Latest Updates to the Employment Rights Bill: Key Changes Employers Should Know

The Employment Rights Bill, hailed as one of the most transformative updates to employment law in recent years, has undergone significant amendments during its journey through Parliament. With the latest changes announced in March and April 2025, employers must prepare for the implications these reforms will have on workplace policies and payroll systems. Below is a summary of the key updates and their potential impact.

Key Amendments to the Employment Rights Bill:

• Unfair Dismissal Protection: Employees will now have the right not to be unfairly dismissed from day one of employment, eliminating the current two-year qualifying period. However, a lighter-touch dismissal process will apply during an initial probationary period, expected to last nine months. This change is anticipated to take effect no earlier than Autumn 2026.
• Zero-Hour and Agency Worker Contracts: The Bill introduces stricter regulations for zero-hour contracts, requiring employers to offer guaranteed hours based on an average of previously worked hours. Agency workers are now included in these provisions, ensuring they receive reasonable notice for shift cancellations and proportionate pay for curtailed shifts. This amendment aims to close loopholes that previously allowed employers to bypass rules by using agency staff.
• Statutory Sick Pay (SSP) Reforms: SSP will now be payable from
  day one of sickness absence, removing the three-day waiting period. Employees earning below the Lower Earnings Limit (£123 per week) will be eligible for a percentage-based SSP rate—80% of their average weekly earnings or £118.75 per week, whichever is lower. While this reform aims to support workers during illness, it poses additional financial challenges for employers.
• Family Leave and Pay Enhancements: The amendments propose increases in statutory maternity, paternity, adoption, shared parental, and bereavement pay rates to £187.18 per week starting April 2025[1][6]. Paternity leave will also be extended from two weeks to six weeks within the first year after birth.
• Flexible Working Rights: Employees will retain their right to request flexible working from day one. Employers must provide written explanations for refusals and ensure decisions are reasonable under the amended framework.
• Redundancy Protections: The protective award for failing to consult during redundancies has doubled from 90 days to 180 days’ gross pay per affected employee[8]. This change underscores stricter enforcement measures aimed at ensuring fair treatment during workforce reductions.
• Employment Tribunal Claim Time Limits: The time limit for bringing employment tribunal claims has been extended from three months to six months, giving employees more time to seek legal recourse.

Implications for Employers

These sweeping changes bring both opportunities and challenges:

• Increased Compliance Requirements: Employers must adapt payroll systems to accommodate new statutory pay rates and SSP reforms while ensuring adherence to stricter redundancy consultation rules.
• Financial Impact: Enhanced worker protections and increased benefits will raise labor costs at a time when businesses are already grappling with higher National Insurance Contributions and National Minimum Wage rates.
• Policy Updates: Workplace policies must be revised to reflect new rights concerning unfair dismissal, flexible working, and agency worker protections.
• Litigation Risks: Failure to comply with these new provisions could result in significant penalties or tribunal claims.

Looking Ahead

While many of these reforms are slated for implementation in 2026 following consultations and transition periods, businesses should begin preparing now. The Employment Rights Bill represents a significant shift toward strengthening worker protections and improving job security, but it also places additional responsibilities on employers.

By proactively updating policies and payroll systems, businesses can ensure compliance while supporting their workforce through these transformative changes.