Summary of proposal

The ERB proposes to make protection from unfair dismissal a "day one" right by repealing the current requirement for an employee to have two years' service to claim ordinary unfair dismissal.

To limit the impact of this proposal on employers, the ERB also introduces the concept of an "initial period of employment" (IPE), during which a lower level of protection will apply, and compensation for unfair dismissal  will be subject to a lower cap.

The intention is that, during the IPE, employers will be able to follow a lighter touch process to dismiss an employee for conduct, capability, illegality, or some other substantial reason (although not redundancy).

The length of the IPE will be determined by regulations. The government has indicated a preference for a nine month period, but a proposed amendment which would have required the IPE to be set at between three and nine months was not adopted in the House of Commons.

What does this mean for employers?

It will become more difficult for employers to dismiss employees with short service due to the need to identify a fair reason and follow a fair process. Even the lighter touch process that may apply during the IPE will require some investment of management / HR time.

Employers are also likely to face more claims from employees alleging they have been unfairly dismissed. While compensation for dismissals during the IPE may be subject to a lower cap, the time and cost of defending tribunal claims may be significant.

The increased risk of hiring may prompt employers to take a more strategic approach to recruitment, applying more stringent application, interview and screening processes to ensure that new hires are right for the job before making them an offer. 

Territorial scope

England, Wales, and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

The government has confirmed that this change will not take effect before Autumn 2026.

Summary of proposal

It will become automatically unfair to dismiss an employee for refusing to agree to a change to their terms and conditions of employment (fire and rehire), or to dismiss an employee and hire another employee on amended terms to carry out the same or substantially the same work (fire and replace).

There will be a very narrow exception if the employer can demonstrate that the change in terms was necessary to alleviate serious financial difficulties that were likely to affect the ability to run the business as a going concern, and could not reasonably have been avoided.

Employees who bring an automatic unfair dismissal claim will be able to seek a protective award. Following consultation, the government confirmed its intention to double the maximum amount of a protective award from 90 to 180 days' pay per affected employee, and the ERB has now been amended to provide for this.

The government has, however, confirmed that the proposal to make interim relief available as a remedy in automatic unfair dismissal claims in a dismissal and re-engagement scenario is not being taken forward. This will come as a relief to employers, although the government has said this will be kept under review.

What does this mean for employers?

Given the extremely narrow nature of the exception, this provision will significantly increase the risk involved where an employer seeks to make a change to employees' terms and conditions to which the employees are unwilling to agree.

It is worth noting in this context that assessing an organisation's financial viability isn't normally something that employment tribunals are called upon to do, so applying the exception is likely to take them quite far outside their comfort zone and also outside their area of expertise. In addition, even if a tribunal is satisfied that the exception applies, it will then have to decide whether the dismissal is fair on normal unfair dismissal principles, taking into account the extent of any consultation that the employer carried out and what, if anything, they have offered in return for the employees' agreement to the variation. So even where the exception applies, there is a fairly significant risk for employers in relying on dismissal and re-engagement / replacement.

Where sufficient numbers of employees are affected, statutory collective redundancy consultation may be triggered (as "redundancy" under that legislation is defined broadly enough to cover fire and rehire / replace scenarios). See below for information on the ERB's proposed changes to the operation of those provisions.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB initially proposed to remove the words "at one establishment" from the legislation that sets the collective redundancy consultation threshold. This would result in employers having to consult collectively whenever they are proposing to dismiss 20 or more employees for redundancy in a 90 day period anywhere across their organisation. This change to the current law was a particular concern to large multi-site employers.

Fortunately the government appears to have taken those concerns into account, and has proposed a notable change to the ERB on this topic. The current draft now proposes that:

• Where dismissals are proposed "at one establishment", the current threshold of 20 or more dismissals in a 90 day period would be retained, and
• A different, higher threshold will be set for collective consultation where employees are to be made redundant at more than one establishment (effectively, aggregating dismissals across establishments). Further details will be set out in regulations, with one potential approach being to set the threshold based on a particular percentage of total employees (e.g. if the employer were proposing to dismiss 10% of employees across the business as a whole).

