Current Status of the Employment Rights Bill 2025
The Employment Rights Bill 2025 has now completed its progress through the House of Commons and has been transferred to the House of Lords for the continuation of its passage through Parliament. According to the latest legal commentary, there is a prediction that the Bill could receive Royal Assent in July. Royal Assent is the term given to a Bill that becomes an Act of Parliament, although the date an Act commences will vary depending on the nature of the Bill and the extent of change employers would need to make.
We discussed in our recent Employment Law Seminar (click here for the recording), how some of the reforms under the Employment Rights Bill 2025 could be introduced relatively quickly. These are reforms that don’t require further regulations, consultations, or guidance. Given the predicted timeline, it’s possible that some reforms could come into force from October 2025.
Amendments to the Employment Rights Bill 2025
As the Employment Rights Bill 2025 progressed through the House of Commons, several amendments were put forward and accepted. We expect further amendments to be added as the Bill continues through the House of Lords. Below, we highlight some of the key changes already incorporated.
Amendment: Fair Work Agency
One of the many amendments put forward by the House of Commons in respect of the Bill is regarding the proposed new state enforcement agency, known as the ‘Fair Work Agency’ (FWA).
This agency is expected to have powers in areas such as sick pay, national minimum wage, and holiday pay where employers are found to be non-compliant. The amendment includes:
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Allowing the agency to bring Employment Tribunal claims on behalf of workers, even if the worker chooses not to.
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Granting the agency power to offer legal assistance for employment cases, with potential cost recovery from employers if the claim is successful.
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Imposing financial penalties on employers for unpaid holiday or sick pay, which would be payable directly to the Government.
This is a huge development; because it fundamentally changes how an employer assesses and manages legal risk. Remember though, this Bill is aimed at improving the rights and entitlements for workers and whilst most employers already comply with their legal obligations, there are still unscrupulous employers that exploit workers.
Amendment: Collective Consultation Rules
The original draft of the Employment Rights Bill 2025, published back in October, proposed removing the ‘at one establishment’ test for triggering collective consultation in redundancy situations. This would mean all redundancies across a business would count toward the threshold.
As the Bill has gone through the House of Commons, it has been amended by reinstating the ‘one establishment’ principal but, by allowing for Regulations to be developed that sets out a threshold for when collective consultation is triggered for redundancies proposed at more than one establishment. The threshold is likely to be based on either a percentage of the workforce or on a set number of redundancies. For example, the threshold is set at the lower of either X number of redundancies, or X% of the workforce.
Amendment: Statutory Sick Pay for Low Earners
One of the biggest areas of reform is regarding statutory sick pay. This is because the proposal is to remove ‘waiting days’, meaning SSP could become payable from the first day of absence. Secondly, the current lower earnings threshold for qualifying for SSP will be removed and instead, qualification will be based on a percentage of the worker’s earnings.
Following a public consultation, the Government have confirmed that the appropriate percentage rate of qualifying for SSP is 80% of the SSP flat rate, for those whose normal weekly earnings are less that the flat rate (currently £123 and increasing to £125 from April).
Amendment: Zero-Hour Contracts and Agency Workers
Following a public consultation, the Government have confirmed that the Employment Rights Bill 2025 has been amended to include a framework for the application of zero-hour contract measures to also apply to agency workers. Key points include:
- Both the employment agency and the end hirer will be responsible for providing the agency worker with reasonable notice of shifts. The Employment Tribunal will be able to apportion liability based on the responsibility of each party in each case.
- The employment agency will have the responsibility to pay any short notice cancellation or curtailed payments however, they will be allowed to re-coup this from the hirer where they have arrangements with the hirer covering this.
- The Secretary of State will have the right to publish Regulations that stipulate the form and way an agency worker should receive notifications of shifts, cancellations or curtailments.
- The end hirer will have responsibility to offer guaranteed hours to qualifying agency workers.
- Where there is a genuine temporary work need, there will be an exception clause that allows an employer to lawfully not offer guaranteed hours.
- The current system of extended hire periods and transfer fees under The Conduct of Employment Agencies and Employment Businesses Regulations 2003 will continue to apply.
There also appears to be amendments in the area of guaranteed hours to indicate that it may be possible to contract out of the requirement to offer guaranteed hours, so long as it is done so in the form of a collective agreement and that it is then replaced with something else that is contractual.
