Employment Rights Bill: Labour’s new proposals and what you need to know as an employer

The Labour government’s Employment Rights Bill is set to bring major reforms to the workplace. We break down what to expect and how businesses can start to prepare.

What is the Employment Rights Bill?

The Employment Rights Bill is proposed legislation before Parliament, introduced by the Labour government in October 2024. It aims to modernise UK employment law through reforms including day-one employment rights, stronger unfair dismissal and redundancy protections, enhanced parental and bereavement leave, fair work enforcement, trade union reforms, and safeguards on zero-hour contracts.

The Bill is a key part of the Make Work Pay plan, which sits within the Government’s five mission led priorities to grow the economy. According to the government, it will deliver economic security and growth for businesses, workers, and communities by improving pay, increasing productivity, and tackling exploitative practices.

Why does the Bill matter?

The Bill matters as it will redefine workplace obligations and standards, aligning them with the needs of a modern economy. For workers, it means stronger rights, fairer pay, and greater job security with the flexibility needed for modern working lives.

For employers, it supports sustainable growth by improving workforce stability, engagement, and productivity. As Jonathan Reynolds, then Business and Trade Secretary, highlighted, "the best employers know that employees are more productive when they are happy at work."

Around one in six UK businesses with 10 or more employees report worker shortages, and the Bill aims to address these pressures by stabilising the labour market and driving long-term economic growth.

What new policies does it introduce for all sectors?

Below is an overview of the key cross-sector reforms proposed under the Bill.

• Zero-hour contracts

Zero-hour contracts are employment agreements that do not guarantee a minimum number of hours of work. Around one million UK workers are currently on zero-hour contracts, often young people in the service industry. 

Under the proposed Bill, workers on zero-hour or low-hour contracts will have the right to a guaranteed-hours contract if their regular hours consistently exceed those set out in their contract over a defined period. Those who prefer to remain on a zero-hours contract can continue to do so.

In addition, the Bill gives zero hours, minimum hours, and some agency workers the right to reasonable notice of shifts, with provision for pay if shifts are cancelled or changed at short notice.

• Restrictions on ‘fire and rehire’ and ‘fire and replace’ 

The Bill aims to curb the misuse of ‘fire and rehire’, where employers dismiss staff and rehire them on less favourable terms, and ‘fire and replace’, where workers are dismissed and replaced with contractors or agency workers on lower pay or conditions. Under the Bill, such dismissals will generally be treated as automatically unfair. A narrow exception applies when the employer is facing genuine financial difficulties and has no reasonable alternative.

• Strengthening Statutory Sick Pay  

Currently, Statutory Sick Pay (SSP) is paid from the fourth day of sickness and only applies to employees earning above a certain threshold. The Bill would make SSP payable from day one and remove the lower earnings limit, helping more workers, particularly those on lower pay, receive sick pay.

• Strengthening flexible working

The Bill strengthens the right to request flexible working by requiring employers to provide a written explanation when rejecting a request, stating which of the eight business grounds applies and why the decision is reasonable.

• Family rights

The Bill proposes stronger protections for working parents and carers. It would provide legal protection to women from dismissal while pregnant, on maternity leave, or during the first six months after returning to work, with very limited exceptions.

It would remove length-of-service requirements for statutory parental and paternity leave, granting these rights from day one of employment. The Bill would also introduce a day one entitlement to at least one week of protected bereavement leave, including in cases of pregnancy loss before 24 weeks.

• Trade union rights

The Bill will repeal the Strikes (Minimum Service Levels) Act, relaxing strike ballot and notice requirements. It will simplify the union recognition process, strengthen union rights, and enhance protections for union representatives.

Under the Bill, employers will be required to inform workers of their right to join a trade union.

• Fair Work Agency

The Bill proposes the creation of a Fair Work Agency, which would bring together existing enforcement functions under one body. This would give workers a simpler route to enforce their rights, covering pay, leave, and other workplace entitlements.

What sector-specific legislation will be introduced?

Establishment of the Adult Social Care Negotiating Body   

The Bill will establish the Adult Social Care Negotiating Body, bringing together trade unions and social care employer representatives to negotiate pay and employment terms for adult social care workers.

