The Employment Rights Bill: Transformative Changes for Workers and Employers

by

The Employment Rights Bill, which passed its final parliamentary hurdle in December 2025 and is awaiting Royal Assent, represents the most significant overhaul of UK Employment Rights Billemployment law in a generation. Once implemented, this legislation will fundamentally reshape the relationship between employers and workers across England, Scotland, andWales, introducing sweeping reforms across unfair dismissal, flexible working, zero-hours contracts, harassment protections, and enforcement mechanisms.[1][2][3][4]

Unfair Dismissal: From Day One to Six Months

The most substantial change concerns unfair dismissal protections. Originally promising a “day one” right to claim unfair dismissal, the government made a major concession in November 2025 following pressure from the House of Lords and business groups. The compromise reduces the current two-year qualifying period to six months of continuous service..[5][6][7]

This means that from mid-2026 onwards, employees hired will be able to bring unfair dismissal claims after just six months—rather than the current two years. Employers should note that current legislation adds an extra week when calculating qualifying periods, so employees with as little as 25 weeks’ service may be able to claim.[6]

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Even more significantly, the government has voted to remove the statutory compensation cap entirely for unfair dismissal claims. Currently capped at the lower of 52 weeks’ pay or £118,223, successful unfair dismissal claims will instead reflect the employee’s actual financial loss with no upper limit. This aligns unfair dismissal with discrimination and whistleblowing claims, where compensation is already uncapped. This change will particularly impact high-earning employees and those with valuable pension arrangements or long-term career losses.[8][9][10][11][12]

 

Zero-Hours Contracts: Guaranteed Hours and Shift Notice

The Bill does not ban zero-hours contracts outright, but introduces substantial new obligations designed to end “exploitative” practices. Employers will be required to offer guaranteed hours contracts to qualifying workers (including agency workers) based on the hours regularly worked over a reference period, expected to be 12 weeks.[13][14][15][16][1]

After each reference period, if a worker’s actual hours exceed the minimum guaranteed in their contract, employers must offer a contract reflecting those higher hours. The duty to make offers continues until the worker no longer qualifies (i.e., when their contract guarantees more than the minimum threshold). Workers can reject offers and remain on zero-hours contracts if they prefer.[15][1][13]

Additionally, workers will have rights to reasonable notice of shifts (likely 48 hours based on early proposals) and compensation for shifts cancelled at short notice. These provisions extend to agency workers, closing a potential loophole. The guaranteed hours regime is expected to take effect in 2027.[17][14][18][1][13]

 

Fire and Rehire: Automatic Unfair Dismissal

The Bill severely restricts “fire and rehire” and “fire and replace” practices. It will be automatically unfair to dismiss an employee for refusing to agree to a “restricted variation” of their employment contract, or to replace them (including with agency workers or contractors) on varied terms.[19][20][21][1]

“Restricted variations” include changes to pay, pensions, working hours, shift patterns, or time off. Changes to other contractual terms, such as job duties or workplace location, are not restricted variations and would be assessed under normal unfair dismissal principles.[22][21]

A narrow exception exists where an employer can demonstrate that the variation was necessary to eliminate or significantly reduce financial difficulties affecting business viability, and that consultation requirements were met. The maximum protective award for failing to consult collectively will increase from 90 to 180 days’ pay per employee. Fire and rehire restrictions take effect in October 2026.[23][20][24][25][26][17][19]

 

Harassment: Third-Party Liability and Enhanced Duties

Building on the preventative duty introduced in October 2024, the Bill strengthens sexual harassment protections by requiring employers to take “all reasonable steps” (rather than merely “reasonable steps”) to prevent sexual harassment.[27][28][29]

More significantly, the Bill reintroduces employer liability for third-party harassment across all protected characteristics, not just sexual harassment. An employer will be judged to have “permitted” harassment if a third party (such as a customer, client, or member of the public) harasses an employee in the course of employment and the employer failed to take all reasonable steps to prevent it.[28][30][31][27]

Crucially, there is no requirement for harassment to have occurred on previous occasions or for the employer to have prior knowledge—a lower threshold than the repealed 2013 provisions. Disclosures about sexual harassment will also be classified as “protected disclosures” under whistleblowing law. These harassment measures take effect in October 2026.[32][33][26][27][28]

 

Statutory Sick Pay: Day One Entitlement

From April 2026, Statutory Sick Pay (SSP) will be payable from the first day of sickness absence, removing the current three-day waiting period. The Lower Earnings Limit (currently £125 per week) will be abolished, making all employees eligible for SSP regardless of income level.[34][35][36][1]

For employees earning below the current threshold, SSP will be calculated as the lower of 80% of average weekly earnings or the flat rate (currently £118.75 per week). This change will extend SSP coverage to an estimated 1.3 million workers who currently miss out.[35][36][37]

 

Family-Friendly Rights: Day One Access

The Bill makes several family leave entitlements available from day one of employment:[38][39][1]

  • Paternity leave becomes a day-one right (previously requiring 26 weeks’ service)[26][34][38]
  • Unpaid parental leave becomes a day-one right[1][38]
  • A new statutory right to unpaid bereavement leave (minimum one week, for a wider range of bereavements including pregnancy loss before 24 weeks)[40][41][38][1]

Enhanced protections for pregnant women and new mothers will make dismissals during pregnancy, maternity leave, and for six months after return to work automatically unfair except in specific circumstances. The protected period and exceptional circumstances are subject to ongoing consultation, with implementation expected in 2027.[42][43][44][1]

