Updates to the Employment Rights Bill – March 2025

Claire Treacy, Senior Associate

As it has passed through the House of Commons there have been various amendments to the Employment Rights Bill and it is now making its way through the House of Lords where further amendments may be made. In anticipation of it becoming law, Claire Treacy takes a look at what those changes are and what they will mean for employers.

Unfair Dismissal Rights from Day One

This is the change that has arguably caused most concern for employers. When the Bill comes into force and employees have unfair dismissal rights from the day they start work, probationary periods will take on a new importance, with a new legal framework (which hasn’t yet been disclosed) governing how dismissals can be carried out fairly in those early months of employment.

We are also still waiting for confirmation of the compensation levels for employees claiming unfair dismissal early in their employment. The Government has indicated that a different financial cap will apply to dismissals during the probationary period, not the current cap of £115,115 (rising to £118,223 in April).

Bereavement leave and pay for pre-24-week pregnancy loss

The Bill already contains provisions to convert the existing right to statutory parental bereavement leave to a more general form of bereavement leave, although, as currently drafted, it would not apply in the event of pregnancy loss before 24 weeks. However, an amendment has been tabled to extend the existing parental bereavement leave rights and although the amendment has not been accepted as yet, the principle of bereavement leave for pregnancy loss has been and it may be that further amendments are made to grant this right.

Redundancy and collective consultation

Currently an employer making redundancies across multiple locations can often avoid triggering collective consultation obligations where there are fewer than 20 redundancies are proposed at each location. The first draft of the Employment Rights Bill removed the ‘at one establishment’ rule entirely meaning all redundancies across the business would count towards the threshold for collective consultation and therefore, potentially requiring more businesses to carry out the more onerous collective consultation duties.

However, the latest amendment to the Employment Rights Bill has cast doubt on this. Further clarity about when collective consultation duties will be triggered is now set to be announced in later regulations. The speculation is that instead of the threshold being whether 20 or more redundancies are proposed across all locations, the Government will instead introduce a business-wide threshold based on either a percentage of the workforce or a set number of redundancies.

For now we will have to wait and see what thresholds are announced, but what businesses can be clear on is that collective consultation obligations are still likely to apply to far more businesses than they currently do.

Fire and re-hire and collective redundancy consultation

The Government has been adamant that it intends to all but ban dismissals on the basis of fire and re-hire. Where a business intends to make 20 or more redundancies at anyone of its locations (although note the change referred to above) which includes dismissals on the basis of fire and re-hire employees can make a claim for what is known as “the protective award” if collective consultation obligations are not carried out or not carried out properly.

“The protective award” is currently a claim for up to 90 days gross pay for each employee but the Bill will amend this to increase the award to 180 days gross pay to encourage employer compliance.

Employers will therefore need to be far more alive to the risk of getting collective consultation obligations wrong and not understanding the new thresholds for when these obligations apply.

New Fair Work Agency

The new Fair Work Agency that will be established as part of the Employment Rights Bill will have unprecedented powers, including:

• the ability to bring claims on behalf of workers;
• the power to offer legal assistance for employment cases, with costs potentially recoverable from employers if the claim succeeds (this is a significant change from the current regime in the Employment Tribunals, where it is very rare for one party to pay another party’s costs);
• authority to pursue employers for unpaid holiday pay and sick pay, and impose financial penalties payable to the Government.

It is anticipated that this along with the extension of time to lodge a claim in an Employment Tribunal being extended from 3 months to 6 months and the changes to the law on unfair dismissal will result in far more claims being pursued.

Zero hour and low hour contract workers

This month the Government published a response to its consultation on extending to agency workers the rights in the Employment Rights Bill that currently relate to those working under zero hours or low hours contracts. You can read in detail about these changes here. However, in summary they are:

1. An obligation to offer a “guaranteed hours contract” to qualifying workers to reflect the hours they actually work.
2. A new obligation on employers to have to give reasonable notice of shifts and any changes to shifts.
3. A new right for qualifying workers to receive a payment from their employer if they have their shift cancelled, moved or cut short at “short notice”.

The response confirms that the changes will be extended to agency workers to prevent businesses from switching from using zero hour and low hour contract workers to agency workers to avoid the new laws. This announcement confirms that:

• Hirers will have the responsibility for offering guaranteed hours contracts to eligible agency workers.
• No changes will be made to the current systems of transfer fees or extended hire periods.
• The responsibility for providing qualifying agency workers with reasonable notice of shifts will be shared by agencies and hirers.
• Agencies will be responsible for paying agency workers compensation for any short notice cancellation, curtailment or movement of shifts. However, agencies will be able to recoup those costs from hirers in some circumstances.

If you make use of agency workers it will therefore be important to ensure that your contract with the agency reflects the change in legislation.

In addition, other changes have been made to the Bill which indicate it may be possible to contract out of the requirement to offer guaranteed hours by way of collective agreement, and replace them with something else, so long as the new terms are contractual. We await further clarity on this. For now businesses should review their current arrangements with zero hour and low hour contract workers by looking in particular at their contractual hours in comparison to what hours they actually work each week.

Statutory Sick Pay

Employees earning below the Lower Earnings Limit (LEL) per week (currently £123 but due to increase to £125 in April) are not currently eligible to receive SSP. However, when first published the Employment Rights Bill proposed removing that requirement.

Following recent consultations, the Government has acknowledged the need to adjust the SSP rate for those earning less than the LEL. It has determined that in such cases, SSP should be set at 80% of the SSP flat rate provided that 80% of an employee’s normal weekly earnings is lower than the flat rate.

Sick pay policies will need to be updated accordingly once this comes into force and businesses will need to ensure that the correct rate of SSP is paid to qualifying employees.

When the Employment Rights Bill will come into force:

The Bill should receive Royal Assent before Parliament breaks for summer recess in July. That means some parts of it will likely to come into force in October 2025 including:

• Removal of the waiting days for statutory sick pay
• The abolition of dismissal and re-engagement (“fire and rehire”)
• Making employers liable for third party harassment (not just sexual harassment) if they don’t take all reasonable steps to prevent third-party harassment in the workplace.
• The increase in the time limit to bring a claim in the employment tribunal from 3 to 6 months.

The more complex areas of the Bill such as making unfair dismissal a day one right and the changes to zero and low hour contract workers are still expected to come into force around October 2026.

We will keep you updated on any further changes as well as timescales.

In the meantime if you want to read more about the Employment Rights Bill you can do so here. Our Employment Solicitors also talked about the Bill at our November HR Breakfast seminar which you can watch back here.