Where collective consultation requirements apply to dismissals at more than one establishment, the employer would be required to consult with all appropriate representatives. However, it need not consult all of them together, nor with a view to reaching the same agreement with all of them.

The maximum amount of a protective award will double – from 90 to 180 days' pay per affected employee, although employment tribunals will continue to have discretion to vary the amount of the award. The government has confirmed that it will not take forward a proposal to make interim relief available in such cases (although this will be kept under review). 

What does this mean for employers?

The original proposal to require to consult collectively whenever they are proposing to dismiss 20 or more employees for redundancy in a 90 day period anywhere across their organisation would have been particularly difficult for large multi-site employers to comply with, given the need to keep track of proposed dismissals across their various sites to identify when collective consultation was triggered. The proposed amendments will therefore come as a significant relief for employers – albeit that much is yet unknown about how the trigger will operate for multi-establishment redundancies.

The amendments specifying that consultation need not take place with all appropriate representatives together, or with a view to reaching the same agreement with all of them will also be welcomed by employers, as they recognise that it may be difficult to convene a consultation meeting with representatives in geographically distant locations, and that different establishments may have different concerns, making it more appropriate for consultation to take place at the local level.

However, the doubling of the maximum amount of the protective award, for which an employer may be liable for failure to comply with collective consultation requirements, will significantly increase the financial risk of getting it wrong. The government has committed to producing guidance for employers on compliance with collective consultation obligations, to help employers understand the requirements and avoid inadvertent breaches.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

Employers will be required to offer contracts for a guaranteed number of hours to zero-hours workers and low-hours workers. The number of hours to be offered will have to reflect the number of hours that the worker regularly works during a reference period (to be specified in regulations, but expected to be 12 weeks). Offers will have to be made at the end of every reference period, until the worker no longer qualifies as a zero or low hours worker. Anti-avoidance provisions prevent employers from limiting a worker's hours during the reference period in order to reduce the amount of hours they must provide in a guaranteed hours offer, or to get out of making a guaranteed hours offer altogether.

Employers will also be required to provide such workers with reasonable notice of shifts, and of cancellations or changes to scheduled shifts, as well as compensation for cancelling or changing shifts at short notice.

It will be automatically unfair to dismiss an employee if the sole or principal reason for dismissal concerns various rights relating to guaranteed hours offers, and workers will be protected from being subjected to a detriment relating to such offers, or in relation to the rights around notice of shifts and compensation for short notice cancellation/changes.

The ERB now also includes a provision allowing employers expressly to exclude the requirements to make a guaranteed hours offer, provide reasonable notice of shifts and shift changes/cancellations, and make payments to workers to compensate them for short notice changes/cancellations, where this is done via a collective agreement which expressly excludes and replaces those requirements. The relevant term of the collective agreement must also be incorporated into individual contracts.

What does this mean for employers?

These provisions appear fiendishly complicated, and employers may struggle to comply with them. Failure to comply, or dismissing or subjecting an employee to a detriment in relation to these rights, will give rise to potential tribunal claims.

While the ability to contract out of the zero and low hour contracts requirement via a collective agreement may be helpful to employers that recognise trade unions, it may be difficult to persuade the union to agree to terms that allow employers the flexibility they desire. This provision also does not assist employers that do not currently recognise a trade union.

In practice, these provisions may result in a reduction in employers' use of zero hours contracts, because the complexity of the requirements will make it less attractive for employers to operate such contracts.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

Following consultation, the government has confirmed its intention to extend the above provisions on zero and low hours contracts to agency workers, and the ERB has been amended to provide for this.

The end hirer will be responsible for making an offer of guaranteed hours to its agency workers, as end hirers are considered to be best placed to forecast and manage the flow of future work. Where work is genuinely temporary, end hirers will be able to offer temporary contracts. Regulations will also allow for the obligation to make a guaranteed hours offer to be placed on the agency instead in certain circumstances.