Reinstate the School Support Staff Negotiating Body  

The School Support Staff Negotiating Body (SSSNB) will be reinstated, giving union and employer representatives a formal role in negotiating pay, conditions, training, and career progression for support staff in state-funded schools.

How will National Living Wage change? 

The government plans to change the remit of the Low Pay Commission to take into account cost of living when setting the minimum wage. It will also remove age bands for adult workers - meaning a pay rise for thousands of young workers.  

Note: This is a brief overview of the Bill’s key proposed reforms. The Bill is not yet law, and full details will be confirmed in official guidance after Royal Assent.

Employment Rights Bill timeline

Expected milestones from 2025 to 2027

• 10 October 2024: Bill introduced in the House of Commons
• 29 April – 24 June 2025: Lords Committee Stage
• 1 July 2025: Government publishes Implementation Roadmap
• Autumn 2025: Royal Assent expected
• Summer / Autumn 2025 – early 2026: Phased consultation waves
• 6 April 2026: First common commencement of key reforms
• 1 October 2026: Second wave of implementation begins
• 2027: Final phase of measures comes into force

What to expect after Royal Assent

The immediate measures coming into force following Royal Assent include:

• Repeal of the Strikes (Minimum Service Levels) Act 2023
• Scrapping most provisions of the Trade Union Act 2016
• Removal of the 10-year ballot requirement for trade union political funds
• Simplified industrial action notice and ballot notice procedures
• New protections from dismissal for employees participating in lawful industrial action

The other measures will be implemented in phases, as set out in the published roadmap:

6 April 2026

• Day-one paternity leave and unpaid parental leave
• Whistleblowing protections
• Establishment of the Fair Work Agency
• Removal of the lower earnings limit and the waiting period for SSP
• Simplifying trade union recognition
• Doubling the maximum period of the collective redundancy protective award

1 October 2026

• Fire-and-rehire reforms
• Adult Social Care Fair Pay Agreement Negotiating Body
• Strengthened trade union rights
• Stronger protection from sexual harassment
• Updated employment tribunal rules
• Reinstatement of the procurement two-tier code
• Tightening of tipping regulations

December 2026

• Commencement of the Mandatory Seafarers’ Charter

2027

• Mandatory gender pay gap and menopause action plans
• Stronger rights and protections for pregnant workers
• Power to define the “reasonable steps” employers must take to prevent sexual harassment
• Enhanced protections against blacklisting
• New industrial relations framework
• Regulation of umbrella companies
• Updated collective redundancy consultation thresholds
• Expanded flexible-working rights
• New statutory bereavement leave
• Restrictions on exploitative use of zero-hours contracts (including for agency workers)
• Day-one right to protection from unfair dismissal

How to prepare for phased enforcement

The phased rollout of the Employment Rights Bill gives employers, trade unions, employees, and other stakeholders time to adapt. To stay prepared, keep up to date with expected measures, timelines, and guidance. During this period, review key policies and practices, brief or train management and relevant teams, and run small-scale trials of new processes. These steps will help lay the groundwork for smooth implementation as each phase takes effect.

Strategic implications of the Employment Rights Bill for organisations

As one of the most significant employment law reforms of recent years, the Bill is anticipated to drive substantial changes to organisational policies, processes, and workforce management.

Anticipating workforce impact and cost

Due to restrictions on zero-hour contracts, employers are required to offer predictable working hours. This limits just-in-time workforce flexibility and will raise fixed labour costs. Changes to SSP, including pay from day one and expanded eligibility, will add to cost pressure.

Other reforms, such as day-one parental leave and new industrial action provisions, will further affect workforce planning, potentially requiring adjustments to staffing models, contingency arrangements, and overall people budgets.

Accurate resourcing and long-term job-cost planning are more important than ever, particularly in sectors with fluctuating demand, such as retail and logistics, leaving organisations more vulnerable to under- or over-staffing.

Policy, compliance, and culture alignment

The Bill will affect several company policies, including employee contracts, probation, leave, working hours, and industrial action procedures. Ensuring compliance with these new requirements will be a key challenge for organisations, requiring updates to HR processes, manager training, and strengthened monitoring.

Beyond formal policies, the reforms will influence culture, particularly around flexibility. Even roles usually seen as fully on-site may require rethinking to allow flexible elements, such as remote administrative work, training tasks, or alternative shift patterns.

