Sian Wilson from Day One explores the potential ramifications of the Employment Right Bill, and what employers and recruiters need to look out for.

The Employment Rights Bill, currently making its way through Parliament, has sparked significant debate with 160 amendments introduced at the report stage in the House of Commons. Despite aims to strengthen workers’ rights across the UK, the Institute of Employment Rights has identified major loopholes that could leave employees vulnerable to the very practices the legislation intends to prevent.

At the center of this controversial bill are proposals to crack down on zero-hours contracts and strengthen trade unions. Specifically, employers would be required to offer guaranteed-hours contracts to workers who regularly exceed their contracted hours over a 12-week period. However, concerns have been raised by various stakeholders about its practical implementation. According to a British Retail Consortium survey, approximately half of retailers believe the employment rights bill will result in higher prices for customers and potential job losses.

Furthermore, the bill introduces “day one” rights for workers, including sick pay and the right to request flexible working. Despite these protections, critics warn that the legislation may not fully address exploitative practices like fire and rehire. techUK has called for more industry consultation, cautioning that strict penalties could unintentionally penalize employers and stifle innovation.

This practical guide examines the key changes in the Employment Rights Bill 2025, helping you understand how the new legislation will affect your workplace, whether you’re an employer navigating compliance or an employee seeking to understand your rights.

Key Changes in the Employment Rights Bill 2025

The Employment Rights Bill 2025 represents a substantial overhaul of UK employment law, described by the government as “the biggest upgrade in employment rights for a generation” [1]. Scheduled to come into effect no earlier than autumn 2026 [2], the bill introduces significant changes across multiple areas of employment protection.

1. Day-one rights for all workers

The bill eliminates waiting periods for several critical employment rights. Workers will gain immediate access to:

Protection against unfair dismissal without the current two-year qualifying period
Paternity leave without the previous 26-week service requirement
Unpaid parental leave from the first day of employment
A new statutory right to at least one week of unpaid bereavement leave

2. Right to request flexible working from day one

While employees already have a day-one right to request flexible working since April 2024 [5], the bill strengthens this protection by:

Requiring employers to justify any refusal as “reasonable”
Mandating written explanations that identify the specific statutory reason for refusal
Maintaining the existing eight business reasons for refusal, but adding the reasonableness test

3. Stronger protections against unfair dismissal

Perhaps the most significant change is the removal of the two-year qualifying period for unfair dismissal claims. Nevertheless, the bill balances this with:

A new concept of an “initial period of employment” (essentially a statutory probation period)
Anticipated to last nine months with a “lighter-touch” dismissal process
No change to redundancy dismissals, which will require the same fair process for all employees regardless of service length
Potential revised compensation regime for dismissals during the initial period

4. Enhanced sick pay and paternity leave

The bill substantially improves sick pay and family leave provisions:

Statutory Sick Pay (SSP) will be payable from day one of sickness, eliminating the current three-day waiting period
The Lower Earnings Limit for SSP eligibility will be removed, extending coverage to approximately 1.3 million low-paid employees
SSP will be paid at the lower of £118.75 per week or 80% of normal weekly earnings
Parents will gain the flexibility to take paternity leave after shared parental leave if they wish

Zero-Hours Contracts and Guaranteed Hours

Recent data shows over 1 million people in the UK currently work on zero-hours contracts [10]. The Employment Rights Bill 2025 doesn’t ban these contracts outright but introduces substantial protections against what the government terms “one-sided flexibility,” where workers bear most of the financial risk.

What changes for zero-hours workers?

Under the new legislation, employers must offer qualifying zero-hours and “low-hours” workers a contract with guaranteed hours that reflects their regular working pattern. This applies after a defined reference period, with workers gaining:

The right to a guaranteed-hours contract based on their regular working pattern
Protection from dismissal for accepting or rejecting such offers
Extended rights for agency workers, who will receive the same protections

Notably, workers can decline guaranteed hours offers and remain on their current contracts if they prefer [11]. This provision recognizes that some people, particularly students or those with caring responsibilities, value the flexibility zero-hours arrangements provide [10].

The 12-week reference period explained

The reference period for calculating guaranteed hours is expected to be 12 weeks [11]. After this initial period:

Employers must offer a contract reflecting the average hours worked
The offer must specify days and times when work will be available
Workers have a response period (at least one week) to accept or decline

This process repeats after each subsequent reference period until the worker either accepts guaranteed hours exceeding the “low hours” threshold or chooses to remain on their existing contract [12]. For agency workers, the obligation to offer guaranteed hours will fall on the end hirer rather than the agency [13].

Right to reasonable notice and compensation

The bill introduces two crucial protections for shift workers:

Reasonable notice of shifts, including hours, start/end times, and days
Compensation for shifts canceled, moved, or curtailed at short notice

Both employment agencies and end hirers will be responsible for providing reasonable notice to agency workers [14]. What constitutes “reasonable” notice will be defined in regulations, with tribunals able to consider specific circumstances [15].

Avoiding one-sided flexibility

The bill aims to create a fairer balance between employer and worker needs. Research shows 84% of zero-hours workers would prefer guaranteed hours [16]. Additionally, 64% of managers believe ending exploitative zero-hours contracts would positively impact their business [16].

Collective agreements between employers and trade unions can opt out of the guaranteed hours and reasonable notice requirements, allowing sector-specific arrangements that benefit both parties [12]. This flexibility recognizes that different industries may require tailored approaches while still protecting basic worker rights.

