Despite the Employment Rights Bill (ERB) being published in October 2024, it remains subject to extensive debate during its passage through Parliament. Last week, the Government published responses to its ERB-related consultations on (i) strengthening statutory sick pay, (ii) fire and rehire and collective redundancy, (iii) industrial relations, and (iv) zero hours contracts and agency workers which trailed various amendments to the ERB and its response to a fifth consultation, launched in June 2023, on tackling non-compliance in umbrella companies which has also led to amendments to the ERB.
A lengthy Amendment Paper, published on 5 March 2025, included further amendments proposed by MPs. It is not expected that all the proposals will be taken forward, and we expect further changes when the ERB is debated in the House of Lords.
In this Law-Now we highlight what we currently know about the key changes to the ERB relevant to employers, including some significant amendments such as an increase in the maximum protective award payable where an employer has failed to comply with its collective consultation obligations from 90 to 180 days’ actual pay, the extension of time limits for bringing most claims in employment tribunals from 3 months to 6 months, and the application of the zero hours contracts measures to agency workers.
| Unfair dismissal |
- The time limit for bringing most employment related claims will be extended from three months to six months, with the aim of reducing the pressure on the employment tribunal system by allowing parties more time to resolve their disputes without recourse to litigation. It remains to be seen whether that aim will be achieved, although it is consistent with the direction of travel of alternative dispute resolution in the UK courts and tribunals system.
- Currently, there is no proposal to extend the standard six-week mandatory Acas early conciliation period before a claim can be issued, although Acas are likely to remain available to support conciliation attempts between the parties in most cases.
- The extension of the time limit to bring claims, together with the removal of the two-year qualifying period threshold for bringing most unfair dismissal claims, is likely to assist claimants (particularly those who have limited access to legal advice) and may, in fact, lead to an increase in claims.
- Compensation awarded for dismissals during the new ‘statutory probationary period’ will be subject to a limit calculated by reference to the maximum amount of a compensatory award for unfair dismissal.
- While the length of the ‘statutory probationary period’ is yet to be confirmed, this will be between 3 months and 9 months.
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| Zero hours contracts |
- Earlier amendments to the ERB, at the Committee Stage, clarified and strengthened the zero hours contracts measures including by (i) introducing a duty on employers to inform workers about their right to guaranteed hours and to notify them whenever an exemption applies, (ii) making clear how compensation will be calculated if short notice of a shift change is given, and (iii) introducing anti-avoidance measures around successive fixed-term contracts.
- Zero hours contracts rights will be extended to apply to agency workers.
- End hirers (the terminology used by the Government to describe the hiring employer) will have the obligation to make guaranteed hours offers to agency workers.
- End hirers and employment agencies will be jointly responsible for giving agency workers reasonable notice of shifts, shift cancellations and changes to shifts.
- Employment agencies will be responsible for making the penalty payment to the agency worker where a shift has been curtailed, cancelled or moved.
- Acknowledging that the decision to change the shift may have been made by the end hirer, and not the employment agency, it will be permissible for the parties to negotiate in the commercial agreement that the employment agency may recoup costs from the end hirer.
- Employers who enter into a collective agreement with a trade union may be able to contract out from the rights to offer guaranteed hours and reasonable notice.
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| Collective redundancy |
- The maximum period of the protective award for failing to comply with collective consultation requirements will increase from 90 to 180 days’ actual pay. The Government consulted on another option of removing the cap altogether, but this was discounted on the basis of a lack of certainty for businesses and disproportionality.
- Despite originally proposing the removal of the ‘at one establishment’ test (which raised concerns that multi-site businesses could end up in a perpetual state of collective consultation), that test will be retained, but a second threshold trigger (the details of which are still to be determined in regulations) targeting multi-site redundancies will be introduced. The threshold may be a set figure (e.g. 100) or a percentage (e.g. 10%) of employees of the business.
- A related amendment states that employers will not be required to consult all employee representatives together or consult with a view to reaching the same agreement with all employee representatives. This amendment is aimed at tackling a concern previously raised in response to the Government’s original proposal to remove the ‘at one establishment’ test that employers would be required to consult with disparate groups of employee representatives about unrelated redundancy situations.
- Interim relief will not be available for employees who bring protective award claims nor where employees are dismissed in breach of an employer’s collective consultation obligations.
- The Government has committed to gathering views this year on strengthening the collective redundancy framework.
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| Fire and rehire |
- Interim relief will also not be available where an employee brings a claim for automatic unfair dismissal in a ‘fire and rehire’ situation.
