On 10 October 2024, the UK Government unveiled the Employment Rights Bill, deemed the “biggest upgrade to rights at work for a generation.” This long-anticipated bill introduces 28 crucial reforms to employment law. Although implementation is expected in 2026, it’s vital for businesses and HR professionals to stay ahead of these changes and understand their implications for workers and employers alike.
Day-One Rights and Unfair Dismissal Protections
One of the most transformative changes in the new bill is day-one eligibility for essential rights, including paternity, parental, and bereavement leave, as well as protection from unfair dismissal. This removes the current two-year employment threshold for bringing unfair dismissal claims, potentially leading to a rise in tribunal cases.
To balance these reforms, the government proposes a statutory nine-month probation period for all employees. While this could provide some leniency around dismissal protections, the specific rules and guidelines will be determined following a 2025 consultation period.
Expanded Maternity, Flexible Working, and Zero-Hour Contract Protections
Enhanced maternity protections are another focal point of the bill. Under the new legislation, employees on maternity leave will be protected from redundancy throughout their pregnancy and for six months following their return. This extension also applies to other statutory family leaves like paternity and adoption leave.
The bill further strengthens the right to request flexible working. Employers must now provide a written, reasonable explanation if they deny flexible work requests, necessitating a formal update to internal policies.
Zero-hour contracts, frequently criticised for creating job insecurity, will also see tighter regulation. Employers must provide guaranteed hours in specified circumstances and reasonable advance notice of shift schedules. Additionally, workers will have a right to compensation for shifts cancelled at short notice, with discussions underway to potentially extend these protections to agency workers.
Workplace Harassment and “Fire and Rehire” Practices
The bill takes a strong stance on workplace harassment, mandating that employers take “all reasonable steps” to prevent harassment across all protected characteristics, not just sexual harassment. This requires businesses to review and reinforce training and policies to comply with these new standards.
In response to controversies surrounding “fire and rehire” practices, the new legislation restricts this approach. Under the bill, dismissals designed to rehire employees on less favourable terms will be classified as automatically unfair unless the business can prove severe financial hardship.
Revisions in Collective Redundancy and Statutory Sick Pay
The Employment Rights Bill proposes significant updates to collective redundancy laws, eliminating the requirement for redundancies to be localised within a single establishment to trigger collective consultation obligations. For larger organisations with multiple locations, this could increase the administrative demands and financial costs associated with redundancies.
Statutory Sick Pay (SSP) will also change, eliminating the three-day waiting period and the earnings threshold for eligibility. While this improves financial support for employees, it may increase operating costs for businesses, especially those employing a high percentage of low-wage workers.
The Impact on Workers
An analysis by the Department for Business and Trade indicates that around 10 million UK workers will benefit from the new bill, particularly those in low-paid and insecure jobs. Key demographic groups, including women, younger workers, and ethnic minorities, are expected to experience notable gains in job security, working conditions, and overall well-being.
This upgrade in employment standards is expected to positively impact workforce productivity and contribute to economic growth across sectors. Paul Nowak, TUC General Secretary, commented, “The Employment Rights Bill is good for workers, good for business, and good for the wider economy.”
The Impact on Businesses
While the bill promises many benefits for workers, the government estimates that it will cost UK businesses up to £5 billion annually. This cost, concentrated primarily in low-wage sectors, is projected to be a small percentage of the UK’s overall wage bill. However, the financial impact may weigh heavily on small and medium-sized businesses (SMBs), as compliance costs tend to be fixed and not relative to revenue.
To address SMB concerns, the government plans to consult with stakeholders and provide advisory services to facilitate compliance.
Preparing for Change
With major changes on the horizon, businesses should begin aligning HR policies with the new employment standards. A proactive approach will enable organisations to attract and retain talent while ensuring compliance with evolving legal obligations.
To gain further insights on the Employment Rights Bill and its impact, HR professionals and business leaders can attend the CIPD Annual Conference in Manchester on 6–7 November. The conference will cover productivity, artificial intelligence (AI), workplace conflict, and strategies for enhancing employee experience.
To Summarize
The Employment Rights Bill represents a major milestone in UK employment law, addressing key issues like job security, fair treatment, and workplace flexibility. By embracing these changes, businesses can foster a healthier, more engaged workforce that is aligned with contemporary employment standards. As the employment landscape evolves, businesses prepared for these changes will be better positioned to thrive in an increasingly competitive market.
Stay tuned as the bill’s consultation phase unfolds, and prepare for the new regulations that will reshape the future of work in the UK.
