Employment Rights Bill – where are we now?

The original ERB proposed to change the law so that there is no qualifying period required for an employee to claim unfair dismissal. It proposed to have a statutory probation period during an initial period of employment (of potentially 9 months) during which an employer can achieve a fair dismissal provided it has a fair reason related to the individual (so not redundancy) and follows a “lighter touch” process than would be required for employees with service exceeding the statutory probation period. The lighter touch process is proposed to consist of a meeting with the employee before dismissal to explain the concerns and a right for the employee to be accompanied to that meeting.

No amendments have yet been suggested to the original ERB proposal but the Government did indicate an intention to consult on:

• Length of the initial period of employment.
• The lighter touch dismissal process during the initial period.
• How the initial period will interact with the ACAS Code.
• Compensation for unfair dismissal during the initial period.

No consultation has yet been launched.

Employers should:

• Start implementing a culture now of meaningful review and appraisal in the first 6-9 months of employment so that the process and evidence is built into your normal way of working.
• Strengthen recruitment processes.
• Always aim to follow some process wherever possible regardless of service – this is good practice already to guard against claims (such as discrimination and whistleblowing) which already do not carry a service requirement.

This is expected to come into force in Autumn 2026.

The original ERB proposed that qualifying zero/low hours workers will have the right to:

• be offered guaranteed hours where they work regular hours over a reference period (suggested to be 12 weeks) (albeit they can refuse);
• reasonable notice of shifts/changes to shifts; and
• a payment each time a work shift is cancelled, moved or curtailed at short notice

The above will be supported by corresponding rights not to be subjected to a detriment and, as regards the rights to guaranteed hours, not to be unfairly dismissed

This was subject to amends by the Government, following consultation, which;

• Extend the right to guaranteed hours, the right to reasonable notice of shifts and the right to compensation for late notice changes to agency workers. The obligation to offer guaranteed hours sits with the end-hirer, the liability for reasonable notice of shifts is on both the employment agency and the end-hirer, and the responsibility for payment of late notice changes rests with the agency (although this can be dealt with under a commercial agreement between the end-hirer and the agency).
• Permit contracting out of the right to guaranteed hours and reasonable notice of shifts, for both workers and agency workers, under a collective agreement.

Broader consultation is expected in the coming months. A number of key provisions – such as the length of the reference period, exceptions to the right, potential conditions for qualification relating to regularity of hours, and what constitutes a “low-hours contract” – remain to be determined in secondary legislation.

Employers should:

• Ensure you have a good grasp on which parts of your business currently rely on zero hours/low hours workers or agency workers.
• Consider whether you may be able to meet the workload demand in a way which does not rely on zero or very low hour contracts with workers or agency workers.
• Consider whether your resource planning tools will be sufficient if you plan to continue to utilise zero/low hours workers and how this will be monitored/staffed in practice.

This is expected to come into force in 2026.

What the Government means by “fire and rehire” is where an employer effectively forces new (and often worse) contractual terms on employees where they cannot be agreed by dismissing them on notice and offering immediate re-engagement on the new terms that the employer wants.

Currently, fire and rehire does remain a lawful way to change contractual terms where you have a sound business reason and where you have first engaged meaningfully in consultation seeking to reach agreement in other ways.

The original ERB proposed to effectively make fire and rehire unlawful (except in response to financial difficulties affecting the employer’s ability to carry on the business as a going concern) by making any dismissal automatically unfair where:

• the reason for dismissal is that the employee did not agree to the employer’s attempt to vary their terms and conditions of employment; or
• because the employer intended to employ another person on varied terms to carry out substantially the same role.

In addition, the Government proposed to lift the cap of 90 days’ pay on protective awards for a failure to informal and consult in relation to collective redundancy in the context of fire and rehire exercises. The Government has confirmed this will be increased to 180 days’ pay (but they will not make interim relief an available remedy as originally proposed).

Employers should:

• Consider whether any contractual changes are required and could be achieved in accordance with the ACAS Code before this change in the law comes into effect.

This is expected to come into force in 2026.

Currently, employers proposing 20 or more redundancies “at one establishment” within a period of 90 days must go through a collective consultation process before making any redundancies. If employers don’t comply, employees can claim a protective award of up to 90 days’ pay.

The original ERB proposed to remove the words “at one establishment” so that collective redundancy consultation would be required whenever an employer proposed 20 or more redundancies across the whole company within a period of 90 days regardless of location.

Following consultation, the Government proposed amendments to the ERB which:

• Keeps the old “establishment” based threshold but adds an additional alternative threshold test (that doesn’t cover “establishment”), so that employers will need to collectively consult where they either propose 20 or more redundancies at one establishment (as per the current law) or meet the other threshold test which will relate to employee percentage or numbers across the whole business.
• The new threshold will be defined in regulations and is likely to involve a number between 20 and 100 and/or be a % test across the employing entity as a whole.
• Increases the maximum protective award for a failure to collectively consult to 180 days’ pay from 90 (but a previous proposal to introduce an uncapped award and interim relief has been dropped).
• States that the employer does not need to consult all employee representatives together or try to reach the same agreement with all of the representatives when carrying out collective consultation across different establishments – addressing concerns raised about the Bill otherwise requiring representatives to be physically brought together as a central group over batches of unconnected local redundancies.

