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The Employment Rights Bill is almost here: What it means for employers

The long-awaited Employment Rights Bill is now entering its final stages within Parliament and so it is important that employers consider the impact of this legislation on their organisation.

The Bill was first introduced in Parliament on 10 October 2024 and has since gone through several readings and amendments in the Commons and Lords.

It is expected to receive royal assent in late September or October, depending on the Parliamentary calendar.

From that point onwards, we should have a clearer idea of when and how the various parts of the new legislation will be introduced, but there are steps that employers can consider now.

What will change under the Employment Rights Bill

The Employment Rights Bill brings some of the most significant workplace reforms in recent history with wide-ranging implications for employers and employees alike.

Here is a summary of the key changes being introduced:

Removal of the two-year qualifying period for unfair dismissal claims: These protections will become a day-one right, with a statutory probationary period, expected to be around nine months, providing a lighter-touch dismissal process.
In response to this change, you will need to ensure that the statutory probation terms are included within contracts and that managers are trained to adapt to this amendment.

Harassment at work: Employers will have to take all reasonable steps to prevent sexual harassment, not just “reasonable” ones and protections will extend to whistleblowers and third-party harassment. Confidentiality clauses preventing employees from discussing discrimination or harassment will also be banned.Employers need to take active steps to not only update their policies and contracts to reflect these changes but also conduct regular risk assessments to ensure the right steps are being taken to prevent harassment.

Flexible working: Although larger reforms were initially proposed, the default position remains that requests for flexible working can be refused on commercial, however, any refusal must be reasonable and explained. As part of this, employers will have to consult with an employee when rejecting a request.Again, training and updates to existing contracts will be critical to ensuring your business is protected from the risk of tribunal.

Family rights: Paternity and unpaid parental leave will become available from day one and dismissal during pregnancy, parental leave or within six months of return will be unlawful except in a limited set of circumstances. The Bill also introduces a new right to bereavement leave, including pregnancy loss.It is important to update and prepare new process to ensure that your organisation remains compliant, this includes reviewing and amending existing policies and handbooks.

Abolishment of “fire and rehire”: Dismissing staff to impose changes to terms will become “automatically unfair”, except where necessary to preserve the business as a going concern. In the past, some employers have used this method to alter pay, pensions or hours, but this change will expose this practice to the risk of tribunal.Employers will need to carefully build contractual flexibility and may face increased redundancy risk if changes cannot be agreed.

Collective redundancies: A new threshold based on redundancies across the whole entity (not just one site) will make consultation duties more likely to be triggered. Penalties for breaches will double to up to 180 days’ pay per employee, making compliance more critical than ever.Employers facing the potential of collective redundancy in the near future, need to consider how this change may affect their plans.

Equality reporting: Large employers, those with 250 or more employees, will have to publish equality reporting beyond the existing gender pay gap requirements. This includes publishing action plans for menopause support and ethnicity and disability pay gap reporting.Larger employers should begin to consider how they might report this information and put policies in place that assist with this.

Zero-hours and irregular hours workers – Existing rights in this area will be strengthened and workers regularly working above their contracted hours over a 12-week period must be offered a contract reflecting those hours. They will also be entitled to notice of shifts and compensation for last-minute cancellations.Although this isn’t an outright ban on zero-hour contracts, it is intended to give workers more stability in both working hours and income. Employers will need to consider how these changes affect their shift patterns and introduce systems that flag where a contract may need to be offered or compensation paid.

Pay, holiday and sickness rules: Statutory sick pay will become a day-one right without an earnings threshold. The National Minimum Wage and National Living Wage will merge, applying from age 18, and the Low Pay Commission will factor in cost of living. Employers will also have to keep detailed holiday pay records for six years, with criminal penalties for failure.

Worried about the impact of Employment Rights Bill on your business?

Throughout the life of the Bill there has been significant unease and criticism from British industry about the proposals put forward, due to the additional costs and administrative burdens that it will bring.

Whilst some of these concerns have been feedback into the amended Bill, there remains significant change ahead.

If you would like support preparing for and adapting to this landmark change in employment legislation, please get in touch.

Amanda Hyam

Head of Dispute Resolution and Employment

I have specialised in Dispute Resolution, Civil Litigation and Employment law for more than 15 years. I understand how daunting the prospect of litigation can be and because of this I am always available to discuss concerns.