Responsibility for providing an agency worker with reasonable notice of shifts, shift cancellations and changes to shifts will sit with both the end hirer and the agency, but responsibility for making payments to workers where shifts are cancelled, moved or curtailed at short notice will rest with the agency – since the worker will already be on the agency's payroll. In the case of pre-existing contracts (entered into before or within the two-month period after the Bill is passed) agencies will be permitted to recoup these costs to the extent the hirer was responsible. Thereafter, the parties are expected to provide in their contracts for how they wish such costs to be apportioned.

The ability to exclude these requirements via a collective agreement (see above) is stated to apply to agency workers as well as direct employees.

What does this mean for employers?

Although the draft provisions allow end hirers to offer temporary contracts where work is genuinely temporary, businesses remain concerned about the impact of these provisions on temporary and seasonal work, and the extent to which they will limit employers' ability to use flexibly engaged agency workers to meet unpredictable and seasonal demands.

While the ability to opt out of these provisions via a collective agreement is stated to apply in the context of agency workers as well, it is not clear how collective bargaining should operate in such situations.

In practice, these provisions may result in a reduction in employers' use of agency workers, since the flexibility currently offered by such arrangements will no longer be available. 

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB proposes to increase the limitation period for employment tribunal claims from three months to six months.

What does this mean for employers?

A doubling of the limitation period is likely to result in a large increase in the number of claims being brought, as employees have more time to prepare and file their claim.

The employment tribunal system is already under-resourced, and an increase in the number of claims is likely to lead to greater delays in claims being heard. This may make claims harder for employers to defend, e.g. if key witnesses can no longer accurately recall events, or if they leave the organisation in the intervening period.

Territorial scope

All tribunal claims in England, Wales and Scotland, but only certain claims in Northern Ireland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB introduces a requirement for employers to prevent harassment of their workers by third parties (covering not just sexual harassment, but all types of harassment under the Equality Act 2010).

The employer will be liable if a third party harasses an employee in the course of their employment with the employer, and the employer failed to take all reasonable steps to prevent the third party from doing so.

What does this mean for employers?

Employers do not have control over the actions of third parties such as suppliers, clients, contractors, etc. so the imposition of legal liability in the event that such a third party harasses an employee is a significant risk.

Employers will need to assess the risk of third party harassment within their organisation and the effectiveness of any existing preventative measures, and identify any further steps they could take to prevent such harassment. Mitigation measures such as the introduction of contractual clauses requiring clients and suppliers to abide by codes of conduct, and/or indemnify the employer in the event of a harassment claim, will also be necessary.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations required (but likely to be tied in with enhanced duty to prevent sexual harassment, and regulations on reasonable steps).

Expected to take effect in 2026.

Summary of proposal

The ERB proposes to strengthen the duty on employers to prevent sexual harassment at work by requiring them to take “all reasonable steps” to do so (as opposed to simply “reasonable steps”, as has been the case since the preventative duty came into force on 26 October 2024).

Regulations will set out examples of what could constitute "reasonable steps".

What does this mean for employers?

Failure to comply with the preventative duty can lead to 25% uplift in compensation where an employee succeeds in a sexual harassment claim. Extending the preventative duty to require "all reasonable steps" will dramatically increase the difficulty for employers in complying with the duty, and potentially make it harder for employers to successfully defend sexual harassment claims.

As well as financial cost, there is potential reputational impact if the media reports that an employer has failed to comply.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further substantive regulations required, with consultation on what should be included in the regulations as examples of reasonable steps.

Expected to take effect in 2026.

Summary of proposal

The ERB will make express provision confirming that disclosure of a concern about sexual harassment will amount to a protected disclosure for the purposes of whistleblowing protection.

