Employment Rights Bill: Guide for Employers

The Employment Rights Bill will be the most substantial shift in UK workplace regulation of recent times.

The Bill is the Labour government’s headline employment law reform, setting out a long list of new employer duties and worker entitlements, many of which are expected to come into force from 2026.

Key measures include day-one protection from unfair dismissal, a statutory right to request flexible working from the outset of employment, tighter rules on fixed-term and zero-hours contracts and new enforcement powers for a centralised agency. Larger employers will also face new reporting duties and equality-related action planning requirements.

Although much of the detail remains to be confirmed through secondary legislation, the overarching direction of travel is clear for employers: the Bill will create new legal risks, it will increase administrative demands on organisations and it will narrow the scope for informal flexibility in managing staff.

Employers of all sizes and sectors will be affected by the new provisions, with notable heightened exposure for those relying on casual labour, regular contract changes or probation-based dismissals.

Contracts, policies and personnel training will need updating well in advance, and the risk of tribunal claims and regulatory scrutiny is set to rise. Waiting until implementation to adapt to the changes would be an avoidable mistake.

This guide sets out the status of the Bill to date. To discuss how to prepare your organisation for the reforms, contact us.

 

Section A: Background to the Employment Rights Bill

 

The Employment Rights Bill represents one of the most significant proposals for reform of workplace legislation in the United Kingdom in recent years. It forms part of the government’s stated ambition to modernise employment law and improve protections for workers while maintaining flexibility for businesses. According to the government, the Bill addresses long-standing concerns around insecure work, inadequate enforcement of existing rights and the perceived imbalance in the employment relationship, especially in sectors reliant on casual labour.

The Bill has its roots in commitments made by successive Conservative governments following the 2017 and 2019 general elections. The 2019 Conservative manifesto promised to introduce measures that would make the UK the best place in the world to work, including a focus on transparency, fair treatment and enforcement of rights. Although the widely anticipated Employment Bill was initially expected during the 2019–2021 parliamentary session, progress was delayed, in part due to the COVID-19 pandemic and its economic impact.

Public concern during the pandemic about precarious work and lack of access to sick pay brought renewed scrutiny to the framework governing workers’ rights. Employers faced criticism over the use of fire and rehire tactics, zero-hours contracts and non-standard working arrangements. In response, the government committed to delivering stronger statutory protections and improved oversight of employment practices.

The Employment Rights Bill, introduced in 2024, reflects these concerns and aims to consolidate and expand upon previous proposals, incorporating recommendations from the Taylor Review of Modern Working Practices and findings from parliamentary inquiries and consultations.

For employers, however, the Bill signals a sharp increase in regulatory expectations, creating new legal duties, narrowing room for discretion in managing staff and increasing the risk of claims and enforcement action if existing practices are not reviewed and adapted in time.

 

Section B: Proposed changes under the Employment Rights Bill

 

The key changes set out in the Bill include:

 

1. Day one employment rights

 

Employees will be entitled to certain rights from the first day of employment, removing the current qualifying periods that apply in several areas. The right not to be unfairly dismissed will apply immediately, subject to specific exemptions that are expected to be clarified in secondary legislation. The intention is to ensure that new employees are protected from arbitrary dismissal from the outset, regardless of length of service.

The right to request flexible working arrangements will also become available from day one. This represents a departure from the current system, where employees must have 26 weeks’ continuous service before making such a request. Employers will still be permitted to refuse requests on business grounds, but the expectation is that refusal will need to be justified with greater transparency.

Eligibility for Statutory Sick Pay will also begin on the first day of absence due to illness, without the requirement to wait three consecutive days. The change reflects concerns raised during the pandemic about the impact of unpaid absences on low-paid workers and public health outcomes.

Immediate access to statutory paternity leave and unpaid parental leave is also being introduced. These measures are intended to support family life and promote greater equality between men and women in the workplace.

