In October, the Government introduced the much-anticipated Employment Rights Bill to Parliament, a major piece of legislation set to transform employment law in the UK.
Described as the “biggest shake-up of workers’ rights in a generation,” the Bill proposes 28 employment reforms to overhaul workplace protections. These include ending exploitative practices, such as zero-hours contracts and “fire and rehire” strategies, while establishing crucial “day one” rights for paternity, parental, and bereavement leave.
This Bill, and its subsequent consultation though controversial, represent a balanced approach after extensive discussions with both businesses and unions, underscoring a significant policy shift for the current Government. The Bill reflects a pragmatic approach to workers’ rights while paving the way for future reforms to further empower employees and foster a more equitable workplace.
The Path to Reform
The Government’s employment law reform journey began with the Labour Party’s 2021 manifesto, New Deal for Working People, which set out bold proposals for workplace protections. However, the initial, ambitious plans were met with concerns. Media critics questioned the reforms’ potential impact on businesses, and others worried that such changes could impact Labour’s electoral success as the 2024 general election approached. In response, Labour softened its proposals, seeking a middle ground that balances business needs with essential worker protections.
The 158-page Employment Rights Bill reflects this compromise, retaining key promises—such as expanded day one rights and the repeal of anti-union legislation—but, at this stage, without the key detail employers need to prepare. With most new rights unlikely to take effect before autumn 2026, this delay reflects the Government’s intent to provide businesses with a transition period, aiming to smooth the process.
Key Provisions of the Employment Rights Bill
- Ending Zero-Hours Contracts Workers on zero-hours contracts will gain the right to a guaranteed-hours contract if they work regularly for a defined period. While Labour’s original proposal offered this contract after 12 weeks of continuous work, the Bill includes a consultation period to finalise the threshold. Importantly, workers who prefer zero-hours contracts will retain the option to stay on them. The Government believes that agency workers should have the right to guaranteed hours which reflect the hours they work. The Government’s intention is also that agency workers should receive payment for shifts that are cancelled or curtailed at short notice. The unique tripartite relationship between agency workers, employment businesses and hirers, makes the application of these measures to the recruitment sector particularly complex. The zero hours contract measures create new responsibilities for employers. For agency workers Government needs to decide whether these responsibilities sit with the employment business, the end hirer, or both. In the consultation the Government is seeking to understand how these measures can best apply to agency workers, and how they can mitigate unintended consequences.
- Repealing Anti-Union Legislation The Bill seeks to dismantle anti-union laws introduced by the previous Conservative administration, including the controversial Minimum Service Levels (Strikes) Act. It also makes provisions for online balloting for union votes, though this will not require new legislation.
- Introducing “Day One” Rights Under current law, employees must work for two years before qualifying for protections against unfair dismissal. The Bill will eliminate this waiting period, enabling workers to claim unfair dismissal from their first day of employment. Additionally, day-one rights will extend to paternity and unpaid parental leave, complementing the existing day-one maternity leave rights. The Bill will also introduce bereavement leave, balancing employee needs with employer considerations.
In addition, the Government is proposing a new statutory probation period for new hires to balance the introduction of day-one rights. This initiative is designed to support businesses in thoroughly assessing an employee’s suitability for a role while simultaneously ensuring that employees benefit from immediate workplace protections. The proposed probationary period of nine months represents a significant shift from the current two-year qualifying period for unfair dismissal claims, bringing a sharper focus on skills and competencies during hiring.
Employers now face a shorter timeframe in which to evaluate fit and performance, which underscores the importance of targeted recruitment strategies that prioritise skill and role alignment from the outset. In this new framework, the five established ‘fair’ reasons for dismissal—conduct, capability, redundancy, statutory restriction, and other substantial reasons—will remain intact, allowing organisations to continue managing workforce adjustments within a structured and balanced approach.
- Sick Pay from Day One A significant reform sparked by the COVID-19 pandemic, the Bill will establish a universal entitlement to sick pay from the first day of illness, instead of the current four-day waiting period. This change addresses a critical gap that left many workers unable to self-isolate due to the absence of sick pay at the start of their illness.
- Banning Fire and Rehire Practices The controversial practice of “fire and rehire,” where employers dismiss workers only to rehire them on less favourable terms, will be banned in all but the most extreme circumstances. This move strengthens protections against unfair workplace treatment.
- Strengthening Maternity Leave Protections The Bill also enhances protections for pregnant employees and those returning from maternity leave, shielding them from dismissal during pregnancy, while on maternity leave, and for six months following their return. Large employers will additionally be required to develop action plans to address gender pay gaps and support employees experiencing menopause.
Broader Employment Reforms
The Bill introduces several additional measures aimed at creating a fairer, more inclusive workforce. These include:
- Minimum Wage Adjustments: The cost of living will play a more prominent role in setting the minimum wage, and age-based wage bands will be removed, aligning the pay rate for 18–20-year-olds with that for over-21s.
- Flexible Working by Default: Employers will be required to offer flexible working arrangements unless they can demonstrate that such arrangements are impractical.
- Fair Work Agency: A new enforcement body, the Fair Work Agency, will have inspection powers and the authority to impose penalties for breaches of employee rights, such as unpaid holiday pay or non-compliance with the minimum wage.
What’s Next for Employers?
The Employment Rights Bill signals a shift in the UK’s employment landscape, with sweeping changes poised to redefine workplace protections. As the Bill progresses, Morson Group remains committed to working closely with our clients, advisory bodies, and industry associations such as APSCO and the REC. We will actively participate in consultations to ensure our clients stay informed and compliant as these reforms take shape.
While the timeline for these changes extends into 2026, businesses would benefit from beginning their preparations now for the new employment rights framework. From revisiting policies on zero-hours contracts and flexible working to understanding enhanced protections for workers, this Bill presents both challenges and opportunities for UK businesses and workers alike. Morson will be hosting a number of regional roundtables to help, support and guide businesses in light of these iterative changes.
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