Navigating the Tides of Change: What the New Employment Rights Bill Means for Your Organisation

The UK's employment law landscape is on the cusp of a significant transformation with the introduction of the new Employment Rights Bill. This landmark legislation, anticipated to bring about a series of reforms from 2026 onwards, aims to modernise worker protections, address "one-sided flexibility," and foster fairer workplaces. For employers and employees alike, understanding these impending changes is not just beneficial, but essential for compliance and effective workforce management.

At People & Compliance, we believe that staying ahead of legislative shifts is paramount. Here's a breakdown of some of the key provisions in the Employment Rights Bill and what they mean for your organisation:

1. Day-One Rights for Unfair Dismissal (with a Statutory Probation Period)

Perhaps one of the most talked-about changes, the Bill proposes to remove the current two-year qualifying period for unfair dismissal claims. This means that, in principle, employees will gain protection against unfair dismissal from their very first day of employment.

However, to provide a practical balance for businesses, a new "statutory probation period" or "initial period of employment" is being introduced, likely lasting up to nine months. During this time, employers are expected to have a "lighter touch" or less onerous dismissal process for new hires who aren't a suitable fit for the role. The specifics of this "lighter touch" and the exact length of the probationary period are still subject to further consultation.

What this means for you:

• Employers: Review your onboarding and probationary period processes. While a lighter touch is anticipated, you'll still need clear documentation of performance issues and a structured approach to managing new employees. Robust performance management from day one will become even more critical.

• Employees: Increased job security from the outset, empowering you to challenge unfair dismissals earlier in your employment.

2. Overhauling Zero-Hours Contracts

The Bill is set to address concerns around "one-sided flexibility" by introducing significant reforms to zero-hours contracts. Key provisions include:

• Right to Guaranteed Hours: Employers will be required to offer a guaranteed hours contract to "qualifying workers" (those on zero-hours or low-hours contracts) if they consistently work a regular pattern over a defined reference period (likely 12 weeks). Workers will have the option to accept or reject this offer.

• Reasonable Notice for Shifts and Compensation for Cancellations: Employers will need to provide reasonable notice of shifts and offer payment for shifts that are cancelled, curtailed, or changed at short notice.

What this means for you:

• Employers: Assess your use of zero-hours contracts. You'll need to develop processes to monitor working patterns and ensure compliance with the new guaranteed hours obligations and notice requirements. This could lead to a shift towards more permanent employment where consistent work exists.

• Employees: Greater predictability and security of income, reducing the uncertainty often associated with zero-hours contracts.

3. Strengthening Collective Redundancy Rights

The Bill aims to enhance protections during collective redundancy processes by removing the "one establishment" trigger for consultation. Collective consultation will now be required if 20 or more redundancies are proposed at one establishment or if a "different threshold" is met across the employing entity as a whole. The specifics of this alternative threshold are yet to be finalised but could be a percentage or a higher number of redundancies across the business.

Furthermore, the maximum protective award for failing to consult collectively will be increased from 90 days to 180 days, significantly upping the financial penalty for non-compliance.

What this means for you:

• Employers: You'll need to expand your monitoring of redundancy numbers across your entire UK business, not just individual sites. The increased protective award underscores the importance of adhering strictly to collective consultation obligations.

• Employees: Enhanced protection and potential for greater compensation if collective redundancy rules are not followed.

4. Tackling "Fire and Rehire" Practices

The Bill seeks to effectively outlaw the controversial practice of "fire and rehire" where employers terminate existing contracts to move employees onto new ones with less favourable terms. Dismissals will become automatically unfair where the reason is an employee's refusal to agree to changes to their employment contract, or where the reason is to hire another person on amended terms.

A limited exception may apply in severe financial difficulties where changes are unavoidable, but this will be narrowly defined. The protective award for failing to inform and consult in "fire and rehire" exercises will also increase from 90 to 180 days.

What this means for you:

• Employers: Changing contract terms without employee agreement will become significantly more challenging. Employers should prioritise consultation and negotiation, and ensure contracts are drafted with appropriate flexibility clauses where necessary.

• Employees: Stronger protection against unilateral changes to employment terms.

5. Strengthening Statutory Sick Pay

The Bill will improve access to Statutory Sick Pay (SSP) by:

• Scrapping the Lower Earnings Threshold: More low-paid employees will become eligible for SSP.

• Eligibility from Day One: Employees will be able to claim SSP from the first day they fall ill, removing the current three-day waiting period.

What this means for you:

• Employers: Review your SSP policies and procedures to ensure compliance with the expanded eligibility and immediate payment.

• Employees: Greater financial security during periods of sickness absence.

6. Enhanced Protections Against Harassment and for Whistleblowers

The Employment Rights Bill also includes measures to bolster protection against harassment:

• Stronger Duty to Prevent Sexual Harassment: Employers will be required to take "all reasonable steps" to prevent sexual harassment, extending the current "reasonable steps" duty.

• Third-Party Harassment Liability: Employers may become liable for harassment (of any kind) by third parties (e.g., customers, clients) unless they take "all reasonable steps" to prevent it.

• Whistleblowing Protection for Sexual Harassment: Disclosing sexual harassment will explicitly be added to the list of "qualifying disclosures" for whistleblowing protection.

What this means for you:

• Employers: Proactively review and update your harassment policies, conduct thorough risk assessments, and ensure robust training for all staff, including on managing third-party interactions.

• Employees: Increased avenues for reporting and protection when experiencing harassment.

Preparing for the Future

While many of these changes are not expected to take full effect until 2026 or later, the time to prepare is now. The Employment Rights Bill represents a significant shift towards a more protective and transparent employment framework.

At People & Compliance, we encourage organisations to:

• Stay Informed: Keep abreast of the detailed regulations and guidance as they are released.

• Review Policies and Procedures: Update your employment contracts, HR policies (e.g., probation, redundancy, flexible working, sickness absence, anti-harassment), and disciplinary procedures.

• Train Your Teams: Ensure HR professionals, managers, and all employees are aware of the new rights and obligations.

• Seek Expert Advice: Consult with employment law specialists to understand the specific implications for your unique organisational context.

By proactively addressing these upcoming changes, your organisation can ensure compliance, minimise legal risks, and continue to foster a fair and productive working environment for everyone. The new Employment Rights Bill is not just a legal update; it's an opportunity to build stronger, more resilient workplaces for the future.