Employment Rights Bill: What HR Teams, Senior Leaders, and Boards need to know

What is the Employment Rights Bill?

The ERB (or “the workers’ rights bill”) was drafted and put before parliament within Labour’s first one hundred days in office. If I am being critical, this shows in some of the drafting and scant information contained within it. The ERB has taken up much of the employment law “airtime” over the last year with speculation full of “ifs, buts and maybes.”

Below, I set out in high level detail what are the key proposed changes and what this will mean for businesses, as well as steps to take now. Many of the changes – those “big ticket” items like the introduction of day one unfair dismissal rights - are planned for some time in 2027. Whilst this may appear an age away, time will quickly tick.

Consultations

The ERB is an enabling “Act.” To bring its various elements and changes to life will take separate Regulations and a lot of them. This means the ERB is light when it comes to details and there is still much we do not know and will not know for many months. Saying that, we do have an idea of what will change substantively and the overall direction of travel, the minutia coming further down the track.

In the meantime, what we have seen, and will continue to see as move from 2025 to 2026, are government consultations on the various proposed changes. For example, we currently have consultation concerning how the rights of pregnant women and those on maternity leave (or recently returned) should be “enhanced” as well as what the increased rights of Trade Union rights might look like in practice.

I urge all of you to engage with any consultations and make your views known. Sign up to our newsletters too for updates and information.

“In all challenge comes opportunity”

This has been my mantra and one I am sharing with my audiences when it comes to the ERB’s changes. I do think there are positives (really!), although we may have to look hard for them! Thinking now how we can embed good management practices, how we engage a culture of positive performance management, how we can use manager training programmes to focus on legal and leadership duties and upskill our leadership population, and how we can focus on internal talent are, to me, all positives.

As you read the high-level overview below, take note and take advice.

Key proposed changes, timetable, and impact

Statutory sick pay (SSP), family and bereavement leave, pregnancy / maternity dismissal protection, equality action plans and flexible working

SSP

Currently: qualifying employees receive SSP from their fourth day of sickness absence and must earn above the statutory Lower Earnings Limit (LEL) threshold (as set each year).

What is changing: the three-day waiting period will be removed, meaning SSP will be payable from day one of absence. Eligibility extended to those earning below the LEL (payable at 80% of earnings up to the SSP flat weekly statutory amount).

Impact: this change will have a significant impact on sickness absence costs for employers. Greater internal focus on absence management processes will be needed which should include better reporting and tracking of absences, training for managers around spotting poor absence and why management is so important.

When: April 2026

Family Leave

Currently: eligible employees must be continuously employed for 26 weeks to qualify for paternity leave and for 12 months to qualify for parental leave. Also, if an employee has taken shared parental leave (SPL) first, they forfeit their right to take paternity leave.

What is changing: statutory paternity and parental leave will become day one leave rights (eligibility requirements for statutory paternity pay remain, parental leave remains unpaid). Removal of the anomaly regarding the taking of paternity leave and SPL.

Impact: employers will need to revisit their family leave policies and update. Training advised for managers on new leave obligations. The paternity leave/SPL anomaly removal will mean that those eligible can flex when they take SPL and paternity leave but also mean we need clear internal triggers.

When: April 2026

Bereavement Leave

Currently: no statutory right to take bereavement leave (save in situations where statutory parental bereavement leave applies).

What is changing: introduction of a day one right to (at least) one week’s unpaid statutory bereavement leave (eligibility/details awaited), including for miscarriage/pregnancy loss before 24 weeks.

Impact: unlikely to create significant new costs as many employers will currently offer discretionary leave in these cases; however, policies will need to be revisited and updated and awareness raised of new rights.

When: 2027

Increased Dismissal Protection (Pregnancy and Maternity)

Currently: there are specific requirements to offer any suitable available vacancy to those employees “at risk” of redundancy who are pregnant/on maternity, adoption, neonatal care or shared parental leave, and for a period of time after they return to work (this is 18 months after the child’s birth/placement and for SPL/neonatal care leave, this right applies after returning from leave of at least six continuous weeks).

What is changing: expect additional Regulations preventing employers from dismissing women during pregnancy/maternity leave and for six months following a return to work (except in specific circumstances). Details awaited and are currently being consulted upon. Options in the consultation include removing certain potentially fair statutory dismissal grounds (for example, redundancy) thereby making it unlawful to dismiss for certain statutory grounds (except in – as yet defined – exceptional circumstances) or to have a separate test of “fairness” which employers will have to meet when dismissing a pregnant woman/recent maternity returner. Also note that this change could also be extended to cover those on adoption or shared parental leave (and maybe paternity and neonatal care leave).