Employers should:

• Keep accurate records of any redundancies made and proposed across the business as a whole (to ensure employers can correctly identify when the threshold is triggered.
• Consider having a standing body of representatives for collective consultation purposes.
• Consider whether any contractual changes are required and could be achieved in accordance with the ACAS Code before this change in the law comes into effect.

This is expected to come into force in 2026.

The original ERB contained a whole host of changes designed to make it simpler for trade unions to access the workplace, obtain statutory recognition and go on strike when there is a dispute.

In particular it proposed to:

• Lower hurdles for statutory union recognition
• Give Trade Unions a right of access to workplaces
• Require employers to give a written statement to workers about their right to join a Trade Union.
• Provide extra protection for TU reps and members
• Repeal Minimum Service Levels and Trade Union Act legislation.
• Allow electronic balloting for industrial action

After consultation, the Government confirmed a number of measures including that it will:

• Streamline the Trade Union recognition process by implementing the measures proposed originally, including keeping the lower threshold for recognition by requiring a union to simply show that 10% of a proposed bargaining unit are union members (with no need for majority support). The Government had been consulting on lowering the support threshold to 2% but the proposed amendment will not state a figure and will simply give the Secretary of State the power to lower the 10% threshold.
• Make the Trade Union right of access to the workplace a digital, as well as a physical, one.
• Require Trade Unions to provide a 10 day notice period for strikes/industrial action (currently 14 days).
• Allow Trade Unions to utilise e-balloting.
• Extend strike mandate expiry from 6 to 12 months.

Employers should:

• Seek to ensure you have sufficient engagement mechanisms in place with staff.

There are different dates for aspects to come into force, but they are largely expected in 2026.

National Minimum/Living Wage is not dealt with under the ERB but the Government has made it clear that it wants to move towards one adult rate “taking steps year by year to reduce the gap between the 18-20 rate and the NLW rate”.

Employers should:

• Budget for minimum wage rises to increase faster for younger workers (18-20) in addition to the annual increases in National Living Wage each April.

The original ERB proposed to:

• Remove the waiting period of 3 days before sick pay kicks in, so that SSP is payable from the first day of absence.
• Remove the Lower Earnings Limit (which is currently £123 per week) to make SSP available to lower income workers.

After consultation, the Government has proposed to make SSP payable for those below the lower earnings limit at a rate of 80% of normal weekly earnings.

Employers should:

• Factor increased statutory sick pay costs into budgets.
• Refresh and retrain on absence management processes in order to seek to deter malingering and/or increasing absence levels.

The ERB proposed to:

• Make flexible working the default position unless employers have “reasonable” grounds for refusal (although the 8 business reasons for refusal will not change).
• Require an employer to state the grounds for refusal and explain why it is reasonable to refuse the request on those grounds in a decision letter.

Employers should:

• Already action flexible working requests quickly and give meaningful consideration to them, setting out detailed reasons for any refusal (not just stating the business reasons for refusal).
• Be ready to review policies.

This is expected to come into force in 2026.

The ERB proposed to strengthen the existing proactive duty for employers to take reasonable steps to prevent sexual harassment of employees and workers in the course of employment by:

• Requiring employers to proactively take “all reasonable steps” not just “reasonable steps” to prevent sexual harassment in the workplace (with provision for the Government to set out in regulations what amounts to “reasonable steps”).
• Making employers liable for harassment (of any kind, not just sexual) by third parties unless they took all reasonable steps to prevent this.
• Making disclosure of sexual harassment a qualifying disclosure for whistleblowing.

Employers should:

• Ensure that they are already complying with the 8 steps recommended by the EHRC to prevent sexual harassment.

This is expected to come into force in 2026.

At present, in redundancy situations, women who are pregnant, on maternity/adoption/shared parental leave or have recently returned from such leave (up to 18 months after birth/placement) have priority right to be offered a suitable alternative vacancy (where one is available) before being made redundant.

The ERB proposed to give the Government power to introduce regulations to give enhanced protection from dismissal (i.e. for any reason, not just redundancy) during pregnancy or during or following return from maternity/adoption/shared parental/neonatal care/extended bereaved parent paternity leave, adoption leave and shared parental leave, neonatal care leave and bereaved partner’s paternity leave. The ERB does not specify how long the protection will apply for following return from family leave, but explanatory notes suggest that this will be for 6 months.

