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The Employment Rights Bill: what employers need to know

The long-awaited Employment Rights Bill is moving into its final stages in Parliament, with royal assent expected later this year. The legislation marks one of the most significant shake-ups in workplace law in decades and employers should start preparing now for the changes it will bring.

Key changes for employers

After lengthy debate between the Lords and the Commons, the Bill is set to introduce a wide range of reforms that will affect how businesses manage staff, from recruitment through to dismissal.

Unfair dismissal

The current two-year qualifying period for unfair dismissal will be abolished, making protection a day-one right. A statutory initial period of employment, similar to a probationary period, will apply to allow greater flexibility for dismissals during this stage.

The initial period is expected to last around nine months and a consultation on the detail of the process will begin this autumn. Employers will need to update contracts and train managers to apply these new terms fairly.

Harassment at work

Employers will be required to take all reasonable steps to prevent sexual harassment and new protections will extend to whistleblowers and third-party harassment. Confidentiality clauses restricting employees from discussing harassment or discrimination will be banned.

Policies, contracts and risk assessments must be updated to reflect these rules and care will be needed when drafting settlement agreements.

Flexible working

Employees will continue to have the right to request flexible working, but employers must handle refusals reasonably, explain their decisions and engage in consultation. Training managers and reviewing contract terms will be essential to reduce the risk of tribunal claims.

Family rights

Paternity and unpaid parental leave will become available from day one, although statutory paternity pay will not. Dismissal during pregnancy, parental leave or within six months of returning to work will be unlawful except in specific circumstances, with further regulations due in 2027.

A new right to bereavement leave, broader than the current parental bereavement provisions and covering pregnancy loss, will also be introduced. Employers should review policies and handbooks accordingly.

“Fire and rehire”

The practice of dismissing staff to impose new terms will be deemed automatically unfair, except in cases of genuine financial difficulty that threaten the business’s ability to continue trading. This makes it vital for employers to build flexibility into contracts and consider proposed changes carefully.

Collective redundancies

The threshold for triggering collective consultation will apply across the whole organisation rather than individual sites. Breaches could result in penalties of up to 180 days’ pay per employee, double the current limit. Employers should ensure redundancy plans comply with the new structure.

Equality reporting

Large employers with 250 or more employees will need to publish equality action plans showing how they are promoting gender equality, addressing the gender pay gap and supporting staff going through menopause.

A separate Equality (Race and Disability) Bill is expected to follow, introducing disability and ethnicity pay gap reporting. Employers should begin preparing systems to collect and publish this data.

Zero-hours and irregular workers

Employers will need to offer contracts that reflect the actual hours worked by staff on zero-hours or low-hours arrangements if these exceed contracted hours over a set reference period, expected to be twelve weeks.

Workers will also gain rights to notice of shifts and compensation for cancelled work, although the details of notice periods and compensation rates are still to be confirmed. Employers using irregular contracts will need to adapt their rostering systems.

Statutory Sick Pay

Statutory Sick Pay (SSP) will become available from day one, with no earnings threshold. A new system will be introduced to provide fair earnings replacement for those earning below the current SSP rate.

Preparing your business

The Bill has raised concern among many employers about the cost and complexity of implementing the new rules. While some amendments have softened the proposals, the overall impact will still be significant.

Now is the time for employers to review contracts, update policies and ensure compliance training is in place. Acting early will reduce the risk of breaches once the legislation takes effect.

For tailored advice on how the Employment Rights Bill could affect your business, contact the Employment Law team at Mander Hadley.

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.