Impact: potential to add complications to redundancy/reorganisation or other internal performance management and disciplinary processes. Audit staff prior to key workplace restructures and ensure managers are aware of new rights and processes so that dates are not missed.

When: 2027

Equality Action Plans

Currently: employers with 250+ employees must report their gender pay gap annually but no requirement to implement an action plan to reduce any identified pay gap.

What is changing: new requirements for employers with 250+ employees to implement equality action plans, including information to address their gender pay gap and to support employees going through menopause.

Impact: more work will be required of employers. Scope and implementation of action plans could become grounds for dispute in claims of discrimination. Expect further reporting on disability and ethnicity pay gaps (details awaited under separate legislation).

When: Voluntary action plans from April 2026, mandatory from 2027

Flexible Working

Currently: universal, day one right for employees to request statutory flexible working. A statutory framework and an ACAS Code of Practice apply. A request may be rejected on one (or more) of the eight “statutory grounds.”

What is changing: an employer’s refusal must be reasonable, and the employer must write to the employee explaining why it is reasonable.

Impact: greater emphasis on evidence and reasoning where a request is refused is going to be necessary. This will involve engagement from managers as well as tighter internal processes. Likely to open up another battleground when an employer rejects a request. Reviewing processes and manager training a must.

When: 2027

Fire and re-hire and “restricted variations”

Currently: where an employee fails to agree a contract change, an employer can (subject to complying with rules relating to dismissal/fairness/collective rights/2024 Code of Practice) dismiss an employee by giving them correct notice and offering re-engagement on new/less favourable terms before notice expires.

What is changing: where an employer is proposing to make “restricted variations” it will be automatically unfair to dismiss an employee for refusing to accept these changes unless the employer can show dire financial straits and no alternative available. Restricted variations would include changes to pay, time off work, hours, shifts and pensions. It also includes seeking to amend contracts to include a variation clause in the contract which would enable the employer to make a variation to the contract without the employee’s agreement. Similarly, dismissing an employee and replacing them with another employee or an agency worker/self-employed contractor will also be automatically unfair. Dismissal in the case of other contract changes could still be unfair, and the employer will need to satisfy new/additional Employment Tribunal “fairness tests.”

Impact: employers will have narrower grounds on which to force through contract changes, even in times of business difficulty, and the process will become riskier. Review contracts now, take advice and consider when pay reviews are.

When: October 2026

Sexual harassment, third party harassment, NDAs, and whistleblowing

Sexual Harassment

Currently: The Worker Protection (Amendment of Equality Act 2010) Act 2023 places a positive and proactive duty on employers to take reasonable steps to prevent sexual harassment of their employees in the course of their employment, including by third parties. Failure to comply can lead to increased compensation in discrimination and harassment claims (up to 25%).

What is changing: increasing the burden on employers to take ‘all reasonable steps’ when it comes to preventing sexual harassment at work. Also, Regulations (expected late in 2027) to give guidance as to what constitutes “all reasonable steps”.

Impact: employers will find it more difficult to discharge the burden of having taken ‘all’ reasonable steps to prevent sexual harassment. This will become an area of challenge in claims. A key area of focus for employers. Revisit risk assessments, training (a must area), awareness, complaint processes, and monitoring.

When: October 2026

Third Party Harassment

Currently: no standalone claim for workplace third party harassment under the Equality Act 2010.

What is changing: employers will be liable to their employees for workplace third party harassment (i.e. from clients, customers, public) where they have not taken all reasonable steps to prevent it. Also includes liability for third party sexual harassment.

Impact: this change will be hugely significant in terms of claims and risks. Employers will need to include third party harassment in their risk assessments, policies, and training as well as revisit commercial terms and contracts with third party providers and clients.

When: October 2026

Non-Disclosure Agreements

Currently: In most cases, NDAs (including settlement agreements) may include confidentiality clauses preventing an employee discussing claims/issues which have arisen during their employment/termination (save for qualifying “protected disclosures”).

What is changing: proposed ban on NDAs (including settlement agreements) preventing employees discussing/raising allegations of workplace harassment/sexual harassment/discrimination. Any clause purporting to “gag” an employee will be void. Potential exception: where the NDA is requested by the employee (having received independent legal advice).

Impact: defending rather than settling harassment claims may be preferable where there is a substantial risk of the employee going public even in a settlement.