To qualify for whistleblower protection, a worker who makes a disclosure must reasonably believe that they are acting in the public interest and that the disclosure tends to show a criminal offence, failure to comply with a legal obligation, miscarriage of justice, danger to health and safety, damage to the environment, or covering up wrongdoing in relation to one of those things.

What does this mean for employers?

A disclosure about sexual harassment could already be covered by the existing list of wrongdoings – for example, it could be a criminal offence, a failure to comply with a legal obligation, or a health and safety issue. However, explicitly providing for such disclosures to be protected will improve employee awareness of whistleblowing protections and may increase the likelihood of claims.

Employers will need to take additional care when dismissing or disciplining an employee who has previously raised a complaint or grievance about sexual harassment at work; even if the reason for dismissal / discipline is entirely unrelated, there is a risk that the employee could assert that there is a connection and seek to bring a whistleblowing claim.

Note also that contractual confidentiality terms are void insofar as they preclude the making of a protected disclosure, so once this provision takes effect disclosures about sexual harassment would be excluded from the scope of confidentiality provisions, e.g. in settlement agreements.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026.

Summary of proposal

Employers will be prohibited from dismissing an employee who is pregnant, is on maternity leave, or has returned from maternity leave within the past six months, except in certain specified circumstances. The ERB does not indicate what those circumstances will be (details will be set out in regulations), but they are likely to include gross misconduct, and possibly genuine redundancy. The ERB gives the government power to make regulations about procedures to be followed in relation to such dismissals and the consequences of failure to comply with such procedures.

The ERB also includes a power for the government to make regulations extending equivalent protection to employees who are on or returning from other forms of family-related leave.

What does this mean for employers?

A prohibition on dismissing pregnant employees / returning mothers would limit employers' ability to manage its workforce – e.g. in particular if performance or redundancy dismissals are restricted.

The level of risk and practical impact of this provision will depend on the breadth of circumstances in which dismissals remain permitted and the extent of any procedural requirements that will have to be followed.

(The impact assessment for these proposals notes that the government will consult before deciding whether and/or how the power to extend protection to cover other forms of family-related leave should be exercised.)

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB will make flexible working the default from day one of employment by providing that employers can only refuse a request if they can show that the refusal (for one of the eight current permitted business reasons) is reasonable.

What does this mean for employers?

Employees have been able to make a flexible working request from day one of their employment since April 2024. Employers can refuse a request if they have one of eight permitted business reasons for doing so (e.g. burden of additional costs, detrimental impact on performance, inability to reorganise work among existing staff, etc.) The employer must base its decision on correct facts, but there is no requirement for the decision itself to be reasonable.

Introducing a reasonableness test for refusal of a flexible working request will shift the dynamic and make it harder for employers to refuse such requests in the future.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026.

Summary of proposal

Statutory rights to paternity leave and unpaid parental leave (which are currently subject to continuous service requirements of six months and one year, respectively) will be made available from day one of employment.

Current requirement for paternity leave to be taken before shared parental leave will be removed.

What does this mean for employers?

Expanding access to paternity leave and unpaid parental leave will have limited impact (especially as access to statutory paternity pay will remain subject to a six month continuous service requirement). However, employers will need to update their relevant family leave policies to reflect the changes.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026.

Summary of proposal

A statutory right to at least one week of unpaid bereavement leave on the death of a close relative will be introduced, as a day one right. (The current day one right to two weeks' paid parental bereavement leave on the death of a child under the age of 18 or the loss of a pregnancy after 24 weeks will remain in place.)

An amendment had been proposed which would extend parental bereavement leave to employees who suffer pregnancy loss before 24 weeks (miscarriage bereavement leave). This amendment was not adopted in the House of Commons but it is reported to have cross-party support, so it may be raised again in the House of Lords.

What does this mean for employers?