 

2. Changes to casual and fixed-term contracts

 

The Bill introduces restrictions on the use of zero-hours contracts that are considered exploitative or abusive. Employers will be required to provide a minimum number of guaranteed hours to individuals who have demonstrated a regular working pattern over a defined reference period. Further details are expected to be confirmed through secondary legislation or statutory guidance.

Fixed-term contracts will also be subject to tighter scrutiny, especially where they are used repeatedly or as a substitute for permanent employment. Employers will need to justify the use of short-term arrangements and may be required to convert contracts to permanent status after a certain period.

 

3. Fire and rehire restrictions

 

New statutory limitations will be introduced on the practice of terminating contracts and offering re-engagement on less favourable terms, commonly referred to as “fire and rehire”. Employers will be required to follow a more structured process of consultation and evidence before such measures can be pursued. The government has indicated that new codes of practice will provide clear standards that must be followed.

The government has stated that employers should regard fire and rehire as a last resort, to be used only after all reasonable alternatives have been explored.

Failure to comply with the new process may result in claims for unfair dismissal or breach of contract, and tribunals may have increased powers to award compensation or reinstate employees.

 

4. Trade union rights strengthened

 

The Bill proposes changes to the framework for trade union recognition and access to workplaces. A simplified recognition process will be introduced for trade unions seeking to represent workers in non-unionised settings. Employers will be expected to facilitate union access for recruitment, information sessions and other lawful activities, particularly in sectors with low union density.

There will also be shorter notice periods for lawful industrial action, and stricter prohibitions on employer conduct that seeks to undermine collective bargaining or deter union membership.

 

5. New enforcement powers

 

A new independent enforcement body, referred to as the Fair Work Agency, will be created to oversee the application of core employment rights. The Agency will be granted authority to investigate complaints, conduct inspections and take enforcement action without requiring individuals to initiate tribunal claims.

The Agency will be empowered to issue compliance notices, recover underpaid wages and impose financial penalties for non-compliance. It will also play a role in promoting awareness of rights among workers and obligations among employers.

 

6. Equality, inclusion and workplace standards

 

Larger employers will be subject to new obligations to publish annual equality action plans. These plans must outline steps being taken to close gender pay gaps and promote diversity and inclusion in the workplace. Employers with over 250 staff will be required to make these reports publicly available.

The government has signalled its intention to expand mandatory pay gap reporting to include ethnicity and disability, although the precise criteria and methodology are still under consultation. Employers may wish to begin preparing for these requirements in advance, by collecting relevant data and reviewing existing reporting practices.

Workplace wellbeing is also a focus of the Bill. Employers will be expected to support employees experiencing menopause, through reasonable adjustments and inclusive workplace policies. Statutory guidance will be issued to help employers understand their responsibilities and create supportive environments.

 

7. New and strengthened statutory rights

 

New rights will be introduced to support employees through difficult personal circumstances. Statutory bereavement leave will be available for a broader range of relationships beyond the current provisions; rules will be developed regarding eligibility and notice requirements.

Whistleblowing protections will also be enhanced to safeguard individuals who report wrongdoing or regulatory breaches. Employers will need to establish and maintain internal reporting procedures that meet minimum standards, and ensure that workers are not subjected to detriment as a result of raising concerns.

Employers will also have a strengthened duty to take all reasonable steps to prevent sexual harassment in the workplace. A proactive approach will be required, involving policies, training and cultural measures. The aim is to move beyond reactive handling of complaints and towards a preventative framework that protects all workers.

 

Section C: When will the Employment Rights Bill become law?

 

The Bill was introduced in the House of Commons in October 2024. The second reading took place in December 2024, followed by the committee stage and report stage in early 2025. Amendments were debated and, in some cases, revised during this process.

The Bill finished the House of Lords Committee stage at the end of June 2025, involving 10 days of clause-by-clause debate and with hundreds of amendments considered. Only relatively technical amendments were agreed, with Bill growing from 310 pages to 318 pages.

Further House of Lords review will follow, before Royal Assent can be expected, likely in Autumn 2025.