When: no date yet

Whistleblowing

Currently: workers who make qualifying “protected disclosures” (blow the whistle) are protected from detrimental treatment and dismissal as a result. NDAs are void in so far as they seek to prevent a worker from blowing the whistle. A disclosure only qualifies for protection if it discloses information about one or more of six specified types of malpractice, wrongdoing, or failure.

What is changing: a disclosure of information that sexual harassment has occurred, is occurring or is likely to occur will be a qualifying disclosure attracting whistleblowing protection.

Impact: employers will need to ensure that they have clear reporting channels and processes if a whistleblowing complaint is raised as well as understanding the risks of dismissal and detriment claims.

When: April 2026

Guaranteed hours for zero (and low) hours and agency workers

Currently: save for core statutory basic entitlements (e.g. Equality Act 2010 protection, working time and minimum wage) and clauses which seek to prevent workers working for other employers, employers and zero hours workers have contractual flexibility.

What is changing: employers will be required to offer zero/low hours workers guaranteed hours based on the number of hours regularly worked (based on a (likely) 12-week reference period). The worker does not have to accept the new contract. The need to keep offering contracts reflecting actual hours worked will be ongoing (i.e. businesses will need to review actual hours worked every – we think – 12 weeks and offer a new contract again and again to reflect hours worked). This is not a one-off exercise!
Workers will be entitled to reasonable notice of shift changes and cancellations with employers liable for compensation if not given. These new measures will also be extended to agency workers. Definitions and details awaited.

Impact: these changes (as well as changes to umbrella companies – see later) are likely to impact the way employers use and engage with workers and agency staff. Record keeping, reviewing commercial agency terms and worker contracts and auditing of staff will be essential.

When: 2027

Unfair dismissal as a day one right

Currently: save for automatic unfair dismissal, employees need at least two years' qualifying continuous employment to bring an ordinary unfair dismissal claim.

What is changing: removal of the two-year qualifying period. Introduction of a new “initial period of employment” (possibly 6 or 9 months) which will allow an employer to dismiss using a “modified” or “light-touch” dismissal process provided it has a fair statutory dismissal reason (e.g. conduct/capability). Possible reduction in compensation from statutory maximum. Please note, this change does not introduce a statutory probation period as such meaning employees can be dismissed within 6/9 months without consequence. The right not to be unfairly dismissed is from the first day of employment (and possibly beforehand if a job offer is pulled prior to the commencement date) meaning a fair reason must be had and a modified fair procedure will have to be followed (albeit a so-called “light touch” process). Moreover, the new modified procedure does not apply to redundancies or employer-related SOSR dismissals and in these situations, normal fairness/procedural rules apply. Expect a new ACAS Code of Practice on disciplinaries and grievances. Details awaited.

Impact: day one unfair dismissal rights are a manifesto pledge, one of the reasons the government has been so reluctant to listen to business and House of Lords’ pressure to change course and reduce the current two-year period to 6-months. The impact of day one unfair dismissal should not be underestimated as there will be a greater burden on employers from increased claims. Employers will need to revisit probation periods and processes, ensure managers are trained in how to manage probation and performance management more generally. Review recruitment plans, contracts of employment and on-boarding.

I have also had employers saying they will use fixed term employment contracts instead. I fear this is not a “work-around” as this is a day one employment right, not linked to a label or contract given. Also, the ending of a fixed term contract is still a “dismissal”. Advice will need to be taken here.

My initial thoughts on the “lighter touch” process: will it create a “two-tier” dismissal process? Possibly as it means a potentially higher bar for employers to jump over when dismissing during the initial period of employment when compared to dismissal thereafter. Will this process be enough to defend other day one right claims such as discrimination or whistleblowing? Unlikely, employers will need to show evidence as to the genuineness of the dismissal and in my opinion a meeting (accompanied) is not going to be enough to satisfy an employment tribunal.

When: 2027

Collective redundancies, enforcement, limitation periods and trade union rights

Collective Redundancies

Currently: the duty to consult collectively arises when an employer proposes twenty or more redundancies at a single establishment within a 90-day period. Collective consultation is with elected employee or trade union representatives, and the Secretary of State must be notified (HR1 form – note the changes to this form as well from 1 December 2025) in advance. Failure to comply with collective consultation results in protective award of up to 90 days’ full pay per affected employee (failing to notify Secretary of State is a criminal offence).

What is changing: “one establishment” will remain but a new (and additional) “threshold” test will be introduced based on the total number of redundancies proposed across the entire business, regardless of location (e.g. 5% or 10%). Expect more small-scale redundancies to be caught. Maximum protective award to double to 180 days’ full pay per affected employee.