- The Government intends to gather further views this year on updating its Code of Practice on dismissal and re-engagement (which took effect in July 2024) to ensure that it reflects the changes to fire and rehire in the ERB (which include making it automatically unfair except in certain limited circumstances).
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| Statutory Sick Pay (SSP) |
- Removal of the 3-day waiting period for SSP (which means that SSP is paid from day one, rather than the current regime where it isn’t paid until the fourth day of sickness absence).
- Introduction of a new rate of SSP – set at 80% of average weekly earnings or the flat rate (currently £116.75 per week) whichever is lower. As a result, the lower earnings limit (currently £123 per week) is removed as a condition of entitlement for SSP.
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| Industrial relations |
- Recognising the Government’s commitment to modernise working practices, the new rights of access will be extended to cover digital access (the details of which are to be set out in regulations). The consultation gives the example of union-related updates on an employer’s intranet page.
- Earlier amendments to the ERB, at the Committee Stage, clarified that the rights of access are (i) limited to trade unions that have a certificate of independence, and (ii) do not extend to parts of workplaces used as private dwellings.
- Notice to employers of industrial action will be reduced from 14 to 10 days (rather than 7 days which the Government acknowledges would not give employers adequate time to prepare for strike action in some important sectors such as transport and healthcare).
- The duration of industrial action ballot mandates will be doubled from 6 to 12 months. The Government says this is supported by evidence that the vast majority of industrial action concludes within 12 months, and confirms that there will be no option for an employer and trade union to agree an extension of the mandate beyond 12 months.
- Information requirements for industrial action ballots and notices to employers will be simplified. This change will mean that employers have less information on which to assess the impact of industrial action on their operations. For example, the existing requirements will be removed for a trade union to provide information to an employer ahead of an industrial action ballot regarding (i) the number of employees concerned in each category or workplace and (ii) how the total number of employees concerned was determined by the union.
- Businesses will be prevented from altering the number of workers in a bargaining unit after an application for statutory recognition has been submitted. The aim behind this change is to prevent employers from diluting union support in order to avoid union recognition being granted.
- The Government will consult further on modernising the trade union landscape after the ERB receives Royal Assent, including in relation to the delivery of e-balloting.
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| Umbrella companies |
- Umbrella companies will be defined and brought within the definition of an employment business which means they will be regulated by the Fair Work Agency (once it is introduced in due course) in order to address concerns of non-compliance and exploitative employment practices. These changes will mean that workers engaged by umbrella companies will have the same rights and protections as those engaged by employment businesses.
- PAYE responsibility will move from an umbrella company to the recruitment agency. Where there is no recruitment agency, responsibility will move to the end hirer.
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| Powers of the Fair Work Agency |
- The remit of the new employment rights enforcement agency, the Fair Work Agency, has been extended, enabling it to take enforcement action in relation to workers’ additional holiday pay entitlements. A new enforcement mechanism will be applied where employers will be served with a notice of underpayment and the amount must be paid to the employee within 28 days. These changes will be particularly significant for employers who are yet to address issues of holiday underpayment within their business.
- Employers will be required to keep records for 6 years to show that they have complied with workers’ entitlements in relation to annual leave, although the manner and format in which those records are kept will not be prescribed by law. Failure to do so will amount to a criminal offence punishable by a fine.
- The Fair Work Agency will also have a standalone right to bring proceedings in an employment tribunal against an employer, instead of the worker themself. If the claim is successful, an employment tribunal can still make a financial award in the worker’s favour.
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| Other potential changes |
- Amendments have been proposed to provide for new protections for victims of domestic abuse, including a statutory right to at least 10 days’ domestic abuse victims’ leave and miscarriage bereavement leave.
- Those amendments also seek to extend the duty to prevent sexual harassment in the workplace (introduced in October 2024) to include domestic abuse. Employers would be required to take all reasonable steps to prevent their workers from experiencing domestic abuse.
- We await further updates to establish whether these amendments will be taken forward.
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Next steps and timescales
The latest amendments will be debated by MPs at the third reading in the House of Commons this week before moving to the House of Lords. The ERB is expected to achieve Royal Assent by mid-2025, although the majority of the provisions are not expected to come into force until 2026.
As further changes are made to the ERB while it continues its journey through the legislative process, we will be updating our dedicated ERB webpage where you can access expert insights on the ERB including a series of in depth articles and on demand webinar recordings. If you would like more information about how these changes might affect your organisation, please get in touch with your contact in the CMS employment team.
Article co-authored by Olivia Bradshaw, solicitor apprentice.
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