What employers need to know about Labour’s Employment Rights Bill

The Labour Party’s Employment Rights Bill represents one of the biggest legislative overhauls in recent history, aimed at improving workers’ rights across the board.

Announced this month, these reforms will impact how businesses operate, from hiring practices to employee entitlements.

While many aspects of the bill will not be enacted for at least two years, employers must start getting to grips with the upcoming changes and understand their legal implications.

What are the key changes?

Day-one employment rights

One of the headline changes is the introduction of day-one rights for workers.

Employees will qualify for protection against unfair dismissal from the first day of employment, as opposed to the current requirement of two years’ service.

This will also extend to day-one rights for paternity and unpaid parental leave, broadening the scope of parental entitlements.

Businesses must now be prepared for how they manage new hires, as dismissal processes could face more scrutiny from day one.

Employers should review their onboarding and probation procedures to ensure compliance with these new protections.

Statutory Sick Pay

A major change will be the introduction of Statutory Sick Pay from the first day of illness, without the current lower earnings limit.

This means all workers, regardless of income, will be eligible for Statutory Sick Pay from the first day they report sick.

While the Statutory Sick Pay rate of £116.75 per week remains unchanged for now, the removal of the earnings threshold is expected to impact the financial planning of many businesses.

Employers will need to adjust their sick leave policies and be prepared for the administrative and financial implications of providing sick pay from day one.

Zero-hour contracts and fire and rehire

Over one million people currently on zero-hours contracts will gain the right to guaranteed working hours if they have worked regular shifts over a set period (initially proposed as 12 weeks).

Employers can still offer zero-hours contracts, but only if workers opt to remain on them.

Additionally, ‘fire and rehire’ practices, where employers dismiss workers and rehire them on less favourable terms, will be banned except in extreme circumstances, such as businesses on the brink of collapse.

We can help advise employers on their long-term strategies to ensure that any necessary changes to employment terms are handled lawfully.

Flexible working 

Labour’s commitment to making flexible working the default option for employees will reshape workplace policies.

Employers will need to adopt flexible working arrangements where practical and ensure they have clear policies on how to implement these changes.

Failure to provide flexible working options may expose businesses to legal challenges, so employers must review their current working practices and policies.

Employers will also be required to create action plans to close gender pay gaps and support female employees experiencing menopause.

These provisions will add further compliance requirements for employers, particularly those with larger workforces.

The Fair Work Agency

A new enforcement body, the Fair Work Agency, will be established to monitor and enforce the expanded rights contained in the bill, including holiday pay and other entitlements.

This agency will combine several existing enforcement bodies and is expected to have wide-ranging powers to inspect and audit employers’ compliance with the new legislation.

Employers should prepare for possible inspections and ensure that all aspects of their employment practices, from holiday pay to flexible working, comply with the new requirements.

What do employers need to do now?

While many of these changes will not be fully implemented until 2026, we strongly advise employers to start preparing now.

This means reviewing current contracts, employment practices, and workplace policies to ensure they are in line with the forthcoming legal framework.

Employers should also engage in consultations with their legal advisors to manage risks and minimise potential liabilities.

Our employment law specialists can help you prepare for these new regulations and ensure that your business is compliant well in advance of the bill’s enactment.

For further assistance, please contact us today.

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