We need the detail that will be set out in regulations to be sure, but it appears that the intention is to restrict the circumstances in which an employer can dismiss a pregnant employer or someone on/recently returned from family statutory leave by making it unlawful, subject to some exceptions. We don’t know what those exceptions might be, but this may include gross misconduct, illegality or redundancy (where there is no suitable alternative role). A consultation is anticipated in relation to this proposal.

Employers should:

• Make sure that you have good records for exact dates for family-related leave and that these are kept up to date.
• Already consider priority rights for those on/recently returned from family leave when planning/executing restructures/redundancies – and be sure to be across these changes when advance planning.

This is expected to come into force in 2026.

The ERB proposed to make:

• Paternity leave a day one right and enable paternity leave to be taken after shared parental leave.
• Parental leave a day one right.
• Unpaid bereavement leave a day one right and extend parental bereavement leave to employees who lose a pregnancy before 24 weeks.

In addition, the Government referenced outside of the ERB an intention to introduce paid carer’s leave.

Employers should:

• Keep up to date on the proposals and be ready to update policies and consider any impact on contractual enhancements.

This is expected to come into force in 2026.

Most claims have a 3 month limitation period (meaning in practice employees need to initiate ACAS Early Conciliation within 3 months of the act relied upon).

The original ERB contains no reference to limitation but it has been amended to extend time limits to 6 months for all claims (except breach of contract).

Employers should:

• Keep up to date on these proposals and factor in longer uncertainty after an issue has been dealt with or an employee has left.

At present, the majority of employment rights are enforced by individuals bringing a claim to an employment tribunal. Some limited rights (e.g. in respect of NMW, SSP and agency workers) are enforced by the state on behalf of workers but via a fragmented group of bodies. The Government thinks this is confusing and means many breaches/underpayments (especially for lower paid workers) go unchallenged.

The ERB creates a new state enforcement agency which is proposed to be called the Fair Work Agency, which will be an Executive Agency of DBT. This is proposed to enforce NMW, holiday pay, SSP, Modern Slavery and Agency worker rights and combine:

• HMRC’s National Minimum Wage Enforcement Team;
• Gangmasters and Labour Abuse Authority;
• Employment Agency Standards Inspectorate; and
• also have remit over the enforcement of holiday pay.

The Government has indicated that it fully intends that the Fair Work Agency would take on enforcement for a wider range of employment rights in time, creating a single place where workers and employers can turn for help. We have seen reference to the potential for the Fair Work Agency to receive whistleblowing concerns.

The Fair Work Agency will have power to:

• Appoint enforcement officers
• Investigate – including by requiring provision of information and entry to business premises
• Require compliance – via Labour Market Enforcement Undertakings (which can be in place for up to 2 years)
• Issue civil penalties
• Order employers to compensate workers
• Issue Labour Market Enforcement Court orders – prohibiting or requiring certain action for businesses who refuse or fail to comply

Employers should:

• Consider undertaking an internal audit to ensure confident compliance in respect of NMW, holiday pay, SSP, Modern Slavery and Agency worker rights.

This is expected to come into force in 2026.

Large private and voluntary sector employers (with 250 or more employees) must report their gender pay gap. Specified public sector employers are also subject to this requirement. Reports are based on a snapshot taken on 5 April each year and must be published within a year of the relevant snapshot date. There is currently no requirement for employers, when publishing their gender pay gap reports, to say anything about what they plan to do to close the gender pay gap – although many publish this voluntarily.

The ERB proposes tweaks to gender pay gap reporting via regulations (yet to be published), including:

1. A new requirement for employers to identify providers/employers of outsourced workers when publishing their gender pay gap reports. Employers won’t need to include outsourced workers in their pay gap calculation. This is an attempt to address a concern/loophole that organisations can show a smaller gender pay gap if they outsource any low paid work which is predominantly carried out by women.
2. An additional requirement to publish “equality action plans” setting out the steps they are taking to ensure gender equality, including closing the gender pay gap and supporting employees going through the menopause. The proposal is for there to be specific penalties for failing to publish an action plan.

Employers should:

• Consider voluntarily publishing an action plan as to how you will close the gender pay gap (if you have to report on your gender pay gap but do not yet publish an action plan).
• Keep an up-to-date list of contract workers which includes key pay information and benchmark this against non-contract worker employees to ensure consistency in pay rates.
• Put a specific menopause policy in place and take other proactive measures e.g. training for managers on how to support employees going through menopause.

This is expected to come into force in 2026.

Outside of the ERB, the Government had proposed to introduce measures through a new Equality (Race and Disability) Bill, including:

• extending pay gap reporting to ethnicity and disability for employers with more than 250 staff and measures on equal pay;
• extending equal pay rights to protect workers suffering discrimination on the basis of race or disability;
• ensuring that outsourcing of services can no longer be used by employers to avoid paying equal pay; and
• implementing a regulatory and enforcement unit for equal pay with involvement from trade unions.

The Government indicated that it would consult on a draft bill but it has instead launched a consultation ahead of publishing a draft bill.

We will keep you updated as the ERB and related consultations progress.