Employment Rights Bill update – What employers need to know

As we reported in our previous article, Employment Rights Bill – can employers breathe a collective sigh of relief? | Cripps, the Employment Rights Bill (ERB) is likely to reshape the legal landscape for millions of UK workers and employers.

Following the Bill’s publication last October, it then started a journey through Parliament, resulting in various amendments following consultation. It is now predicted that the Bill may receive Royal Assent before Parliament breaks for its recess in July 2025. This could mean that some elements of the Bill come into force as early as October 2025, however this has yet to be confirmed.

So, what progress has been made thus far? More than 200 amendments have already debated in the House of Commons, and dozens more added in the Lords. So, what’s in it? What’s changing? And what impact will it have on HR strategy and operations?

As the Employment Rights Bill nears its final stages in Parliament, there are several steps that employers and HR professionals can do to prepare:

Here’s a breakdown of the key reforms and their likely impact:

Unfair dismissal rights from day one

What’s changing: The right to claim unfair dismissal will apply from the first day of employment. A simplified dismissal process may be available during a transitional “initial period” (expected to be nine months), but this will be set following further consultation.

HR impact: Recruitment, probation, and onboarding processes will need reviewing. Clear documentation and performance management protocols will be essential from day one.

Guaranteed hours & shift notice for all workers

What’s changing: Workers and agency staff on zero or low-hours contracts will have a new right to request guaranteed hours and to receive compensation for short-notice shift cancellations.

HR impact: Workforce planning will need to become more predictive and transparent. Joint obligations with agencies for shift notice and compensation could create operational challenges. Collective agreements may offer some flexibility.

Statutory sick pay expansion

What’s changing: SSP will be payable from day one of sickness. Employees below the earnings threshold will receive 80% of their average weekly earnings.

HR impact: Payroll systems and absence tracking will need updates. Budgeting for increased sickness costs is advisable.

Bereavement leave for miscarriage

What’s changing: Two weeks’ leave for employees experiencing pregnancy loss before 24 weeks, extending current parental bereavement rights.

HR impact: HR policies on compassionate leave should be updated. Line managers may need guidance on handling these sensitive situations.

Pregnancy and maternity dismissal protections

What’s changing: Dismissals during pregnancy, maternity leave, or within six months of return will be banned except in narrowly defined cases.

HR impact: Dismissal decisions involving pregnant employees or those recently or currently on maternity leave must be treated with heightened caution. Expect further regulation on notification and procedural requirements.

Redundancy: Collective consultation thresholds and penalties

What’s changing:

• Collective consultation may now apply to redundancies across the business, not just at a single site.
• Penalties for failing to consult increase from 90 to 180 days’ pay per employee.

HR impact: Centralised oversight of redundancies is now essential. Even local or unrelated redundancies may trigger collective consultation. The risks and costs of non-compliance are significantly higher.

Fire and rehire restrictions

What’s changing: Fire and rehire practices will be automatically unfair unless the business is in financial distress and follows a revised Code of Practice.

HR impact: Strategic restructuring options are narrowing. Ensure all proposed changes to terms and conditions follow best practice consultation and justification. Consider greater use of flexibility clause in contracts.

Fair work agency: A new regulator with teeth

What’s changing: A new enforcement body will oversee compliance with holiday pay, minimum wage, SSP, and more. It can:

• Impose 200% penalties for underpayments of holiday or SSP,
• Launch tribunal claims for workers, and
• Recover enforcement costs from employers.

HR impact: Expect greater regulatory scrutiny, especially in lower-paid roles. Accurate recordkeeping for holiday pay and statutory entitlements will be essential as failure to comply will be a criminal offence.

Umbrella company reform

What’s changing: Umbrella companies will be regulated as employment businesses. From April 2026, agencies (or end-clients) will become responsible for PAYE/NICs compliance.

HR impact: Review labour supply chains. In-house payroll or compliant third-party providers may become the safer option.

Strengthened trade union rights

What’s changing:

• Greater access for unions (including digital),
• Reduced notice periods for industrial action (10 days),
• Longer mandates for strike action (12 months),
• Lower potential recognition thresholds in future.

HR impact: Expect a more active union presence and faster escalation of disputes. Early engagement and relationship management will be key.

How we can help

As the Employment Rights Bill edges closer to becoming law, the devil—as ever—will be in the detail. We will keep you posted on all major developments – so stay tuned.

If you have any questions about the likely impact of the Employment Rights Bill or how you can prepare, please contact the Employment team.