The Employment Rights Bill, introduced to Parliament in October 2024, represents one of the most significant shifts in UK employment law in decades. With 28 planned reforms, the Bill will strengthen workplace protections for employees, including a ban on zero-hours contracts, day-one protection against unfair dismissal, extended family leave rights, and reforms to sick pay and flexible working.
Although the Bill is still under consultation and is not expected to become law until 2026, it will have a major impact on employers once implemented. This is in addition to the recent hike in costs for employers like yourselves.
So, what do you think you should do right now? The best approach is to start preparing now. The changes will increase compliance requirements and heighten the risk of employment tribunal claims, so early planning will help businesses adapt smoothly.
To help you along the way, we have summarised below the key areas you need to focus on. We will note at this stage that consultations are ongoing, so there may be further changes; however, we believe the framework will remain in place.
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Day-One Right to Unfair Dismissal
What’s changing:
Employees will no longer need to have two years of continuous service to claim unfair dismissal. They will have this right from the first day of employment.
Employer impact:
- Probationary periods will no longer shield employers from unfair dismissal claims.
- Managers will need stronger justifications and more precise documentation when terminating employment, even at an early stage.
- The risk of costly tribunal claims increases significantly.
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Statutory Sick Pay (SSP) from Day One
What’s changing:
SSP will be payable from the first day of absence, and low earners currently excluded will now qualify (though possibly at a lower rate).
Employer impact:
- Costs of absence management will rise, particularly in sectors with high levels of short-term absence.
- Payroll processes will need updating to reflect day-one entitlement.
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Strengthened Flexible Working Rights
What’s changing:
The Bill creates a default expectation that flexible working requests will be granted unless there is a valid business reason to refuse. Employers must provide written justifications when rejecting requests.
Employer impact:
- More requests for homeworking, compressed hours, or alternative working patterns should be expected.
- Employers will face increased scrutiny if they deny such requests. Therefore, if your business cannot accommodate flexible working for certain roles, you should consider and document the reasons why.
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Fire and Rehire Restrictions
What’s changing:
The controversial practice of terminating and rehiring staff on new terms will be tightly restricted. It will remain permissible only where business restructuring requires it and no alternative exists. Dismissing an employee solely for refusing to accept new terms will be automatically unfair.
Employer impact:
- Contractual changes will need to be handled through genuine consultation, not unilateral imposition.
- Restructuring exercises will take longer and require greater legal input.
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Positive Duty to Prevent Sexual Harassment
What’s changing:
From 26 October 2024, employers will be under a proactive duty to take reasonable steps to prevent sexual harassment. This goes beyond current obligations, which focus on addressing incidents after they occur.
Employer impact:
- Liability risk will rise where preventative measures cannot be demonstrated. Please ensure you are familiar with the law. You can find your guidance here.
- Employment tribunals may look more closely at culture and policies.
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Ban on Zero-Hours Contracts
What’s changing:
Zero-hours contracts will be prohibited. Employers must offer workers a guaranteed-hours contract based on average hours worked over a 12-week reference period.
Employer impact:
- Greater certainty for workers will reduce employer flexibility in staffing.
- Labour costs may increase as employers must guarantee minimum hours so it’s important that this is reflected in any forecasts and budgets you may have prepared.
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Extended Protection for Mothers and Families
What’s changing:
Pregnant employees, new mothers, and those returning from family leave will receive extended protection against dismissal, not just in redundancy situations. These protections will also extend to adoption, shared parental, neonatal, and bereavement leave.
Employer impact:
- Any dismissal or redundancy process involving affected employees will carry heightened legal risk.
- Employers will need a clear, objective justification to dismiss in these circumstances.
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Paternity and Parental Leave from Day One
What’s changing:
Eligibility thresholds for parental and paternity leave will be removed, making both available from the first day of employment. Paternity leave and pay will also be available even after shared parental leave.
Employer impact:
- Employees will gain immediate rights, increasing administrative and scheduling pressures.
- Policies and payroll systems must be updated. If you’re considering outsourcing your payroll function due to its complexities, please reach out to us for more information.
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Simplifying Employment Status
What’s changing:
The government intends to move from the current three-tier system (employee, worker, self-employed) to a two-tier model, eliminating the distinction between “employee” and “worker”. This is expected later than 2026.
Employer impact:
- Potentially significant changes to employment contracts, holiday pay, and entitlements.
- Could affect how businesses engage casual or gig economy workers.
Final Thoughts
The Employment Rights Bill will impose greater obligations on employers, introduce new compliance burdens, and raise the risk of tribunal claims.
However, with the right preparation, businesses can adapt and even view the reforms as an opportunity to improve recruitment, retention, and workplace culture.
Taking early action, you can effectively minimise legal risks and disruptions. Now could also be a good time to consider outsourcing your payroll function. While we may not be lawyers or HR experts, we are here to raise concerns you might have otherwise overlooked during payroll preparation. Embracing a second opinion can lead to more informed and empowered decisions. What’s more, with us processing your payroll, you can buy back a lot of your time.
You can contact your normal manager by phone or email to investigate this further.
We are serious about you and your ambitions and want to help you and your business thrive. So, if you are not yet working with us but want to see if we are a good fit, book your free consultation here