Scenario planning and risk mitigation

The reforms in the Bill will introduce new uncertainties around workforce availability, scheduling, and costs, as well as potential operational, financial, and compliance risks. Organisations will need to be proactive, adopting scenario planning to anticipate staffing shortfalls, fluctuations in demand, changes in employee entitlements, and budget pressures.

Measures to address these risks may include cross-training employees, creating flexible shifts, maintaining contingency reserves, and revisiting budgets, helping organisations respond effectively to disruptions.

Preparing for compliance and change

A structured approach to policy review, communication, and compliance tracking will help organisations lay the groundwork for effective implementation.

Reviewing internal employment policies

With the Bill driving an overhaul of employment practices, organisations will first need to review and update their internal policies to ensure alignment with the new requirements. This includes revisiting contracts, probation terms, working hours, leave policies, and procedures related to industrial action.

HR teams should assess where current policies fall short, identify areas requiring revision or clarification, and ensure documentation is consistent across departments. Early policy review will help prevent compliance gaps and reduce the risk of future disputes.

Communicating changes to managers and employees

Provide clear and timely communication to employees on the changes that affect their rights, entitlements, and working arrangements, along with guidance and training on how these reforms will alter aspects of their roles and day-to-day responsibilities. This includes understanding how decisions, schedules, and interactions may need to be adjusted to remain compliant.

Structured communication plans, manager briefing packs, and updated employee handbooks can help deliver these messages effectively while maintaining transparency and trust throughout the transition.

Leveraging HR technology for compliance tracking

With new employment policies, tighter record-keeping rules, and stricter requirements around flexible working, working hours, and pay transparency, HR teams are under increasing pressure. Integrated HR software solutions, such as those provided by OneAdvanced, can significantly reduce this burden.

OneAdvanced’s Time and Attendance software simplifies workforce management by automatically creating schedules based on skills, preferences, and compliance rules. Employees can easily swap shifts, ensuring optimal coverage and smooth handling of demand fluctuations.

With web and mobile access, managers gain real-time visibility, while employees benefit from flexible, transparent options aligned with the Bill’s enhanced flexible working rights. The platform also provides insight into absence patterns, workforce planning, and training needs, supporting accurate staffing and effective cost control.

OneAdvanced’s Payroll ensures accurate, compliant pay by automatically applying correct rates, statutory payments, and rules. Its built-in compliance reports, including gender pay-gap data, help employers meet evolving requirements under the Bill.

OneAdvanced’s HR software centralises employee data, including contracts, pay history, training, performance, and benefits. With real-time updates and version control, data remains accurate and audit-ready.

As a fully integrated suite, HR, payroll, and attendance data flow seamlessly between systems, ensuring consistency and supporting compliance across the employee lifecycle.

How can software help? 

Predicting new employment outgoings 

Forecasting job costs will be key when assessing how these new rules will affect your business’s finances. Time & Attendance software has a job-costing functionality that allows leaders to compare planned tasks and budgets to those already achieved – crucial as leaders consider their outgoings and employment budgets following the alterations to zero-hours contracts and introduction of a new National Living Wage.  

Creating new contracts and integrating with payroll  

Businesses are also facing the prospect that they will need to create new contracts and payroll structures in alignment with new regulations. Primed to adapt will be those who already have robust, HMRC-recognised Payroll software where it is quick and easy to adjust contracts and ensure they are compliant.  

Enabling flexible working  

Strong Time & Attendance software will also help in making the requisite changes to enable flexible working. It will do so by offering flexibility in how time is tracked, streamlining the creation of new rosters and shift patterns, and ensuring time tracking is accessible both remotely and on-site. 

Ensuring compliance with pay changes 

National Living Wage and sick pay changes will need to be incorporated into each business’s Payroll function. Robust, HMRC-recognised Payroll software will be updated in line with any changes, giving employers peace of mind that they are up to date with the new regulations. 

Taking the pressure off operational, payroll and HR teams  

As all these changes come into force, the members of your team that deal with employment functions and workforce management will be under high stress. Automate tasks such as creating recurring shift patterns over multiple weeks or the repetitive jobs associated with payslip delivery, freeing up time for your team to concentrate on the strategic implications of new employment law.

Ensure your organisation is ready for the Employment Rights Bill with OneAdvanced’s People and Workforce Management solutions.