The Employment Rights Bill: What Employers Need to Know
Labour has officially introduced its highly anticipated Employment Rights Bill, fulfilling its pledge to reform UK employment law within 100 days of taking office—though just barely, releasing the bill on day 98. While many predicted bold, sweeping reforms, the final draft reveals a more balanced and phased approach. For employers, this means significant change is coming—but not all at once.
Below, we break down the core proposals, what they mean in practice, and what steps employers should be considering now.
Key Provisions of the Employment Rights Bill
1. Unfair Dismissal: From Day One, But With Caveats
The headline grabber is the promise of day-one unfair dismissal rights. However, these rights come with an “initial period” (likely 9 months), during which a lighter-touch dismissal process will apply for performance, misconduct, capability, or other substantial reasons. The actual details are still subject to consultation and won’t take effect until at least Autumn 2026.
What this means for employers:
No immediate action needed.
Continue using current two-year qualifying period.
Don’t rush to amend probationary policies until more guidance is published.
2. Enhanced Sexual Harassment Protections
Employers will now be required to take all reasonable steps—not just “reasonable steps”—to prevent workplace sexual harassment. Critically, liability will extend to harassment from third parties on any protected ground, not just sex.
Action point:
Review and bolster existing training and harassment policies.
Ensure third-party conduct (e.g., clients, customers, contractors) is addressed in risk assessments and training.
3. Significant Union and Collective Rights Reform
Labour’s bill strengthens trade union recognition processes, reinstates rights curtailed by previous governments, and simplifies industrial action procedures. Electronic balloting is on the horizon. Employers must also inform staff of their right to join a union.
The bill also removes the “at one establishment” clause in collective redundancy triggers, meaning redundancy consultations must now be counted across all sites.
Employer tip:
Track redundancy proposals group-wide.
Ensure your teams are prepared for more engagement with trade unions.
5. Zero-Hours and Low-Hours Contracts Reform
While zero-hours contracts aren’t banned outright, employers will be required to offer guaranteed hours to regular workers after a reference period (possibly 12 weeks). The requirement applies even if the worker doesn’t want guaranteed hours.
There’s also a new duty to provide reasonable notice of shifts and cancellations—details to be defined in forthcoming regulations.
6. Flexible Working: A Stronger Test
Refusals to flexible working requests will need to be “reasonable,” although existing grounds for refusal remain unchanged. While the legal cap on compensation is still modest, expect more disputes.
7. Gender Pay Gap Action Plans
Employers will need to:
Publish plans to close their gender pay gaps.
List the providers of contract workers used in the business.
While contract workers won’t need to be included in pay gap calculations, this could expose issues in outsourced arrangements.
8. Day-One Family Rights and Sick Pay
Paternity and parental leave will become day-one rights. Statutory Sick Pay (SSP) will also be payable from the first day of sickness, with the lower earnings threshold removed. These reforms are likely to be implemented sooner than others.
9. Fair Work Agency Created
A new enforcement body—the Fair Work Agency—will consolidate several existing regulatory bodies and oversee compliance with minimum wage and holiday pay. Over time, its remit could grow, signaling a move toward more proactive state enforcement of employment rights.
Employer Q&A: What You Need to Know Now
Q: Do I need to change employment contracts now?
A: No. Most changes are not due until 2026. Wait for further consultation outcomes before making contractual adjustments.
Q: Should we shorten or extend probation periods?
A: There’s no need to change your current probation period policies at this time. The proposed “light-touch” dismissal process during the initial period may influence future practices, but details are still evolving.
Q: Are we liable for harassment by a customer or third party?
A: Soon, yes. If you don’t take all reasonable steps to prevent third-party harassment, you could be liable under the new Bill. Update training and policies now to prepare.
Q: Will the right to request flexible working change significantly?
A: The core business reasons for refusal remain, but the new requirement to act “reasonably” could increase tribunal challenges. Be ready to justify your decisions more thoroughly.
Q: When do the changes come into force?
A: Most reforms will be delayed until at least 2026 following further consultation. However, some changes—such as SSP and union-related reforms—could come into effect sooner.
Final Thoughts: A Time of Transition
The Employment Rights Bill marks a generational shift in employment law, with a clear tilt toward greater worker protections—particularly for those in casual, insecure, or low-paid roles. For employers, it represents a new era of compliance, transparency, and accountability.
But while the direction of travel is clear, the timetable is not. Much of the detail will be subject to consultation throughout 2025, giving employers time to prepare.
Our advice?
Stay informed. Update policies gradually. And don’t hesitate to seek legal advice before the reforms hit the statute books.
If you’d like to discuss how the Employment Rights Bill may impact your business or need help reviewing your contracts and workplace policies, contact our team of employment law specialists today.