End of year review, Employment Rights Bill 2025 roadmap: Current status and key developments

Many of you will recall that in October 2024 the Labour Government announced  plans for a significant overhaul of employment legislation intended to improve workers’ rights in the UK through the implementation of the ERB. The ERB was hailed as the most significant overhaul of employment legislation in over a decade. Since then, there have been considerable changes in government (the ERB is understood to be the brainchild of former Chancellor Angela Raynor) and following consultation and several backwards and forwards between the Commons and the Lords, at the time of writing the government has just got the ERB over the line and the bill has now been passed.  Once Royal Assent has been given (which we anticipate will before the end of the year) then we will have the Employment Rights Act 2025.

There are a number of provisions in the ERB setting out major reforms to Employment Law which are intended to modernise the workplace whilst strengthening protection for workers.

By way of reminder, some of the key provisions in the ERB are:

Day-One Rights

The manifesto proposal that under the ERB employees would gain immediate protection from unfair dismissal has been abolished. following consultation on the ERB in the House of Lords. Instead, an amendment has been passed to retain the qualifying period for unfair dismissal claims, but reduce it form 2 years to 6 months. This means that employees will not have a day one right to unfair dismissal protection, but employers will have a much shorter timescale within which to dismiss employees whilst avoiding unfair dismissal claims.

Sick pay and parental leave

Employees will be entitled to these from the first day of employment.

Cap on compensation in unfair dismissal claims

The government has recently introduced a proposal to abolish the cap on compensation claims for unfair dismissal. Compensation is currently capped at the lower of 1 year’s pay or a prescribed statutory amount (currently £118,223), whichever is lower. This will almost certainly become law, but at present what is unclear is whether both elements of the cap will be removed, or whether  the prescribed statutory amount will remain.

Harassment

In October 2024 a duty was imposed on employers to take reasonable steps to prevent sexual harassment in the workplace. The ERB strengthens this duty and requires employers to take ALL reasonable steps to prevent sexual harassment. Employers will also be liable for harassment by third parties if they have not taken steps to prevent it.

Zero-Hours Contracts

To reduce the use of exploitive zero-hours contracts the ERB will require employers to offer contracts which include guaranteed minimum hours of work and provide compensation for shifts which are cancelled at short notice (protection to be extended to agency workers).

Fire and Rehire

An introduction of the right to claim Automatic Unfair Dismissal where an employee is dismissed for refusing to accept contract changes imposed on them under the fire and re-hire practice. Employers will only be able to rely on fire and re-hire practices in cases of extreme financial hardship or when making non-material changes only.

Collective Consultation in Redundancies

Penalties for failing to collectively consult where you are proposing redundancies of 20 or more employees are set to increase from 90 days to 180 days gross pay per affected employee.

Statutory Sick Pay

To become a day one right and proposal to remove the minimum earnings threshold meaning all eligible employees will be entitled to SSP from day one.

Trade Union Rights

The ERB includes provisions to make the process of recognising a trade union more simple and to enhance the rights for collective bargaining. It also proposes to make accessing a union easier and allowing permission to unions to access employees who they do not currently represent.

Fair Work Agency

The FWA will be established and is intended to oversee and enforce employment rights.

Proposed changes under the ERB are going to bring with it a huge amount of cultural change for organisations. The Government have committed to introducing the amendments on a phased basis to try and assist organisations and give them time to adapt to the new set of legislation. It is vital that employers start to think about the impact these changes will have and where possible start considering practices and policies which can be put in place now so that they ensure they are prepared for the changes.

When will the proposed changes to the ERB take effect?

This roadmap clearly explains when we expect the implementation of the ERB

Employment-Rights-Bill-2025-Roadmap-December-2025-Ward-Hadaway

To discuss any of the above changes in detail, contact a member of our employment team.