For employers who already provide for compassionate leave on the death of a close relative, and for employees who suffer pregnancy loss before 24 weeks, these changes will not have a significant impact. Since statutory bereavement leave (other than parental / miscarriage bereavement leave) will be unpaid, its introduction will have limited impact even for employers who do not currently provide for compassionate leave.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

Employers who are required to report on their gender pay gap (i.e. those with 250+ employees) will have to produce gender equality action plans alongside their gender pay gap report. Action plans will have to address what the employer is doing to address the gender pay gap and how it supports employees going through the menopause.

What does this mean for employers?

Employers who already produce voluntary narrative reports to explain their gender pay gap are likely to be part of the way there when it comes to compliance with this new requirement. Those who currently limit their gender pay gap reporting to the bare minimum legal requirement may wish to consider what their action plan might look like in preparation for when this requirement takes effect.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further substantive regulations required and government has indicated it will consult with the EHRC on required content.

Expected to take effect in 2026.

Summary of proposal

Employers will have to provide workers with a written statement informing them that they have the right to join a trade union, at the same time as the statement employers must provide under section 1 of the Employment Rights Act 1996. Employers will also have to reissue the statement at other times, which will be specified in regulations.

If an employer fails to provide a statement as required, a worker will be able to bring a claim in the employment tribunal and may be entitled to an award of up to two weeks' pay.

What does this mean for employers?

Informing and reminding workers of their right to join a trade union may lead to increased worker interest in trade union membership. This, combined with the proposals to give unions a new right of access to workers and simplify the trade union recognition process (see below) has the potential to lead to greater union presence in many workplaces and an increase in the number of employees whose terms are determined by collective bargaining.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB aims to give unions a right of access to workplaces to allow them to meet, represent, recruit or organise workers (regardless of whether they are members of a trade union), and to facilitate collective bargaining.

It does this by establishing a process to facilitate the making of access agreements between employers and unions. There is the possibility for the CAC to order access based on default statutory terms where the parties fail to reach agreement and a fast-track approval process for agreements that meet certain criteria.

Access agreements will be presumed not to be legally binding, but the employer or the union will be able to complain to the CAC in the event of a breach.

"Access" will include communication with workers by any means (effectively, covering digital as well as physical access).

What does this mean for employers?

The right of access offers trade unions much greater visibility amongst workers. This, combined with the proposals to require employers to provide workers with a statement of their right to join a trade union, and simplify the trade union recognition process (see above and below) has the potential to lead to greater union presence in many workplaces and an increase in the number of employees whose terms are determined by collective bargaining.

The extent to which trade unions take up the right of access is likely to depend on their resources (particularly how many officials they have available to attend workplaces). It is possible that they may focus on obtaining access agreements with larger employers first.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

Under the current law, the CAC can only accept an application for statutory trade union recognition if it is satisfied that:

• at least 10% of the workers in the proposed bargaining unit are union members; and
• a majority of the workers in the bargaining unit would be likely to be in favour of the union being recognised.

The ERB gives government the power to make regulations reducing the current 10% threshold to anywhere between 2% and 10%, and removes the requirement that the majority of workers would be likely to be in favour of recognition entirely.

Where the CAC orders a ballot on recognition, the current law requires the CAC to declare that the union is recognised if at least 50% of the workers voting in the ballot vote in favour of recognition and those who vote in favour make up at least 40% of the bargaining unit. The ERB removes the 40% threshold, so only a simple majority of those voting will be required.

The ERB also strengthens the provisions designed to prevent unfair practices during the trade union recognition process, e.g. by preventing employers from increasing the number of employees in the bargaining unit via recruitment once CAC has accepted an application for recognition, or agreeing recognition with a non-independent union to stop an independent union gaining recognition.

What does this mean for employers?

These changes make union recognition easier to achieve and employers may find themselves having to deal with an increase in union recognition applications.

One change that might actually lead to undemocratic results is the removal of the 40% threshold in statutory recognition ballots: if turnout is low because the workforce is broadly apathetic, then a minority of dedicated union members could secure recognition (and collective bargaining) for the whole workforce.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB repeals the Strikes (Minimum Service Levels) Act 2023, which allowed employers to set minimum service levels that had to be maintained during strikes in certain key sectors such as health, transport, fire and rescue, etc.