Before any of the reforms to zero-hour contracts can come into force, further Regulations will be required that will set out the practical application of the law.
Also, prior to this announcement on 3 March, the Business and Trade Committee published its report “Make Work Pay: Employment Rights Bill”. This was a comprehensive analysis of the proposed employment reforms following a public consultation. In the report, the Committee presented their findings in clear and actionable recommendations for the Government to consider.
They included:
- Make changes to the zero-hour contract reforms by defining how many weeks the initial and subsequent reference periods should be.
- Provide clarity on what is meant by “reasonable notice of a shift” that the employer requires (or request) the worker to work.
- Provide definitions for what is meant by “moved”, “short notice” in respect of cancelled, moved or curtailed shifts.
- For the Government to use delegated powers within the Bill to reform zero-hour contracts to enhance protections for agency workers
- Remove from the Bill the current wording in respect of zero-hour contracts “a minimum number of hours, not exceeding a specified number of hours’”. Instead, provide a definition of what is meant by “low hours”
Within the same Select Committee Report, it was also recommended:
- Proceed at pace the Government’s ambition to reform worker status to illuminate “bogus self-employment”
- For the Government to set out how it plans to regulate the sector and tackle non-compliance in the umbrella market
- Revisit how the established structures for enforcing equality law and to set out how the new Fair Work Agency will operate alongside the EHRC.
- Recommending the Government open a public consultation on the future of equality law enforcement targeting on where enforcement could be improved to better protect workers from harassment and abuse based on protected characteristics
- For the Government to consider how they are to use networks of employment support that can help employers in the implementation of the reforms
- Task Acas with leading on an information campaign to raise awareness and promote compliance with best employment practice
- The Government to develop a clear and long-term industrial relations strategy
- To provide a definition of “access” in respect of the new right of union access to non-unionised workplaces
- Introduce a replacement Workplace Employee Relations Survey (WERS)
- Making amendments to the Modern Slavery Act to ensure better transparency and due diligence, that includes the areas of reporting to become mandatory and removing the provision that allows organisations to claim they have taken ‘no steps’ to address modern slavery.
- Introduce penalties and to name and shame companies for not disclosing modern slavery statements and to consider the creation of failure to prevent offences like those set out in the Economic Crime and Corporate Transparency Act 2023
- Align with international law by prioritising the introduction of mandatory Human Rights due diligence.
- Ensure the new Fair Work Agency is properly resourced and has effective powers to deter non-compliance.
Amendment: Fire and Rehire Restrictions
The Employment Rights Bill included reforms that would ban the practice of ‘fire and rehire’ – which is where an employee is dismissed and offered new terms but on lesser terms (or replaced with another worker on lesser terms). The Bill sets out that employers will no longer be able to:
- dismiss and rehire on lower terms
- dismiss and replace employees on lower terms
- impose contractual variations by dismissal and re-engagement.
Amendment: Trade Union Reforms
The Government announced last week that amendments would be put forward in respect of Trade Union reforms, which included:
- Amend the Trade Union and Labour Relations (Consolidation) Act 1992 to provide longer than 24 hours for complaints about the conduct of recognition ballots to be heard and addressed, on the basis that the expected consequences of the Bill may be greater recognition ballot activity.
- In respect of the right to access of a trade union on a non-unionised workplace, develop relevant access agreement templates and better resourcing to support employers, in particular small businesses.
- Enhance transparency around industrial relations disputes by following best practices operated in other countries and that requires parties involved in a recognition ballot to disclose spend on materials, consultants and other payments
Amendment: Notice of Underpayments
An additional amendment gives the Secretary of State power to issue notices of underpayment for up to six years where employers fail to meet statutory obligations such as minimum wage or SSP.
Latest Government Publications and Next Steps
Here is the latest version of the Employment Rights Bill.
We continue to monitor its progress, and will be discussing developments in the Employment Rights Bill throughout the year in our monthly webinars. Our schedule which is running through to the end of the year include:
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Redundancy in 2025: Prevention, process and key steps for a smooth transition
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Statutory Sick Pay Changes | Tackling potential rises in short-term sickness
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New deal for working people: Changes to zero-hour contracts
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How to manage family-friendly leave and flexible working requests
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The future of probation periods
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Reducing the risk of tribunal claims from discrimination
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Budget implications on HR
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Planning for change under the new deal for working people
Register for these events on our webinar page
