After months of heated debate, back‑and‑forth discussions, and extensive consultation, the Employment Rights Bill has received full parliamentary approval. Passed by both the House of Commons and the House of Lords, it now heads for Royal Assent to become the Employment Rights Act 2025.
This landmark legislation represents one of the most significant reforms of workplace law in decades. This brief article walks you through the key changes and what they mean for employers and employees across the UK.
Key changes:
– Unfair dismissal: The original plan for “day one” rights has been dropped. Instead, the qualifying period will be cut from two years to six months. The government also says the compensation cap will be “lifted” – though it’s not yet clear whether that means raised or removed.
– Fire and rehire: Stronger restrictions are on the way. Employers won’t be able to dismiss staff and re-engage them on worse terms (like pay or hours), except in limited financial hardship cases.
– Flexible working: Already a day-one right, but employers will now need to show their refusal is reasonable and explain their reasoning for this
– Collective redundancy: Consultation rules will tighten now. Instead of looking at one site, employers will need to consider redundancies across the whole workforce. Additionally, protective awards could rise to 180 days’ pay.
– TUPE transfers: Expect moves to reduce “two-tier” workforces, with employers required to level up poorer terms after transfers.
– Zero-hours contracts: No outright ban, but employers must offer guaranteed hours if workers regularly exceed their contracted minimum. Workers will also gain rights to reasonable notice of shifts and compensation for last-minute cancellations.
– Right to switch off: Once a headline proposal, this has gone quiet. A Code of Practice may still appear, but nothing concrete yet.
– Pay gap reporting: Gender pay gap reports will expand to include equality action plans. Ethnicity and disability pay gap reporting is expected under separate legislation.
– Sexual harassment: Employers will need to take “all reasonable steps” to prevent harassment, including from third parties. NDAs restricting disclosure may also be curbed.
– Trade unions: Easier recognition processes and stronger rights of access to workplaces are on the horizon.
– Family and leave rights: Parental and paternity leave will become day-one rights. Bereavement leave will be introduced, covering pregnancy loss before 24 weeks.
What This Means for Employers
In plain terms, the Act raises the bar on how businesses treat their people. Employers will need to:
– Rethink dismissal and redundancy processes.
– Be clearer and fairer when refusing flexible working.
– Provide more certainty to staff on hours and shifts.
– Strengthen policies on harassment and equality reporting.
How we can help
At First North Law, we’re committed to helping businesses adapt to the Employment Rights Act 2025. Our team can provide clear, practical guidance so you’re ready for whatever changes lie ahead. For any questions or advice, please contact newinstruction@firstnorthlaw.co.uk.