Many requirements imposed by the Trade Union Act 2016 are also being repealed or amended by the ERB:

• The requirement – in industrial action ballots in important public services – for at least 40% of those entitled to vote, to vote in favour of industrial action will be repealed.
• The 50% turnout requirement in industrial action ballots in all sectors will also be repealed (although this will be linked to the introduction of e-balloting, which does not require primary legislation).
• The amount of information unions must include in ballot notices and industrial action notices provided to employers will be reduced, although not to the same extent. The government considers that employers need more specific information at the point when industrial action is being called, as opposed to merely being a potential outcome of a ballot.
• The notice of industrial action that unions must provide to employers will be reduced from the current 14 days to 10 days.
• The period for which a ballot in favour of industrial action provides a valid mandate is to be increased from six months to 12 months.
• The requirement for union supervision of picketing (by a union official either present at the picket line or readily contactable) in order for industrial action to be protected is being repealed.

What does this mean for employers?

The provisions of the Strikes (Minimum Service Levels) Act 2023 have never been used, so their removal will not make a difference to industrial relations in practice.

While the removal of ballot thresholds does make it easier for a union to gain sufficient support for industrial action, and the increase in the period for which a ballot provides a valid mandate means that strikes may go on for longer, whether or not employers will be faced with an increase in strikes depends more on the general industrial relations climate than on the legislation.

Getting only 10 days' notice of strike action rather than 14 does give employers less time to put contingency plans in place, but they will have been made aware of the ballot in advance of it taking place so could have been preparing for the possibility of industrial action from that point.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Strikes (Minimum Service Levels) Act 2023 repeal to take effect on date the ERB receives Royal Assent.

Other provisions to take effect two months after the date the ERB receives Royal Assent – likely to be during 2025.

However, repeal of the 50% turnout threshold in industrial action ballots will be brought into effect by separate regulations. This will be timed to align with the introduction of e-balloting, and is still expected during 2025.

Summary of proposal

Currently, trade union officials have a right to a reasonable amount of paid time off to carry out their union duties (in relation to collective bargaining negotiations, collective redundancy consultation and TUPE transfers) and to undergo training relevant to those duties. Similarly, trade union learning representatives have a right to a reasonable amount of paid time off to undertake various activities, such as analysing union members' learning or training needs, arranging learning or training, and consulting the employer about such activities.

The ERB introduces a requirement for employers who permit union officials and learning representatives to take such time off to provide them with facilities for carrying out their duties/activities should they request this.

The ERB also introduces a new right to a reasonable amount of paid time off, and the provision of facilities, for trade union equality representatives (whose role broadly involves working towards eliminating discrimination, advancing equality of opportunity and fostering good relations between people with different protected characteristics).

What does this mean for employers?

Union officials and representatives will be able to complain to an employment tribunal if the employer fails to comply with these requirements, and the tribunal will have the power to award compensation if it finds against the employer.

The fact that the ERB also provides that the burden of demonstrating compliance will fall on the employer provides a real incentive for employers to ensure that they comply with the requirements in practice.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations, and a new Acas Code of Practice on how the provisions should operate, are required.

Expected to take effect in 2026.

Summary of proposal

The ERB provides that a worker will have the right not to be subjected to a detriment by their employer (by any act or deliberate failure to act), whose sole or main purpose is to prevent or deter the worker from taking protected industrial action, or to penalise them for doing so.

The ERB also simplifies and reinforces the current protection from dismissal for taking part in protected industrial action, so that an employee will be regarded as automatically unfairly dismissed where the sole or principal reason for dismissal is that they took protected industrial action, regardless of the length of the industrial action.

What does this mean for employers?

