Employment Rights Bill – what’s in the legislation?

By Anna Jordan on Small Business UK - Advice and Ideas for UK Small Businesses and SMEs

The Labour government has outlined its plans for the Employment Rights Bill.

Here are some of the measures in the bill. Most of them won’t be in place until two years from now following consultation.

• The two-year qualifying period for unfair dismissal will be scrapped. Instead, employees will have protection from day one on the job
• Consultations will take place on a statutory probation period for new hires (nine months is being proposed). The idea is to allow proper suitability for the role while giving employees reassurance from their first day
• Flexible working will be the default where practical
• Employers will be required to create action plans on addressing gender pay gaps and supporting employees through the menopause, as well as protections against dismissal for expectant and new mothers
• A new Fair Work Agency will be introduced, combining existing enforcement bodies to make sure employees get holiday pay and allow business owners to seek help with the new rules

The bill will introduce 28 employment reforms, bringing an end to zero hours contracts along with fire and rehire practices and improving parental and bereavement leave for millions of workers. Removing lower earnings limit on statutory sick pay and cutting the waiting period for pay are also mentioned.

As part of the broader Make Work Pay plan from Labour’s manifesto, consultations will be held around:

• A right to switch off – which forbids contacting employees out of hours, unless it’s under exceptional circumstances
• Expanding the Equality (Race and Disparity) Bill to make it mandatory for larger employers to report their ethnicity and disability pay gap
• Review into the parental leave and carers leave systems

Mixed responses

As expected, responses to the legislation from the business community are varied.

Jeanette Wheeler, chief HR officer at  MHR, expresses concerns around the workload for HR professionals:

 “While the government has announced the creation of a Fair Work Agency aimed towards supporting employers with guidance on how to comply with the law, it is imperative that this is easy to access in order to swiftly provide tangible advice for businesses to create a standardised approach towards the employment reforms. Without these guardrails in place, employees and employers alike will face ongoing challenges and potential stifled growth.

“The onus will be on HR teams to carry any employment changes forward. Mitigating challenges created by employees being able to argue for unfair dismissals from day one will require HR departments to put more thorough referencing checks in place, and work closely with the business to develop a more robust recruitment and onboarding process, ensuring people are being provided with the right opportunities to develop their careers from the onset.

“This is all ultimately positive for the business – retaining talent and having an improved induction programme is not a negative impact of the bill – but the concern for businesses is the amount of time and guidance they will be afforded to put these practices in place. HR has a duty of care to not only ensure new policies are reviewed and implemented into the organisation, but also to ensure the wider workforce – namely managers – are properly trained and supported in respect to how the new legislation affects their teams.”

Kate Nicholls, CEO of UKHospitality, said it’s good for the hospitality industry:

“I’m pleased the government has recognised the importance of flexibility to both workers and businesses. This is crucial for hospitality, which employs 3.5 million people and provides countless flexible roles for working parents, students, carers and many more.

“We look forward to continuing our engagement and consultation with the government on its plans, which are not without cost, to get the details right for all parties.”

Gill McAteer, director of employment law at Citation, welcomes the boost the bill will give to recruitment: 

“Getting this right on a large scale will remove a significant handbrake on the economy, and help people find a role that’s genuinely right for them. Having to wait two years before feeling secure in a new role is a barrier to the movement we need in a healthy labour market. It’ll make recruitment easier for businesses struggling with the skills gap, and boost productivity for everyone.” 

Chris Cuckeny, senior associate at Devonshires is less sure: “Whilst more employment rights will be welcome news for individuals, for businesses the new Employment Rights Bill will be received with some trepidation as it reduces their flexibility in being able to manage their workforce whilst, at the same time, increasing their financial obligations. Giving people unfair dismissal rights from day one will inevitably make businesses more hesitant to take people on in the first place, which in the long run will be detrimental to unemployment rates as well as growth in the economy as a whole.

“Employment tribunals are desperately backlogged, with hearings in certain parts of the country already being listed into Summer 2026. Giving employees more rights will inevitably increase the number of legal claims issued, and without substantial investment from the government to increase resources, these new rights risk overwhelming a tribunal system that is already on its knees.” 

Gareth Burrows, founder of Breathe HR, comments:

“The government has already pledged to be pro-worker and pro-business. It can achieve both by providing clear guidance, practical tools, and resources to those who will be making good on new workers’ rights proposals at millions of SMEs up and down the country.” 

Chris Barry, director at Thomas Legal, welcomes the bill:

“It’s all about choice for employees and this will depend on where they are on their career journey and their personal life, but the key takeaway is employees can now choose whether they work longer than contracted hours rather than feeling under pressure by culture or peers.”

Kate Underwood, managing director / HR director at Kate Underwood HR and Training, said:

“The government needs to strike a balance, ensuring that while workers’ rights are safeguarded, small businesses aren’t overwhelmed by new costs and legal risks.”

Keith Budden, managing director at Ensurety is unsure about full salary sick pay:

“Full salary sick pay from day one will have implications for small business. I think that it will increase the cost of recruitment since I suspect there will be more desire for thorough health checks on candidates prior to employment. This could also lead to unintended discrimination against those with chronic illness which is ironically one of those demographic groups the government says it wants to help back into work!”

Shirine Khoury-Haq, CEO of the Co-op, said: 

“Being able to support colleagues when they need it, and in particular women, parents and carers, helps retain valuable talent and makes good business sense. We look forward to continuing to work with government to make work pay and to deliver economic growth.” 

Adam Myers, head of HR consulting at Stellamar, can see both sides:

The Employment Rights Bill is overdue in my view. Whilst we have had robust employment law in the UK for years, so many businesses feel they can skate around it and that it doesn’t really apply to them or their business, which I believe had led to the problem which the government appear to be trying to fix. For too long have businesses relied on ‘probationary periods’ or ‘lack of employment rights’ to make unfair dismissals, so this protection should be positive for workers.

“It is undoubtedly going to make SMEs think twice about making new hires, especially with so much buzz around AI taking roles from people. On the flip side, it may encourage more people to feel protected at work, and therefore want to join small growing businesses without the perceived risk, which I think will have a positive impact on the talent pool.”

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