract or variable hours contract, and the shift hours fall outside any usual or potential pattern of working hours set out in the contract. It has still to be decided how long “reasonable notice” will be, but we know it will not be more than seven days.
Where the worker is an agency worker, it will be the joint responsibility of the hirer and agency to give the notice, and it will be a matter for the parties to agree how this will be done.
Right to reasonable notice for cancelled, moved or shortened shifts
The Bill also introduces a right to reasonable notice of cancelled, moved or shortened agreed qualifying shifts. The same (currently unknown) definition of “reasonable notice” will apply here. Where reasonable notice is not given, there will be a right to compensation (it has not been decided how this will be calculated).
Where the worker is an agency worker, the obligation to pay compensation will fall on the agency, although they can include recoupment provisions in their contractual arrangements with the hirer.
Flexible working
The Bill doesn’t change the existing grounds on which an employer can refuse flexible working requests, but it amends the Employment Rights Act 1996 to say that an employer can only refuse a request if:
- They believe the application should be refused on one or more of the existing grounds; and
- It’s reasonable for them to do so.
It also introduces a requirement that, if an employer does refuse a request, they must state the grounds for refusing the application and explain why they consider it’s reasonable to refuse the application on that or those grounds.
The government is expected to introduce separate regulations to specify the steps employers need to follow to comply with the existing requirement to consult with an employee before refusing a request.
Fire and rehire
Employers sometimes need to implement changes to employees’ terms and conditions due to business needs, but employees may refuse to agree. When this happens, employers might try to force the change by dismissing under the original contract and re-engaging on new terms, a process known as “fire and rehire”. This option can be risky for employers.
A new Statutory Code on Dismissal and Engagement came into force in July 2024, aiming to limit the use of this practice and set standards for the process. The Bill goes further, making it automatically unfair to dismiss an employee and re-engage them (or employ another person) on varied contractual terms to carry out substantially the same duties unless it can be shown that:
- The reason for the change was to avoid or reduce the effect of financial difficulties that were imminently threatening the employer’s ability to continue trading; and
- There was no reasonable alternative to implementing the change.
These changes will make it much harder for businesses to justify forcing through such changes, making it a higher-risk option.
Harassment
The Bill builds upon the increased obligations introduced in last year’s Worker Protection Act by:
- Changing the duty on employers to take “reasonable steps” to prevent sexual harassment to a requirement to take “all reasonable steps”, thereby increasing the employer’s responsibility.
- Extending the current rules to include harassment by third parties for all types of harassment.
Dismissal during pregnancy and following family leave
The Bill paves the way for the Secretary of State to extend the protection pregnant employees currently have against redundancy to other forms of dismissal. It’s believed that new regulations will make it unlawful to dismiss employees who are pregnant, on maternity leave or have returned from maternity leave within the last six months, except under specific circumstances.
Changes to family leave entitlement
The Bill introduces the following changes to family-friendly rights:
- Parental Leave: Currently available to employees with one year of service, this will now be a day-one right.
- Paternity Leave: This will also become a day-one right and can be taken after Shared Parental Leave.
- Parental Bereavement Leave: Extends the right to cover miscarriages under 24 weeks.
- Bereavement Leave: Extends eligibility beyond parents to others, with details to follow.
Collective consultation on redundancy
The potential penalty for failing to meet collective consultation obligations will rise from 90 to 180 days’ pay per affected employee.
Fair Work Agency
The Bill establishes the Fair Work Agency, which brings all labour market enforcement under one umbrella. Its powers include issuing underpayment notices, taking tribunal proceedings on behalf of workers, and recovering costs from non-compliant employers.
New negotiating bodies
The Bill will create:
- Adult Social Care Negotiating Body for overseeing terms for social care workers in England and Wales.
- School Support Staff Negotiating Body to regulate pay and terms for school support staff in England.
Trade unions and umbrella companies
The Bill introduces broad reforms to trade union law and the operation of umbrella companies.
Clients with our HR & Employment Law service will receive regular updates on the Bill’s progress and its practical implications, and we’ll make sure all your documentation is updated as necessary when the time comes.