The new protection from detriment addresses the gap in the current law that was identified by the Supreme Court in the Mercer case that workers currently have no protection against sanctions short of dismissal for taking part in lawful industrial action (see our report on Mercer here). Note, the protection only applies in respect of detriments of a "prescribed description". This reflects the Supreme Court judgment in Mercer, where it said it couldn't rule out the possibility that there may be some circumstances in which it would be legitimate for employers to subject workers to a detriment for participating in industrial action.

The extension of unfair dismissal protection means that should an employer wish to dismiss an employee during long-running industrial action, they will have to take extra care to demonstrate that the dismissal is for reasons other than the employee's participation in the industrial action.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation (including on detriments of a "prescribed description") and substantive regulations required for detriment provisions.

Commencement regulations required for unfair dismissal provisions.

Expected to take effect in 2026.

Summary of proposal

The ERB strengthens the prohibition on blacklisting (i.e. compiling information on individuals concerning their trade union membership and activities, with a view to that information being used by employers or employment agencies to discriminate in relation to recruitment or treatment – for example, deciding not to employ someone, offering them fewer shifts, or dismissing them).

It does this by giving the government power to introduce regulations prohibiting the use, sale or supply of lists of union members or people who have taken part in trade union activities for the purposes of discrimination, even where the lists were not created for such purposes, or where lists are compiled by third parties who don't have a direct employment relationship with the individuals being blacklisted.

What does this mean for employers?

The Explanatory Notes to the ERB state that this proposal is intended to cover, for example, the situation where AI compiles a list (not with a view to discriminate), but that list is subsequently used, sold or supplied by a person with a view to discriminate.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Power to make regulations will come into force two months after ERB receives Royal Assent, but it will be some time before regulations are produced and come into force.

Expected to take effect in 2026.

Summary of proposal

Check-off is where employers deduct trade union subscriptions from workers' pay on the union's behalf and transfer the money to the union.

In the public sector, this is only permitted where workers have the option to pay their subscriptions by other means and the union makes reasonable payments to the employer to cover its costs of administering check-off.

These restrictions will be repealed by the ERB.

What does this mean for employers?

It is possible that the repeal of these restrictions may prompt trade unions that have been paying public sector employers for the operation of check-off to cease making such payments. Employers that wish to consider withdrawing check-off facilities as a result will need to apply caution, given the Supreme Court's decision in the PCSU case that trade unions can enforce contractual check-off terms that have been incorporated into employees' contracts (see our alert on this case here). 

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

To take effect two months after the date the ERB receives Royal Assent.

Likely to be during 2025.

Summary of proposal

Under current rules, SSP is only payable from an employee's fourth day of sickness absence, and employees are only eligible if they earn at least the lower earnings limit (£125 per week). The ERB proposes to broaden rights to SSP by making it payable from the first day of sickness absence and removing the lower earnings limit for eligibility.

Following consultation, the government has confirmed that, for employees earning below the lower earnings limit, SSP will be payable at the normal rate or 80% of their normal weekly earnings – whichever is lower. This is reflected in the current draft of the ERB.

What does this mean for employers?

For employers that provide enhanced company sick pay, these changes are likely to have minimal impact, as company sick pay is usually payable from the first day of sickness in any event.

However, employers that only provide statutory sick pay might see an increase in short-term sickness absence, as employees won't lose out on (as much) pay if they take a day or two off sick. These employers might want to look at their sickness / attendance management policies and consider whether trigger levels for absence review meetings are set appropriately.

Territorial scope

England, Wales and Scotland.

However, the Northern Ireland Assembly is due to introduce equivalent provisions to ensure that parity on SSP entitlement can be maintained across the UK.

Anticipated in-force date

Further substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB gives the government power to create a single labour market enforcement body, which will be known as the Fair Work Agency (FWA).

