The House of Lords has passed the Employment Rights Bill, which now only needs Royal Assent – expected to be given this week – to pass into law.
Once Assent has been given, the Bill is set to become the Employment Rights Act 2025. It will bring a host of new requirements for employers, with these intended to improve the lives and working conditions of staff.
Secondary legislation is needed before the Bill can be enforced, and it will be phased in over 2026 and 2027 – for example, day-one sick-pay rights will be enforceable from April 2026, while reforms to unfair-dismissal-claim rules are set to apply from January 2027.
Employers need to be aware of the following:
Contracts, hours and shifts
- While zero-hour contracts are not being banned, staff on zero or low-hour contracts must be offered new contracts reflecting the time they work if they reguarly exceed these hours over a 12-week ‘reference period’
- Staff on zero and irregular-hour contracts must be given “reasonable notice” before being required to work a shift
- Staff must receive a “set payment” if a shift is cancelled, with this right also applying to agency workers
- Statutory sick pay to be available to all workers from day one of employment
- Firms must explain why they reject any requests for flexible working arrangements, and any reasons given must be “reasonable”
Dismissal and harassment
- Fire-and-rehire practices to become illegal, while firms will be in breach of the law if they make someone redundant for not agreeing to significant contractual changes
- Employers must take “reasonable steps” to prevent staff from being sexually harassed at work, and claims of sexual harassment will be treated as protected whistleblowing disclosures
- Unfair dismissal claims can be brought by staff after they have been employed for six months, down from the two-year-cap that previously existed
- Employers will be liable for any kind of harassment carried out by third parties, such as clients and suppliers, unless they can show they took “reasonable steps” to prevent this
- Staff have six months after the fact to bring employment-tribunal claims, up from the current limit of three months
- An end to the £118,223 cap on payouts for successful unfair dismissal claims
Family life
- Paternity-leave rights to apply from the first day a man begins a new job, ending the previous requirement for men to have been employed for 26 weeks before this right kicked in
- New maternity rights to protect pregnant women from dismissal, and shield new mothers for the first six months after they return to work
- Unpaid parental leave to be available from day one of an employee starting a new job
Unions and reporting
- Firms with over 250 employees must produce a “gender-pay-gap action plan” in addition to gender-pay-gap reports
- Firms must keep records showing compliance with statutory holiday entitlement and pay for at least six years; it will become a criminal offence not to do this.
- Strike and ballot notice periods to be relaxed; electronic balloting set to be permitted
- Employers must tell staff they have the right to join a union
James Lowman, chief executive of the Association of Convenience Stores, had this to say of the Bill:
“This Bill covers a very broad range of new regulations that we will be consulted on and start to be implemented in 2026. We will continue to work constructively with the government through upcoming consultations and the development of secondary legislation to ensure that these measures are fair, practical for local shops, and deliver outcomes that are both pro-worker and pro-business. Local shops are an exemplar of good work, offering secure, local, flexible employment, and these businesses need to be supported so they can keep offering these jobs in local communities across the UK.”
