On 4th March 2025, The UK Government unveiled over 200 pages of proposed amendments to the Employment Rights Bill (‘Bill’) following early consultations with business groups, trade unions and other stakeholders. If these changes are enacted, they will significantly impact employers, particularly in areas such as unfair dismissal, collective redundancy consultations, zero-hour contracts, and statutory sick pay.
This article outlines what we know about the Bill so far, breaks down the most significant proposals and amendments, and highlights key steps employers and HR professionals should be taking now. While many changes will not take effect until 2026, getting ahead of the curve will be essential for smooth compliance and implementation.
The Employment Rights Bill
The UK Government published the Bill on 10th October 2024, which represents the first phase in the Labour Government’s Plan to ‘Make Work Pay’.
Key provisions include the removal of the qualifying period for unfair dismissal, making it a day-one right, and the introduction of guaranteed hours for workers on zero-hours contracts. The Bill also addresses collective redundancy consultations and introduces new protections for trade union members.
You can read more about the Employment Rights Bill here: Coffee & Catch-up: The Employment Rights Bill – Greene & Greene
Amendments to the Employment Rights Bill
Shortly after introducing the Bill, the Government consulted with a wide range of stakeholders (including employers, business representatives, trade unions, and individuals) and have proposed the following amendments:
Unfair Dismissal
One of the significant changes introduced by the Bill is the day one right for employees to bring a claim of unfair dismissal against employers, which is set to take effect from Autumn 2026.
The new right not to be unfairly dismissed from day one will be subject to an ‘initial period’ of employment, when a lighter touch procedure will apply. Although the Government has expressed a preference for nine months, that hasn’t been confirmed yet and will be subject to further consultation before it is finalised.
As a result of these changes, it will be more important than ever for employers to ensure that they are identifying, managing and addressing performance issues during the probation period.
Collective Redundancy Consultation
The current position is that if an employer is planning to make 20 or more redundancies at ‘one establishment’ within a 90-day period, it must undergo a thorough collective consultation process before making any redundancies.
Initially, the Bill proposed broadening this requirement to cover redundancies across an entire business, but following amendments, the existing rule remains unchanged. However, the Government proposes to introduce a new ‘threshold’ that could trigger consultation obligations. This threshold has not yet been confirmed, but the Secretary of State will have the authority to set a specific figure—either a fixed number or a percentage of the workforce.
If the anticipated threshold applies to the entire business rather than just redundancies at one establishment (which it is likely to), it will broaden the scope of collective consultation and notification obligations. Consequently, employers will need to closely monitor redundancy numbers across their entire business to avoid exceeding the threshold, leading to more frequent triggering of the collective consultation obligations.
The Government also plans to double the maximum protective award period for non-compliance with collective redundancy consultation obligations from 90 to 180 days.
Fire and Rehire
The Bill introduces changes to unfair dismissal law, making dismissals automatically unfair where employees are dismissed for failing to agree to a change in their contract of employment, unless employers can show evidence of financial difficulties, and the need to make the change was unavoidable.
The position remains that fire and rehire will only be permitted in very limited circumstances. However, in a small concession to employers, the Government confirmed in the March 2025 changes that it will not proceed with the proposal to allow interim relief in fire and rehire cases (interim relief is a remedy the employment tribunal can award for the continuation of the contract in certain circumstances, such as whistleblowing).
Fair Work Agency
The Government is set to establish a new state enforcement agency to enforce employment rights, such as National Minimum Wage, holiday pay, sick pay, agency rules and modern slavery. This is likely to be called the Fair Work Agency (‘FWA’).
The Bill grants the FWA powers to issue ‘Labour Market Enforcement Undertakings’ to non-compliant businesses, requiring them to improve their practices. Non-compliance may lead to a Labour Market Enforcement court order. Failure to comply, providing false information, or hindering the FWA’s work could result in fines or imprisonment, with sentences up to two years. In March 2025, the Government put forward additional proposals to strengthen the FWA’s powers. These include:
- The ability to issue a notice of underpayment for certain statutory payments (for example National Minimum Wage or sick pay), with payment due within 28 days. Underpayment notices could cover periods up to 6 years prior to a notice being issued.
- The power to bring an Employment Tribunal claim on behalf of worker, if the worker decides not to pursue the claim (it is unsure yet how this will work in practice, but this proposal could add even more pressure to an already strained tribunal system).
- The ability to fine an employer for failing to comply with the new obligation on employers to keep adequate records relating to holiday, including the amount of leave and pay provided to workers.
For employers, this means a heightened need for compliance with labour market legislation, readiness for inspections and information requests, and an awareness of the severe penalties for non-compliance (including liability on individual officers, managers, directors, and partners). Therefore, employers should review their internal compliance mechanisms. For example, introducing more regular audits, monitoring and demonstrating compliance through data and reporting, and enhanced record keeping.