Implementation is expected in phases throughout 2026 and potentially into 2027. Certain measures that require minimal infrastructure, such as day-one rights to request flexible working or changes to statutory sick pay eligibility, are likely to take effect first.

More resource-intensive changes, such as the establishment of the Fair Work Agency or mandatory pay gap reporting by disability and ethnicity, may be subject to further consultation and delayed commencement.

The Department for Business and Trade has confirmed that guidance will be published before the first measures come into force, to assist employers and employees in understanding their new rights and obligations.

 

Section D: Role of Secondary Legislation

 

Many of the Bill’s reforms will be shaped further by secondary legislation, such as statutory instruments and codes of practice. These will provide the practical details necessary for implementation, including definitions, procedural requirements, thresholds, and exemptions.

Examples of areas awaiting further detail include:

 

• The scope and criteria for “exploitative” zero-hours contracts
• The method and frequency of ethnicity and disability pay gap reporting
• Minimum standards for equality action plans
• Rules governing the Fair Work Agency’s powers and enforcement procedures

 

The government has committed to consultation with employers, trade unions and other stakeholders before finalising these instruments.

 

Section E: Employer Preparation Checklist

 

The Employment Rights Bill introduces a wide range of legal and procedural changes that will require employers to review current practices and make adjustments across contracts, policies and day-to-day management. Some reforms will take effect shortly after Royal Assent, while others will follow in later phases. Preparing early will help minimise legal and reputational risks and support a smooth transition.

The following checklist outlines the key areas where employers should focus attention over the coming months.

 

Category	Action
Contractual and Policy Review	Update employment contracts to reflect new day-one rights, including protection from unfair dismissal and the ability to request flexible working from the outset.
	Review probation clauses, as day-one dismissal rights will require closer scrutiny of decisions made during initial employment periods.
	Amend sick pay policies to align with the removal of the three-day waiting period for Statutory Sick Pay.
	Ensure family leave policies provide for immediate access to paternity and unpaid parental leave.
	Prepare for changes to zero-hours and fixed-term contracts, particularly where such contracts are used repeatedly or without objective justification.
Workforce Planning and Risk Assessment	Audit use of casual labour to identify individuals likely to gain entitlement to guaranteed hours or permanent status under the reforms.
	Review agency and temporary worker arrangements, especially in sectors such as hospitality, care, and logistics.
	Consider the impact of the fire-and-rehire restrictions, and whether current change management strategies will meet the new statutory tests.
Training and Internal Communication	Train managers and HR teams on the new rights and obligations, including fair handling of flexible working requests and dismissal procedures under the new regime.
	Ensure supervisors understand union rights and the implications of increased access and simplified recognition processes.
	Communicate changes to employees clearly and consistently, setting out how new rights will be implemented and where to seek advice internally.
Equality, Diversity and Inclusion	Begin developing an equality action plan if your organisation employs over 250 people. Plans will be required to address gender pay gaps and workplace support, including for menopause and other inclusion issues.
	Consider collecting data on ethnicity and disability pay gaps in anticipation of new reporting duties.
	Review harassment prevention policies and training, in light of the strengthened duty to take reasonable steps to prevent sexual harassment.
Union and Employee Relations	Review your union recognition status, and consider whether procedures may need to change under the new simplified framework.
	Plan for increased union engagement, particularly if operating in historically non-unionised environments.
	Ensure appropriate mechanisms exist for responding to industrial action and collective grievances in accordance with the new rules.
Preparing for Enforcement and Oversight	Audit wage, leave and working time records to ensure you can demonstrate compliance in the event of an inspection or complaint to the Fair Work Agency.
	Assign responsibility within HR or compliance teams for monitoring further government guidance, particularly where secondary legislation is still pending.
	Consider legal review of high-risk areas such as redundancy planning, contract variation, and disciplinary processes.

 

 

Section F: Need assistance?

 

In light of the extent of the proposed changes, employers are advised to begin preparations now, particularly in relation to employment contracts, workplace policies and internal processes. Although some reforms may not take effect for over a year, early action can reduce legal risk, support employee engagement and demonstrate a proactive approach to compliance.

