The Employment Rights Bill: Key Updates and Takeaways

Background

The Employment Rights Bill has been progressing through Parliament quickly as it formed a key part of the Government’s manifesto commitments. Angela Rayner was the primary catalyst for the enactment of the Bill, so her resignation from her positions in office has cast some doubt on whether the Bill will live up to the manifesto promises. Keir Starmer has been quick to reassure in his response to Angela Rayner’s resignation letter that he will “continue to fight for the causes you care so passionately about”. In this letter the Prime Minister continued to show support for the Bill as it “represents a very significant achievement that will change the lives of millions of people”.

Currently, the Bill awaits final consideration by Parliament on the 28th October 2025, and it is anticipated that it will receive Royal Assent in early November 2025. Although this expected deadline seems to be fast approaching, the provisions within the Bill will not all become law immediately. Secondary legislation, via regulations, will be required to bring many areas of the Employment Rights Bill into force, meaning that there will be a staggered implementation of the changes to employment law and practices.

Key Changes in Employment Law

Unfair Dismissal and Tribunal Time Limits

Amongst one of the most significant of changes to employment law is the right to claim unfair dismissal at an employment tribunal becoming a day one right. At present, employees must have a 2-year long length of service to at the least qualify for unfair dismissal protections. Historically, 6 months is the shortest length this qualifying period has been as introduced by the labour government in 1974. In 1985 the Conservative Government raised this to two years. This was then reduced by the Labour Government in 1999 to one year. This was brought back up to 2 years by the Coalition Government in 2012. This back and forth illustrates a general disagreement among political parties regarding what this length of time should be. Once the Employment Rights Bill does become law, the Labour government confirmed in their implementation roadmap that this change will not take effect until 2027.

Unfair dismissal as a day one right is a particularly notable change, which opens the doors to a possibility of a heightened number of unfair dismissals claims. To combat this, there will be an initial period of employment (which will essentially be a statutory probationary period) which will be an initial period of employment where employers may be able to follow a more simplified process for dismissals for capability and conduct. We are awaiting more detail around what this process may look like, and how long this period may last. It is expected however, that this will be around 9 months.

Further, the ERB has sought to extend the current 3-month time limit to bring an employment tribunal claim to 6 months. The tribunal system already faces delays, and funding cuts. Combining this with the fact the government has estimated that 9 million employees will be entitled to bring claims for unfair dismissal under the new rules (per Angela Rayner, HC debate, Oct 2024), this raises concerns about whether the tribunal system is adequately staffed and funded to respond to this caseload. The changes to employment tribunal time limits are expected to take effect from October 2026.

Statutory Sick Pay

Currently, statutory sick pay is payable to employees from day four of sickness provided they earn above the weekly lower earnings limit of £123. The Employment Rights Bill seeks to make statutory sick pay payable from day one and to remove the lower earnings limit, ensuring accessibility of some level of SSP to all employees regardless of income.

Although this provision is founded on good faith seeking to make statutory sick pay accessible to all employees when they are unwell, regardless of income, it overlooks the fact that it may encourage absences from work for minor ailments. Employers will have to ensure that they prepare by budgeting for increased SSP costs, review policies and procedures, and ensure management is adequately trained on managing absences.

Trade Unions and the Right to Strike

There are plans to consult imminently on a “package of trade union measures” including electronic balloting and workplace balloting; simplifying trade union recognition processes; duty to inform workers of their right to join a trade union; and, right of access. In addition, new rights and protections for trade union representatives will be covered by an ACAS Code of Practice consultation. It is undoubtable that the Employment Rights Bill is a funnel to strengthen the position of trade unions in workplaces. It is therefore key that organisations are aware of these proposed changes, and prepare for more trade union activity going forward.

Fire and Rehire Practices

Due to commercial and economic reasons, many employers and organisations to date have used dismissal and re-engagement (otherwise known as fire and rehire) in order to effect change within their organisation. However, the ERB will severely restrict employers’ ability to use this practice to change employee terms and conditions. If an employer was to attempt to make changes to certain terms and conditions by using fire and rehire when these specific provisions contained in the ERB come  into force, the employer can expect to face an automatically unfair dismissal claim which can be costly. The only exception to this will be where an employer faces serious financial difficulties affecting their ability to continue with business. It is anticipated that these provisions will come into effect in October 2026.

0-hour Contracts and Agency Workers

The ERB will strengthen the position of agency workers and those on 0-hour contracts by introducing a duty on employers to offer guaranteed hours contracts, providing reasonable notice of shifts, and the obligation to pay compensation for cancelled, moved or curtailed shifts. The motivation behind this is because the government see 0 hour contracts are seen as “exploitative” of workers; however, there are many examples of how this flexibility is welcome for many groups of workers. It is also unclear how seasonal workers will fit with the requirement to offer guaranteed hours contracts.  There will be extensive consultation on these provisions, with the substantive changes not taking effect until 2027.

Consequence for Individuals

The ERB is certainly drafted with workers at the forefront as it embodies an expansion of rights and widens the ability to bring a tribunal claim. Through the ERB, many workers will be able to feel more secure in their employment and benefit from added protections. However, for some groups the provisions in the ERB are a threat to flexibility and will limit access to employment in the first place, as many employers may become more risk averse and reconsider their recruitment strategies.

Consequences for Employers and Organisations

For all employers - no matter the size - the Employment Rights Bill represents a significant change to employment practices from recruitment to dismissal. While the ERB seeks to provide employees with more rights, freedom, and flexibility this undoubtedly imposes more obligations and duties on employers to abide by. It is important, now more than ever, that employers are aware of the legal position so that they can adequately manage risks. Policies will need to be amended or put in place to cover the changes introduced in the ERB.

Conclusion

This article has explored the background of the Employment Rights Bill and some key reforms to employment law. Many lawyers, academics, HR professionals, and employers wait in anticipation of the enactment of the ERB as it will increase job security, and worker rights but also has the potential to stretch the tribunal system beyond its limits. There are significant consultations planned on the key changes to employment law, which will help to shape the nature of these changes going forward. We shall need to await for the outcomes of these consultations to understand the full impact of the ERB on organisations.