Zero Hour Contracts
Under the proposed measures, workers will be entitled to guaranteed hours if they consistently work regular hours over a specified period of time, a right to reasonable notice of shifts, and payments for shifts cancelled at short notice.
The amendments have proposed that these rights should be extended to agency workers. Much of the detail will be left to secondary legislation and further consultation. However, the Government has confirmed the following:
- Offer of guaranteed hours: the end hirer must make an offer of guaranteed hours to qualifying agency workers.
- Shift notices: both the employment agency and the end hirer are responsible for providing reasonable notice of shifts.
- Short notice payments: employment agencies must pay for short notice cancellations or curtailments
- Recouping costs: for agency arrangements made more than two months before the Bill is passed, agencies will be able to recover certain costs from the end hirer. For arrangements made later, the agency and end hirer can negotiate what costs can be recovered.
The amendments also include a proposal to enable employers and workers to contract out of guaranteed hours and shift notice rights through collective agreements, provided replacement terms are clearly stated in the worker’s contract.
This proposal could significantly affect businesses that depend on flexible working arrangements, such as those in hospitality and events, and especially those using agency workers. However, it is difficult to determine the exact impact at this stage since many important details still need to be discussed and finalised in the regulations.
Employers should consider how they will manage the new right to reasonable notice of changes to shifts and working time, and budget for providing proportionate compensation for cancelled or curtailed shifts, and ensure managers are aware of these new rights. This is especially important for end hirers with agency workers, who value flexibility but must now offer guaranteed hours and reasonable notice for shift changes. Companies should also review and update agreements with agencies to address compensation for shift changes or cancellations.
Statutory Sick Pay (‘SSP’)
Those earning below the Lower Earnings Limit (‘LEL’) per week (£125) are not currently eligible to receive SSP. The Employment Rights Bill proposes to remove the requirement that an employee must earn above the LEL to be eligible for SSP.
The Bill will make SSP a day one right for all workers, remove the SSP waiting period and LEL. A new amendment and accompanying regulations will grant employees earning below the LEL the right to sick pay at 80% of their average weekly earnings. As a result, all employees will be entitled to receive either the SSP weekly flat rate (£118.75) or 80% of their average earnings, whichever is lower, from the moment they are off sick from work.
In readiness for the changes to SSP, employers should update policies and procedures on sick pay to reflect the new requirements and ensure payroll are ready to implement the same. Given the increase in costs for employers, it will be important for employers to ensure sickness absence is managed appropriately.
Trade Union
The Bill makes some significant changes to the trade union recognition framework and the ability of unions to take industrial action. The Bill also creates a right for independent trade unions to access workplaces to meet, represent, recruit or organise workers or to facilitate collective bargaining. Following consultation, the Government has put forward a number of additional amendments. Some of the key provisions include:
- There will be a requirement for a 10-day notice period for industrial action (increased from seven days in the initial draft of the Bill).
- A detailed framework for fines by the Central Arbitration Committee (‘CAC’) if there is a breach of the union right of access, which will be consulted on before it is introduced.
- Streamlining the trade union recognition process, including strengthening protections against unfair practices.
- 10 days after the CAC receives a recognition application from a union, the number of workers in the proposed bargaining unit cannot be increased for the purposes of the recognition process. This is designed to stop the recruitment of new workers for the purpose of diluting union membership during recognition campaigns (though this would already be a highly unusual tactic in practice).
- Extending the right for independent trade unions to conduct activities virtually, including meetings, training, and consultations.
What was missing?
One of the Government’s promises was a ‘Right to Switch Off’. This did not form part of the Bill, but the Government had indicated it will be introduced by a statutory Code of Practice. It is reported that this proposal has been dropped.
Next Steps
The Government is not just pressing ahead with the reforms announced in October, it is strengthening them. Employers who act now will be best equipped to manage risks and navigate the changing landscape, while those who delay may encounter significant challenges.
Key actions employers can take now to keep on top of the evolving landscape:
- Strengthening probation and dismissal policies and procedures.
- Start to monitor redundancy numbers across the business as a standard practice.
- Preparing for stricter rules on fire and rehire.
- Ensuring compliance with record-keeping and pay obligations ahead of FWA’s enforcement powers.
- Plan for new rights affecting zero-hour and agency workers.
- Update sick pay policies in line with SSP reforms.
- Prepare for expanded trade union access and recognition rules.
This is only intended to be a summary and not specific legal advice. If you would like further information or advice, please do contact a member of our Employment team.
Useful links: You can access the Employment Rights Bill here – Employment Rights Bill
You can access the Amendment Paper here – employment_day_rep_0311.pdf