Larger employers may need to allocate resources to prepare for the new pay gap reporting duties and to begin drafting or updating equality action plans.

The reforms introduced by the Employment Rights Bill will therefore require all UK employers to act decisively and with care. Early planning, clear documentation and active engagement with staff and unions will reduce the risk of legal disputes and ensure compliance once the new framework takes effect.

For specialist guidance on how to prepare your organisation for the upcoming reforms, ensuring compliance, mitigating risk and supporting positive workforce relations, contact us.

 

Section G: Employment Rights Bill FAQs

 

What is the Employment Rights Bill?

The Employment Rights Bill is a legislative proposal introduced by the Labour government in 2024 to overhaul UK employment law. It includes new entitlements for workers, stricter limits on certain employment practices, and enhanced enforcement powers for regulators.

 

When will the changes take effect?

The Bill is currently making its way through Parliament and is expected to receive Royal Assent in late 2025. Most reforms will be implemented in stages from 2026 onwards, with some measures likely to take effect sooner than others.

 

Do employers need to act now?

While some detail is still to be confirmed, the direction of travel is clear. Employers should begin reviewing contracts, policies, and working arrangements now to prepare for the new duties and reduce legal risk.

 

Will the Bill apply to existing staff or only new hires?

Most provisions, including day-one rights and changes to statutory leave, will apply to all employees once the relevant parts of the legislation come into force.

 

Are small businesses exempt from the new rules?

No. While some reporting duties may only apply to larger employers, most of the core rights and obligations will apply regardless of business size.

 

How will the new rules be enforced?

A new statutory enforcement body, the Fair Work Agency, will be established to oversee compliance. It will have powers to investigate, issue penalties, and bring tribunal claims on behalf of workers.

 

What are the main risks for employers?

Legal claims, reputational damage, and fines for non-compliance are key risks. There is also the risk of operational disruption if policies are not updated in time or staff are not trained to apply the new rules.

 

Will contracts need to be rewritten?

In many cases, yes. Employers will need to update employment contracts to reflect changes such as day-one rights and revised sick pay entitlements. Template contracts and handbooks should also be reviewed.

 

Can employers still use probation periods?

Yes, but they will no longer avoid unfair dismissal claims simply because an employee is within a probation period. Decisions will need to be fair, documented, and properly justified.

 

Section H: Glossary

 

Term	Definition
Employment Rights Bill	A legislative proposal introduced by the Labour government in 2024 aiming to overhaul workplace rights in the UK through a wide range of reforms.
Day-One Rights	Legal entitlements that apply from the first day of employment, including unfair dismissal protection and the right to request flexible working.
Statutory Sick Pay (SSP)	A government-mandated payment made by employers to eligible employees who are off work due to illness. The Bill proposes removing the waiting period.
Zero-Hours Contract	A type of employment contract where the employer is not obliged to provide minimum working hours. The Bill seeks to restrict exploitative use of such arrangements.
Fixed-Term Contract	A contract of employment with a specified end date. Employers may be required to justify repeated use under the new rules.
Fire-and-Rehire	A practice where employees are dismissed and offered re-engagement on new terms. The Bill introduces restrictions and a formal code of practice.
Fair Work Agency	A new enforcement body proposed under the Bill, with powers to investigate breaches, impose penalties and support workers’ claims.
Trade Union Recognition	The formal acceptance by an employer of a trade union’s right to represent staff. The Bill simplifies the process for union recognition.
Equality Action Plan	A document setting out measures an employer will take to address workplace inequalities, required annually for employers with over 250 staff.
Secondary Legislation	Legal rules made by ministers under powers granted by an Act of Parliament. Much of the detail under the Employment Rights Bill will be set out in secondary legislation.
Statutory Leave	Leave entitlements prescribed by law, such as parental or bereavement leave. The Bill expands eligibility and access in several areas.
Tribunal Claim	A formal legal complaint brought by an employee or worker against an employer, usually for breach of employment law.