On Thursday, October 10, the Government unveiled the Employment Rights Bill (ERB), fulfilling a commitment made in their manifesto to enhance employment rights as part of the “Plan to Make Work Pay.”
This significant legislative proposal includes 28 measures designed to overhaul existing employment laws. These changes will not fully take effect until 2026, but they raise key questions about how recruitment and staffing agencies, businesses, and workers will be affected.
The Government has indicated that further consultations will continue through 2025, allowing businesses time to prepare for these changes.
Key Elements of the Employment Rights Bill
- Zero Hours Contracts
One of the Bill’s central focuses is the regulation of zero hours contracts. The Government aims to ban exploitative practices associated with these contracts, ensuring that workers have the right to transition to a contract reflecting their regular hours over a 12-week reference period. Additionally, the Bill mandates reasonable notice for shift changes and compensation for short-notice cancellations. The specifics around these provisions will be clarified through ongoing consultations. The Government has made explicit reference to agency workers, with further consultation planned to ensure the Bill’s provisions are effectively and appropriately applied. As drafted, the Bill does not include agency workers in the new rule.
- Protection from Unfair Dismissal
The ERB introduces protection against unfair dismissal from day one of employment, significantly lowering the current two-year qualification period. However, there is a proposed nine-month probation period during which employers can dismiss employees for performance-related issues without the full dismissal process. The details of this lighter pre-probation process will be subject to further consultation.
- Statutory Sick Pay
The Bill removes the lower earnings limit for Statutory Sick Pay (SSP) and eliminates the three-day waiting period for eligibility. The Government acknowledges the implications this may have for agency workers and promises a consultation to ensure fair application of these provisions.
- Flexible Working
Under the new legislation, flexible working will become the default arrangement for all workers, with employers needing to demonstrate that a request is unreasonable. The Bill outlines specific grounds for rejecting such requests but lacks clarity on the exact processes employers must follow, which will be determined through subsequent regulations.
- Fair Work Agency
The establishment of a Fair Work Agency aims to streamline enforcement across various labor rights areas. This new agency will encompass existing bodies, providing a more efficient means for workers to protect their rights. However, concerns remain regarding its resourcing and the preservation of specialised knowledge relevant to the temporary labour market.
- Parental and Bereavement Leave
The ERB also introduces significant changes to parental leave, removing qualifying periods for both parental and paternity leave, effective from day one. Additionally, the Bill expands bereavement leave entitlements beyond just parents, reflecting a commitment to creating more family-friendly workplaces.
- Fire & Rehire
The Government has made it known that it aims to eliminate the practice of fire and rehire. One proposed solution is to amend the law to enable employees to seek compensation in such situations, with the objective of discouraging employers from engaging in these practices. Additionally, the Government plans to review the possibility of removing the limit on compensation for employees who are let go without a proper redundancy process. It is emphasised that businesses will still be able to restructure and reorganise their operations and staff to remain viable if no other options are available. The specific circumstances under which this would apply are still uncertain and require further clarification.
- Trade Union Legislation
The Bill aims to repeal previous legislation that restricted trade union activities, modernising the framework for union representation, and fostering better workplace relations.
What’s Not Included
Notably, the proposal for a single status of worker—merging employee and worker categories—is absent from the ERB. While this remains a long-term consideration, its exclusion indicates an understanding of the complexities involved in such a change. Furthermore, the anticipated “Right to Switch Off,” designed to prevent after-hours communication, has not been legislated; instead, a statutory code of practice is being developed. Further details can be found here:
Next Steps to Make Work Pay (web accessible version) – GOV.UK (www.gov.uk)
Next Steps
The ERB is set to progress through Parliament, with the second reading scheduled for October 21. Most proposed reforms are expected to be implemented in 2026, following consultations that will begin in 2025. The recruitment sector should remain vigilant and engaged in these discussions, as the implications of the Bill are profound.
Central will closely monitor these developments, ensuring our clients are informed and prepared for the upcoming changes. The REC will actively participate in consultations and advocate for necessary amendments to support the recruitment industry. We encourage our partners to stay involved in the legislative process, as your voices are crucial in shaping the future of employment law in the UK.
The full ERB can be found here:
Employment Rights Bill – Parliamentary Bills – UK Parliament