Flexible Working: Reasonable Refusal Required

The Bill strengthens the existing day-one right to request flexible working by requiring that any refusal must be reasonable. Employers must explain not only which of the eight statutory business reasons applies, but also why the refusal is reasonable in the circumstances.[45][46][47][48][1]

Employment tribunals will gain greater power to scrutinize the reasonableness of employers’ decisions, rather than merely checking procedural compliance. This change is expected to take effect in 2027.[47][48][45][26]

Employment Rights Bill

Collective Redundancy Consultation: Expanded Triggers

The Bill introduces a dual-threshold system for collective redundancy consultation. Consultation will be required if either:[49][18][25][23]

  1. An employer proposes 20 or more redundancies at one establishment within 90 days (the existing test), or
  2. An employer proposes redundancies meeting a new threshold across multiple establishments within 90 days (details to be set in regulations)[18][25][50][49]

This means relatively small, unrelated redundancies at different locations could trigger statutory consultation if they occur within a rolling 90-day period. Employers do not need to consult all representatives together or reach the same agreement across sites.[51][50][52][18]

The maximum protective award increases from 90 to 180 days’ gross pay per employee (effective April 2026). The government is also consulting on doubling the minimum consultation period from 45 to 90 days for 100+ redundancies.[25][23][19][26]

 

Trade Union Rights: Simplified Recognition

The Bill significantly strengthens trade union organizing and recognition rights:[53][54][55]

  • Simplified statutory recognition process: Lowering the membership threshold (from 10% to as low as 2%), removing the requirement to demonstrate majority support, and eliminating the 40% support threshold in recognition ballots[54][55][53]
  • New right of access: Trade unions can request physical access to workplaces for organizing and collective bargaining[55][56][54]
  • Duty to inform: Employers must provide workers with a written statement of their right to join a trade union[54][55]
  • Enhanced protections: New rights for union equality representatives, protection against detriment for industrial action, and extended blacklisting protections[45][53][54]

Most trade union measures take effect in April-October 2026.[57][26]

 

Fair Work Agency: Enhanced Enforcement

The Bill establishes a new Fair Work Agency (FWA) that consolidates existing enforcement bodies and introduces expanded powers. The FWA will enforce national minimum wage, holiday pay (for the first time), statutory sick pay, modern slavery protections, and agency work regulations.[58][59][60][61][1]

The FWA’s powers include:[59][60][61][58]

  • Conducting unannounced workplace inspections
  • Requiring employers to produce evidence of compliance
  • Issuing Notices of Underpayment and civil penalties
  • Bringing tribunal claims on behalf of workers (even without worker consent)
  • Publicly naming non-compliant employers
  • Recovering enforcement costs

The FWA launches in April 2026, marking a shift toward proactive, compliance-driven enforcement.[62][59][26]

 

Extended Time Limits for Claims

The time limit for bringing most employment tribunal claims will increase from three months to six months. This doubles the window for workers to lodge claims and extends the period during which employers must preserve evidence, particularly concerning given tribunal backlogs that can stretch to three years.[63][13][5][1]

 

Implementation Timeline

The Bill is expected to receive Royal Assent in December 2025. Implementation is phased over 2026-2027:[64][2][4][26][57][1]

  • Royal Assent/Early 2026: Repeal of minimum service level strike rules[64][26]
  • April 2026: SSP changes, day-one paternity/parental leave, FWA establishment, increased redundancy protective awards, simplified union recognition[65][34][26][57]
  • October 2026: Fire and rehire restrictions, third-party harassment liability, strengthened sexual harassment duty, 6-month tribunal time limits[26][57]
  • 2027: Unfair dismissal reforms (6-month qualifying period), zero-hours contract guaranteed hours, flexible working changes, bereavement leave, pregnancy protections[17][57][45][26]

Over 80 accompanying regulations and at least 26 consultations will follow, meaning significant details remain to be determined.[17]

 

Implications for Employers

Employers face substantial compliance obligations and increased risks:

  • Review probationary periods: Ensure they are shorter than six months, with clear performance management processes[5][6]
  • Track redundancies across sites: Monitor all proposed dismissals within rolling 90-day periods to avoid triggering collective consultation[50][18]
  • Prepare for uncapped unfair dismissal awards: Settlement strategies and dismissal procedures will require fundamental reassessment, particularly for senior employees[9][10][8]
  • Audit zero-hours arrangements: Develop systems to track hours worked and make guaranteed hours offers[13][15]
  • Strengthen harassment prevention: Conduct risk assessments, implement third-party conduct policies, and train staff[27][28]
  • Enhance holiday pay compliance: The FWA can enforce claims stretching back six years with penalties up to 200%[61]

Implications for Workers

Workers gain extensive new protections and rights:

  • Earlier access to unfair dismissal protections: Reduced to six months, with no compensation cap[12][8][5]
  • Greater job security: Protection from exploitative practices, including fire and rehire and unpredictable zero-hours arrangements[20][19][1]
  • Enhanced family rights: Day-one access to paternity and parental leave, new bereavement leave, strengthened pregnancy protections[38][42][1]
  • Stronger harassment protections: Employers liable for third-party harassment with enhanced preventative duties[28][27]
  • Improved sick pay: SSP from day one with no earnings threshold[35][1]
  • More accessible tribunals: Extended time limits and FWA enforcement support[59][61][1]

The Employment Rights Bill fundamentally rebalances employment law in favour of worker protections while imposing significant new compliance burdens on employers. With most provisions taking effect between 2026-2027, both employers and workers must prepare for the most substantial transformation of workplace rights in over 30 years.[3][4][1]

 

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