Employment

Becci Collins
July 2025

Several of the changes in the Employment Rights Bill which are expected to have the most significant impact will not take effect until 2027 at the earliest. As these changes will mark a drastic departure from the current law, sufficient time is needed for meaningful consultation to take place and for the drafting to be finalised. Given the monumental impact they will bring, it is essential for both employees and employers that they are well thought out and communicated, to reduce the risk of misunderstandings and claims resulting from confusion.

Protection from unfair dismissal from the commencement of employment

Currently, employees must have two years of continuous service to be afforded the right not to be unfairly dismissed (except in a limited number of situations known as automatic unfair dismissal). Before this time, employees are not legally entitled to written reasons for their dismissal.

The Bill will provide employees with protection from unfair dismissal from the first day of their employment. However, the protection will not extend to employees who have entered into an employment contract but have not commenced work (subject to some exceptions), including where the dismissal is due to an automatically unfair reason, such as political opinion or affiliation, or a spent conviction.

We expect to see regulations which detail a light-touch dismissal policy during the initial period (the government has expressed a preference for a nine-month period). This is expected to apply:

  • Where the termination date is no later than three months after the end of the initial period, so long as the notice to terminate the employment was provided during the initial period and;
  • The reason for dismissal is capability, conduct, illegality or some other substantial reason.

During this initial period, there will be a different compensation regime for employees who are unfairly dismissed. Where notice is given to terminate the employment after the initial period, employers will be required to provide written reasons for dismissal if requested.

The government has stated its intention to extensively consult on areas of this reform, including the initial period as well as the process required to terminate employment during this time.

Concerns have been raised regarding the time required to implement this change. Last week, the Conservatives brought forward a measure to defeat the proposed day one protection from unfair dismissal. In what appears to be a simpler solution, the House of Lords voted 304 to 160 to support amending the qualifying period to six months. We are yet to see how the Government will respond to this. Day one protection was a key part of the Government’s manifesto and it will have to decide whether a more in-depth review of the system is required, or whether the proposed Conservative amendment will work just as well. There are several factors which could influence its decision-making, including:

  • The Conservatives’ proposal is simpler for employers and employees to understand, which could result in higher levels of compliance. The hope would be that this would, consequently provide clarity, resulting in fewer incorrect cases being brought before the Employment Tribunal and stretching an already overworked resource even further.
  • As there would be fewer changes to implement via the Conservatives’ proposal, less consultation would be required, meaning that it could become law before the end of the year.

Collective consultation

The requirement to adhere to the collective consultation process will be extended to situations where an employer intends to make 20 or more employees redundant at one establishment, or where the threshold test is met. The threshold test has yet to be defined, but we expect it will be based on a percentage of employees being made redundant. It will also not be a requirement for employers to consult with all representatives together, or to reach the same agreement with all representatives.

Gender pay gap and menopause action plan

Whilst it can be introduced voluntarily in 2026, it will be mandatory from 2027 for employers with 250+ employees to report on their plans to reduce the gender and menopause pay gaps in their company. There will be penalties for non-compliance.

From 2027, employers will also have to include contract workers in their gender pay gap reports.

Enhanced protection for pregnant women and new mothers

Currently, women who are at risk of redundancy have the right to be offered any available suitable alternative employment, once they inform their employer they are pregnant, or if their expected date of childbirth was less than 18 months ago.

The Bill intends to introduce regulations which shall cover protection from other dismissals taking place during pregnancy, maternity leave or following a return to work (for a period of six months).

Further harassment protections

Employers are already expected to take all reasonable steps to prevent sexual harassment – what these steps actually look like are expected to be specified in 2027.

Bereavement leave

Unless an employee’s child dies under the age of 18 or is stillborn after 24 weeks of pregnancy, there is currently no statutory right to bereavement leave. The Bill intends to introduce a ‘day one right’ to at least one week of (unpaid) bereavement leave for employees. Regulations will define the relationship between the employee and the deceased. 

Zero hour contracts

Currently, employers are permitted to engage individuals on zero-hour contracts, provided they do not prevent the individuals from working for another employer.

The government had promised to introduce a ban on ‘exploitative’ zero-hour contracts, but the Bill does not actually go that far. Instead, it gives those on zero-hour contracts the right to a guaranteed-hours contract if they work regular hours over a defined period. Once an employee establishes a pattern of regular working over a 12-week period, employers are obliged to offer regular hours. Should an individual wish to remain on a zero-hour contract, they can. 

These amendments would provide individuals with security while allowing them to remain on a zero-hours contract if they prefer, and will also apply to agency workers. The details of this amendment will be contained in secondary legislation and therefore, it is possible that the length of the reference period, exceptions to the rights and conditions for qualifying for this protection may change in the coming months.

However, on 2 July 2025, during a debate in the House of Lords, the majority voted in favour of altering this requirement from a duty to offer guaranteed hours to a right for workers to request guaranteed hours, with an obligation on employers to grant such a request.

The Bill also proposes that workers on these contracts will be entitled to ‘reasonable’ notice of any shift changes, as well as compensation if a shift is cancelled or cut short. However, the House of Lords again voted for this to be altered to ‘short notice’, requiring that if a shift is cancelled on less than 48 hours’ notice, compensation would be paid.

Access to flexible working

Employees are entitled to make flexible working requests from the first day of their employment and there is no limit to the number of requests which can be made. Under the Bill, should an employer refuse an application, it will now have to explain the reason for the refusal and why it considers its decision reasonable. There is no change to the penalty for breaching the requirements of how to deal with a request, which remains 8 weeks’ pay. It may be that the second draft, or draft regulations, includes guidance on what steps an employer should take before refusing a request.

If you would like more advice on the changes brought by this Bill and your obligations as an employer, please contact our Employment team