Fire and Rehire: New Restrictions

Following the controversial P&O Ferries incident in 2022, when approximately 800 workers were dismissed without notice, the Employment Rights Bill 2025 introduces stringent restrictions on “fire and rehire” practices.

What is fire and rehire?

Fire and rehire refers to the practice where employers dismiss employees and then immediately re-engage them on less favorable terms. Similarly, “fire and replace” involves dismissing existing staff and hiring new employees on different terms for substantially the same roles. Currently, employers can use these tactics when they have sound business reasons for changing employment contracts, such as responding to economic changes or harmonizing terms.

New rules and employer obligations

The bill fundamentally alters this landscape by making dismissals automatically unfair if employees are fired for refusing contractual changes or if the employer intends to replace them with workers on different terms. Employers must now demonstrate genuine financial hardship to justify such actions. Moreover, the protective award for failing to inform and consult on fire and rehire exercises will increase from 90 to 180 days’ pay per affected employee.

Financial difficulty clause and its risks

For the narrow exception to apply, employers must prove:

Financial difficulties affecting or likely to affect their viability as a going concern
Changes aimed at eliminating, preventing, or significantly reducing these financial difficulties
The contractual changes were unavoidable

Even with these elements established, tribunals will still assess whether the dismissal was fair by examining consultation quality and any compensation offered to employees. Consequently, the threshold for justifiable fire and rehire becomes extremely high.

Code of practice and enforcement

A statutory Code of Practice on dismissal and re-engagement took effect in July 2024, emphasizing that fire and rehire should only be used as a last resort. Employment tribunals can increase compensation by up to 25% if employers unreasonably fail to comply with the code. Under the new bill, this enforcement mechanism remains but with enhanced penalties reflecting the more restrictive approach.

The government plans to update the Code of Practice in 2025, with the new restrictions likely implemented in 2026.

Trade Union Access and Worker Representation

The Employment Rights Bill 2025 introduces sweeping reforms to trade union legislation, aiming to modernize collective representation in UK workplaces. These changes represent a significant shift in how unions can organize, represent, and negotiate on behalf of workers across various sectors.

Expanded rights for trade unions

The bill repeals several restrictive measures from previous legislation, including most of the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023. Coupled with these repeals, unions will gain extended industrial action mandates from 6 to 12 months and reduced strike notice periods from 14 to 10 days. Overall, the legislation introduces:

A new duty for employers to inform workers of their right to join a trade union
Protection from detriment for workers participating in industrial action
Simplified information requirements for industrial action notices
Strengthened rights and protections for union representatives
Broadened blacklisting protections with expanded regulatory powers

Union access to workplaces

For the first time, independent trade unions will have a statutory right to access workplaces for recruitment, organizing, and representation purposes. As much as this extends to physical presence, the bill also explicitly provides for digital access to workplaces—allowing unions to engage with workers through company intranets, email systems, and virtual meeting platforms.

The process centers on “access agreements” between unions and employers. Firstly, qualifying unions submit a formal access request, after which employers have a limited response period. Given that no agreement is reached, unions can apply to the Central Arbitration Committee (CAC), which will apply three key access principles:

Access should be permitted where it doesn’t unreasonably interfere with business
Employers should take reasonable steps to facilitate access
Access should only be refused when reasonable under the circumstances

Implications for SMEs and large employers

The impact of these changes will vary considerably based on employer size. In fact, larger workplaces are much more likely to have union members present than micro or small employers. For SMEs, the most immediate requirement will be updating employment contracts to include statements informing staff of their right to join a trade union.

By all means, large employers in sectors with historically limited union representation can expect to become prime targets for union recruitment efforts. In contrast to small businesses, they’ll need to prepare resources for handling access requests and potential CAC applications. For all employers, understanding the forthcoming regulations on access agreements will be essential for compliance with this transformed industrial relations landscape.

Conclusion

The Employment Rights Bill 2025 represents the most significant transformation of UK employment law in a generation. Companies across all sectors must prepare for these substantial changes, which will take effect no earlier than autumn 2026. Day-one rights fundamentally alter the employer-employee relationship from the moment work begins, consequently requiring updated onboarding processes and employment contracts.

Zero-hours contract reforms, though not eliminating these arrangements entirely, provide meaningful protections through guaranteed-hours offers after the 12-week reference period. These changes, alongside the stringent restrictions on fire and rehire practices, shift considerable power toward workers while still allowing businesses legitimate pathways to adapt during genuine financial difficulties.

Trade union reforms likewise reshape the industrial relations landscape by expanding access rights and reducing barriers to collective representation. Employers therefore need to develop clear protocols for handling union access requests and establishing appropriate agreements.

Above all, preparation remains essential for both employers and workers. Businesses should review their employment contracts, sick pay policies, and dismissal procedures well before implementation. Similarly, employees must understand their expanded rights to unfair dismissal protection, flexible working, and guaranteed hours. You can get ahead of these significant legislative changes find out how day one works with your talent and HR teams to source and verify early talent

The time between now and implementation offers a valuable opportunity to adapt systems and policies thoughtfully. Though concerns about implementation costs exist, the bill aims to balance worker protections with business needs through provisions like the initial employment period. Understanding these upcoming changes allows you to navigate the new employment rights framework with confidence when it takes effect.