Impact: risks of failing to follow collective processes increase, and possible knock-on impact on settlement levels if employees are unwilling to compromise higher-value claims for less. Planning and monitoring whole business redundancies crucial.

When: Protective award changes, April 2026. Collective consultation thresholds 2027.

Enforcement, Limitation Periods and Trade Union Rights

The creation of a new enforcement agency – Fair Work Agency – to oversee compliance with laws including minimum wage, holiday pay, SSP and modern slavery. Interestingly, the Fair Work Agency will have the ability to take claims against employers even if the potential claimant does not wish to pursue litigation.

An extension of the limitation period to bring all employment tribunal claims from 3 to 6 months. This will have a huge impact on how businesses manage claims and litigation strategy, on evidence and also on witnesses. As well as this change, the government have also introduced plans to increase the ACAS Early Conciliation period to 12 weeks from 1 December 2025 which could mean, once the limitation period increases, that employers will have to wait as long as 10 months or even 12 months before a claim is issued. Whilst a longer Early Conciliation period may seem a good idea as it gives parties’ greater opportunity to settle claims in advance of issuing an ET1, the increase does not change the burden on ACAS, or the employment tribunal system for that matter. Another issue to think about are document retention periods and data protection policies as retention periods will probably need to be increased for recruitment documents in particular.

Trade Unions - watch out for increased powers, changes to balloting/industrial action rules and time limits, new rights of access to workplaces by Trade Unions and obligations on employers to tell staff about joining a Union (throughout 2025-2027).

Impact: the extension of Trade Union rights will be something for employers to watch, especially where businesses are already unionised. If a business is not currently unionised, is there an opportunity to engage with staff now through Employee Forums? The increasing time limit to bring employment tribunal claims will burden an already “creaking” system and will impact litigation strategy.

When: April 2026 (Fair Work Agency – enforcement powers likely to be later). October 2026 (Tribunal time limits). Trade Union rights 2025-2027.

Other changes to watch

Changes to equality laws, including:

• Mandatory ethnicity and disability pay gap reporting for employers with 250+ employees.
• Measures to address race and disability pay discrimination.
  New equal pay Regulations and Enforcement Unit.
• Enabling outsourced workers to claim equal pay with ‘in-house’ employees.

Also expect, changes to tipping legislation (October 2026) and increased regulation of umbrella companies (2027).

What to do now and how we can help

1. Audit your workforce and look for compliance gaps – who works for you, in what capacity (e.g. zero hours) and for how long (including those engaged under umbrella companies). Consider workforce planning and impact of ERB changes. Ask: can workforce changes be made now?
2. Equality, Harassment/Sexual Harassment – greater compliance need and risk assessing. Enhanced preventative sexual harassment duty and new third party harassment liability means risk assessments/audits, specific and targeted training (legal and refreshed), policy updates and effective complaints and monitoring processes are vital.
3. Review contracts of employment – are there effective variation clauses? Do changes to terms and conditions need to be made now? Do your contracts give sufficient business protection? Take advice before changing contracts and terms.
4. Review probation periods/processes – does the business have robust, consistent, and well managed probation processes? Reviewing/updating probation periods (and notice periods) and introducing management training on probation, absence, conduct, performance processes, compliance, and risk are essential.
5. Check and update staff handbooks and policies – review policies in line with ERB changes (e.g. family policies, sickness, probation, and flexible working).
6. Consider sickness absence processes and costs – how might day one SSP impact sickness absence costs? How robust (understood/followed) are absence management processes? Revisit sick pay, recording and manager training.
7. Review settlement agreements and NDAs – keep core employee-related agreements reviewed and up to date to ensure there is balance between legal compliance and employer protection.
8. Run the scenarios - how agile is your workforce to change? How sustainable is the employment/engagement model? Where are the risks or recruitment/workforce pinch points? Are there opportunities when it comes to workforce planning?
9. Monitor developments and implementation timetables – who is to coordinate and be responsible for implementation timetables and implementing ERB changes within the business?
10. Training for HR and Managers - essential. Without training, employers will struggle with their equality, harassment, and sexual harassment duties as well as with understanding the changes in legislation (and their implications). Where applicable, consider Regulatory impact and risk.
    

This is a brief overview and snapshot of the key changes proposed by the ERB and is no substitute for taking legal advice. Many of the changes proposed will come via secondary Regulations, the details of which are awaited. Expect changes to be introduced between late 2025 and late 2027. There is time, but CEOs, senior leaders and Boards need to be prepared and start thinking about the changes needed, and their impact, now.