Proposed reforms to UK workplace protections are facing fresh delays after peers in the House of Lords blocked several core provisions of the Employment Rights Bill on Tuesday, triggering a new round of parliamentary “ping pong”.
Peers voted down a series of government-backed proposals including guaranteed hours for zero-hours workers, the right to claim unfair dismissal from the first day in a job and changes to trade union ballot thresholds and political levies. The setbacks mean the bill, which had been moving closer to becoming law, must return once again to the House of Commons.
The Employment Rights Bill was a flagship policy introduced under the leadership of former deputy prime minister Angela Rayner. Although Labour retains majority support in the Commons, opposition from Conservative, Liberal Democrat and crossbench peers has forced a stand-off over what employers should be legally required to offer.
Among the most contentious amendments was the Lords’ move to block automatic day-one unfair dismissal rights. Under existing rules, employees must typically complete two years of continuous service before they can bring a claim. The government had planned to remove this threshold, citing the need for stronger protection in a volatile job market.
Peer: ‘Could harm hiring’
Opponents in the Lords warned that the change could discourage employers from taking chances on new or younger hires. Conservative peer Baron Sharpe of Epsom said in the debate on Tuesday that the proposal would inhibit hiring, especially during a period of falling job numbers. Independent crossbencher Lord Vaux described the measure as the most damaging part of the bill.
On zero-hours contracts, the Lords voted to amend Labour’s plan requiring employers to offer guaranteed hours from the outset of employment. Supporters of the amendment said it would protect flexibility for both workers and smaller employers. Liberal Democrat Lord Fox argued that not all workers want to leave zero-hours arrangements and that mandatory guaranteed hours could impose an unnecessary burden.
Further defeats were delivered on trade union rules, with the Lords rejecting a proposal to scrap the 50 percent turnout requirement for strike ballots, and to automatically sign up new members to pay political levies. Those amendments will now be considered again by MPs.
Warning of operational and legal uncertainty
Responding to the Lords’ intervention, Sarah Kerr, HR technical consultant at employee relations specialists AdviserPlus, told HRreview that ongoing uncertainty over the final shape of the bill was already affecting workplace planning.
She said the Lords’ insistence on a six-month qualifying period for unfair dismissal claims could offer some employers breathing space if the Commons eventually concedes. But if day-one rights are reinstated, HR teams would need to act quickly to review probation, onboarding and dismissal procedures to ensure compliance.
“In either case, uncertainty around dismissal rights is likely to trigger a rise in employee relations cases, particularly in disputes over probationary dismissals or procedural fairness,” Kerr said.
She also questioned whether the proposals would improve outcomes for workers given the state of the tribunal system. “It’s hard to see how this will meaningfully improve outcomes for employees when the tribunal system is already heavily backlogged, with cases taking years to be heard. If more claims come through once the Bill takes effect, potentially in 2027, the system will struggle even further to keep up.”
Caution likely to rise among employers
The potential economic impact of the reforms is also being debated. Kerr said that introducing day-one dismissal protections could make employers more risk-averse and slow down recruitment, especially for younger and first-time jobseekers.
“Many business leaders have warned that the Employment Rights Bill will significantly damage business hiring intentions and confidence in the UK economy, so in spite of it being a manifest pledge, the Commons need to carefully consider the risk to our economic future,” she said.
Meanwhile, the Lords’ revised amendment on guaranteed hours was seen as beneficial for some workers, but likely to increase complexity for HR teams. “[F]or HR this is likely to create more complex admin, as they’ll have to be tracking who’s opted in or out and ensuring the right offers are made at the right times. Contract templates and scheduling systems may need updating,” Kerr said.
She also noted that a surprise government review of the right to be accompanied in grievance and disciplinary meetings could signal an expansion of that right, increasing procedural challenges for HR teams.
Kerr advised that while employers should avoid major policy overhauls until the bill is finalised, HR departments should stay alert and prepared for operational updates. “The eventual outcome will likely bring notable changes in dismissal rights and contract flexibility that will require swift updates across onboarding, performance management and dispute resolution processes.”
Outlook uncertain as bill returns to Commons
Despite the defeats, the government is expected to push for the original provisions to be reinstated in the Commons. But as negotiations continue, the timeline for the bill’s final form remains unclear.
Experts say that for employers, the coming weeks will be critical. The prospect of new dismissal rights, changes to working time protections and evolving trade union rules will all require close monitoring and policy readiness.
