On 10 October, the UK Government published the long-awaited Employment Rights Bill, which it describes as the “biggest upgrade to rights at work for a generation”.

While the Bill introduces sweeping reforms to employment law, many of these changes will not take effect until 2026, with much of the detail still subject to consultation.

The Employment Rights Bill introduces 28 key reforms, many of which address issues around dismissal rights, maternity leave, flexible working, and zero-hour contracts. Although full implementation is a few years away, HR professionals and businesses need to understand the proposed changes and prepare for their potential impact.

Day-One Rights and Unfair Dismissal

One of the most significant reforms proposed in the Bill is the extension of certain employment rights to all employees from their first day of work. This includes rights to paternity leave, parental leave, and bereavement leave – as well as the introduction of day-one protection from unfair dismissal. Currently, employees must have two years of service to bring an unfair dismissal claim. The new rules will remove this qualifying period, potentially leading to an increase in employment tribunal claims.

There are concerns over how this change will affect probation periods. A statutory probation period will be introduced, allowing some variation in unfair dismissal rules during this time. The Government has proposed a nine-month probation period, but the final details will be confirmed after consultation, which is expected to begin in 2025.

Maternity Protection, Flexible Working, and Zero-Hour Contracts

The Bill extends existing protections for employees on maternity leave. Under current legislation, women on maternity leave have limited protection from redundancy. The new rules will go further, banning dismissals for women who are pregnant, on maternity leave, and for six months after returning to work, except in specific circumstances. These enhanced protections also apply to other statutory family leaves, such as paternity and adoption leave.

The Employment Rights Bill strengthens the right to request flexible working. Under the new rules, employers will be required to provide a reasonable explanation in writing if they turn down a request for flexible working arrangements. This change is expected to come into effect soon after a brief consultation period, and businesses will need to adapt their policies to meet the new requirements.

Additionally, the Bill aims to tackle zero-hour contracts, which are widely criticised as “exploitative”, by introducing guaranteed hours in certain circumstances, as well as the right to reasonable notice of work schedules. Workers will also have the right to compensation if shifts are cancelled at short notice. These protections may be extended to agency workers, but the precise details are yet to be finalised.

Harassment and Fire and Rehire

The Bill also strengthens existing rules around workplace harassment, placing a duty on employers to take “all reasonable steps” to prevent harassment based on any protected characteristic – not just sexual harassment. Employers will need to ensure their policies and training programmes are up to date to mitigate the risk of claims.

Another key reform relates to the controversial practice of “fire and rehire”, where employers dismiss and re-hire workers to change their terms and conditions – typically for a lower pay and fewer protections. Under the new law, this practice will be restricted, making dismissals for this reason automatically unfair except in cases of severe financial hardship.

Collective Redundancy and Statutory Sick Pay

The Bill introduces changes to collective redundancy law, removing the requirement for redundancies to occur at one establishment to trigger collective consultation. This means that larger employers with multiple sites could be required to consult collectively if they are making redundancies across several locations within a 90-day period. Failure to conduct proper consultation could lead to costly protective awards for affected employees.

Additionally, the Bill proposes reforms to statutory sick pay, removing the three-day waiting period and the lower earnings limit. This change will provide greater financial security for employees who fall ill but will increase costs for businesses, especially those with a high number of low-paid workers.

Impact on Workers

An impact assessment published by the Department for Business and Trade suggests the Employment Rights Bill will provide substantial benefits to workers, particularly those in low-paid, insecure jobs. According to the analysis, ten million workers may benefit from increased job security and improved working conditions, with particular gains for women, younger workers, ethnic minorities, and disabled employees. The Bill is also expected to have a positive impact on workforce health and wellbeing, which could lead to higher productivity and better economic outcomes.

TUC General Secretary Paul Nowak commented, “This impact assessment confirms that the Employment Rights Bill is good for workers, good for business and good for the wider economy. Driving up employment standards will boost living standards, productivity, and growth. That’s why the vast majority of managers support these plans.”

Impact on Businesses

According to the government’s analysis, the bill will cost firms under £5bn per year.

“To contextualise the size of this impact, total wage costs in the UK were £1.3 trillion in 2023 in nominal terms, meaning that this is equivalent to an uplift of the UK’s total pay bill of up to 0.4%,” the report reads. “This cost would be concentrated largely on employers in lower-paid sectors rather than spread evenly across the economy. Even if we assumed all of this cost falls on such sectors, the equivalent uplift in the wage bill for that part of the economy would be at most 1.5%.”

According to this assessment of the legislation, employers that rely heavily on low-paid or flexible contract workers may find the changes particularly disruptive, with some predicting that the reforms to day-one rights and zero-hour contracts could deter employers from hiring workers. However, Nowak argues, this means this “will stop decent firms from being undercut by the bad”.

“Most employers in this country treat their staff well and do not use exploitative practices like zero-hours contracts and fire and rehire. By levelling the playing field on workers’ rights and protections this bill will give people more predictability and control over their lives,” he said.

The report acknowledges that the new measures will have a proportionately higher impact on SMBs, as “there are usually fixed compliance costs that do not vary depending on a business’s revenue”.

“The Government will consult with stakeholders prior to secondary legislation to understand the impacts on SMBs and develop appropriate mitigations, such as providing information and access to advisory services to support compliance with new regulations,” the report reads.

Preparing for Change

As the employment landscape continues to evolve, businesses that proactively align their HR strategies with the changing legal framework to attract and retain top talent while maintaining compliance with the new laws.

The new Bill, and what it means for business, will be a central topic of discussion at the CIPD Annual Conference and Exhibition, which is set to take place  on 6 and 7 November in Manchester. The theme for this year’s event is ‘Making work work’, with four key streams covering “productivity and skills, artificial intelligence (AI), workplace conflict, leading responsibly, and boosting employee experience”.