The Employment Rights Bill: Where Are We Now?

The Bill introduced 28 reforms to UK employment laws when it was published in October last year and, since then, various amendments have been made. In this article, we have selected a handful of what we consider the most significant changes that are likely to have the most immediate impact for employers.

Unfair Dismissal

Employees will have a day-one right not to be unfairly dismissed, removing the current qualifying period of two years. The UK Government is proposing a new “statutory probationary period” or “initial period of employment,” which could last for up to nine months, during which “a lighter-touch and less onerous approach for businesses to follow to dismiss someone who is not right for the job” will be available. Both the length of the statutory probationary period and how the “lighter-touch” standards for dismissal will operate are subject to further consultation.
While these reforms are not expected to come into effect before autumn 2026, employers can take steps to prepare now, including ensuring their template contracts contain provisions on probationary periods and processes are in place to monitor performance. Managers and HR will need to be ready to deal quickly with new staff who are under-performing.

Collective Redundancies

There have been some significant changes on this issue since the Bill was published. The current threshold for collective redundancy is where an employer proposes 20 or more redundancies within a 90-day period at a single site or establishment. It is now proposed that an alternative threshold test will also apply, measured across all sites/establishments. The new threshold is not yet known, but could be, for example, the lower of 10% or 100 employees across the business as a whole.

The introduction of this additional threshold test will mean the duty to consult collectively will be triggered more frequently. Employers will need to establish processes to monitor the number of redundancies across their entire UK business, on a rolling 90-day basis, and not just on a site-by-site basis.

The other key change is an increase in the maximum penalty for failing to consult collectively will increase from 90 to 180 days' pay per employee and the government has also indicated that it will consult on increasing the minimum consultation period (when dismissing 100 or more employees) from 45 to 90 days.

Fire and Rehire/Replace

The practice of “fire and rehire” (where employers terminate existing contracts to move employees to new ones with different terms) will be effectively outlawed as a practice. Dismissals will become automatically unfair where the reason is an employee's refusal to agree changes to their employment contract. This will also be the case where the reason for dismissal is to hire another person on amended terms (“fire and replace”). There will be a limited exception for employers acting in response to financial difficulties, but only if these difficulties are so severe as to affect their ability to carry on as a going concern, and where the changes could not reasonably have been avoided.

Where collective consultation is triggered on a fire and rehire/replace exercise, the protective award for failing to inform and consult will increase from 90 to 180 days. The government has, however, dropped a proposal to make interim relief available as a remedy.

In light of these new restrictions, changing contract terms without employee agreement will become significantly more difficult. Employers should ensure that their employment contracts are drafted with suitable flexibility clauses, particularly in the areas most likely to change, such as benefit plans.

Zero Hours Contracts

Since the Bill was published, the “right to request predictable hours” for zero-hours workers and those with a “low” number of guaranteed hours has been extended, with the protection now to apply equally to agency workers. Many of the details remain subject to consultation and secondary regulations. These include the length of the “reference period” that will be used to determine the guaranteed hours that should be offered, what constitutes a “low” number of hours for the purpose of being a qualifying worker, what form the offer of guaranteed hours should be made and how long it must remain open for, and what “guaranteed hours” actually means in terms of working pattern or days.

Despite there being much still to be determined, employers can start to prepare. Carrying out an audit of the workforce will allow them to understand the extent to which they are using directly employed or agency workers on zero or low-hours contracts, and what the impact of the new requirements might be on their business model.

Duty to Prevent Sexual Harassment

The law will be strengthened to require employers to take “all” reasonable steps to prevent workplace sexual harassment, with regulations specifying what amounts to “reasonable steps.” The Bill also proposes making employers liable for third-party harassment (not limited to sexual harassment) unless they have taken all reasonable steps to prevent it. A government call for evidence on the “reasonable steps” employers should take to prevent sexual harassment closes on 30 June 2025.

Extension of Time Limits - Tribunal Claims

As a result of an amendment to the Bill shortly after it was introduced, it is now proposed that the time limits for bringing tribunal claims will be extended from three to six months. This will apply to all types of employment claims, save for breach of contract claims (although that may be an oversight that will be added in).

Conclusion

While it has been suggested that the Bill will receive Royal Assent (and therefore become law) in summer 2025, the majority of its reforms are likely to come into force during 2026, with the unfair dismissal changes not being implemented before autumn of that year. Until that time, there will be further consultations on various aspects and in many cases, draft regulations, which we will continue to monitor.