The FWA will take over the functions of the various different existing enforcement bodies, covering minimum wage, statutory sick pay, modern slavery, and it will also be given responsibility for enforcing rights to holiday pay. The most recent amendments to the ERB will give the FWA various powers, including the power to:

• Impose notices of underpayment on employers who have failed to pay certain statutory payments (such as the national minimum wage, or SSP) to their workers. A notice of underpayment could cover a period of six years of underpayments and would require the employer to pay the worker the underpaid amount (with provision for uprating if the applicable statutory rates have changed since the underpayment occurred) and impose a financial penalty payable to the FWA.
• Apply for court orders to enforce compliance with notices of underpayment and bring employment tribunal proceedings on workers' behalf.
• Provide, or arrange for provision of, legal advice and representation for any person who is or may become party to proceedings relating to employment or trade union law.
• Recover its costs of enforcement from any person who has failed to comply with any relevant labour market legislation. (This may be a fixed amount or calculated by reference to an hourly rate – the detail will be set out in regulations.)

What does this mean for employers?

The FWA will be charged with enforcing rights that employers should already be complying with, so many employers will have limited, if any, interaction with the FWA.

However, given the complexity of certain areas of law that fall within the FWA's remit (e.g. holiday pay in particular), there is a real risk that employers could face enforcement action for inadvertent non-compliance. Employers may therefore want to take the opportunity now to review their compliance and get their house in order.

The significant powers provided to the FWA by the most recent amendments to the ERB show that the government intends the FWA to have real teeth, although in practice its ability to act will largely depend on how well it is resourced and funded.

Territorial scope

England, Wales, Scotland and Northern Ireland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026 (although it may take longer for existing agencies to be wound up and  the FWA to be fully up and running).

Summary of proposal

The ERB has been amended to include a requirement for employers to keep records to demonstrate their compliance with workers' rights to paid annual leave under the Working Time Regulations 1998 (WTR) for six years. Failure to comply will amount to a criminal offence (punishable by fine).

What does this mean for employers?

The law on paid holiday entitlement is fiendishly complicated and many employers with the best of intentions may be inadvertently in breach of the strict requirements of the WTR concerning how holiday pay should be calculated.

This new record keeping requirement would impose an additional administrative burden on employers. Coupled with the threat of criminal liability for breach, and compliance enforceable by the FWA (see above), employers may wish to take active steps now to review their position and get their house in order.

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Commencement regulations required.

Expected to take effect in 2026.

Summary of proposal

In 2023, the previous government consulted on possible regulation of umbrella companies. The current government has responded to that consultation and amended the ERB to define umbrella companies, in order to allow for their regulation and bring them within scope of the Employment Agency Standards Inspectorate’s (and subsequently, the FWA’s) remit. It intends to ensure those working through umbrella companies will enjoy comparable rights and protections to those who are directly engaged by recruitment agencies. 

What does this mean for employers?

With workers engaged via umbrella companies having the same rights as those working through recruitment agencies, end clients may reconsider their use of umbrella companies going forwards. Meanwhile, umbrella companies themselves will need to adapt their operations to ensure compliance with this additional regulation.

(Separately, the government announced at the Autumn Budget 2024 that it will legislate to pass responsibility to account for PAYE from umbrella companies to end clients, with effect from April 2026.)

Territorial scope

England, Wales and Scotland.

Anticipated in-force date

Further consultation and substantive regulations required.

Expected to take effect in 2026.

Summary of proposal

The ERB will amend the Procurement Act 2023 to ensure that, where public services are outsourced, the contractor's direct employees are not treated less favourably than those transferring in from the public sector, and vice versa, so as not to end up with two groups, of ex-public sector employees and private sector employees, each on different terms (a "two-tier workforce").

What does this mean for employers?

Employers that take on work that is outsourced from the public sector, and thereby acquire former public sector employees, will need to take care to comply with the code of practice that will implement these provisions.

The requirement to treat direct employees and those transferring in from the public sector equally may have cost implications that employers will need to factor in when tendering for public sector outsourcing contracts.

Territorial scope

UK-wide (England, Wales, Scotland and Northern Ireland).

Anticipated in-force date

Further substantive regulations required.

Expected to take effect in 2026.