The ERB, now the Employment Rights Act, was approved by Parliament on Tuesday afternoon and is expected to be granted Royal Assent later this week.
Unfortunately, we still do now know much of the detail as secondary legislation will be needed to prior to the reforms being implemented.
The Employment Rights Bill was a part of Labour’s plan to “Make Work Pay” as revealed in the Autumn of 2024. This plan promised a plethora of reforms to the world of UK employment law, including day-one employment rights, the abolition of zero hours contracts and reform to tribunal procedures. So now, over a year later, we have the finished product which has some marked and inevitable changes in contrast to the original proposal.
As of today, the provisions introduced by the Strikes (Minimum Service Levels) Act 2023 will be repealed. But don’t be fooled that this is the first of many immediate changes that will be coming in to force as a result of the Act. The following key areas have now been enacted into UK law but are not necessarily in force.
Employees will only need a six-month qualifying period before gaining unfair dismissal protections (in contrast to the current two-year qualifying period). No retrospective period of employment will be used in counting continuous employment so employees with six months service on or after 1 January 2027 will benefit from the relevant protection.
The statutory cap for compensatory awards for a successful unfair dismissal claim (currently one year’s gross pay up to a maximum of £118,223) will be removed which will be of particular significance to high earners who successfully bring an unfair dismissal claim. Any compensatory award will be in addition to the Basic Award.
From April 2026 paternity leave and unpaid parental leave will both become day-one rights (although note that the right to benefit from paternity pay will still have a 26-week qualifying service requirement).
In 2027 bereavement leave for bereavements beyond those covered by the existing benefits covering the loss of a child or a stillborn baby, will also be introduced.
Employees will be protected from dismissal if they are pregnant or whilst on or following the first six months after return from maternity leave, adoption leave or shared parental leave. This has been caveated to the extent that dismissal will be lawful in certain circumstances, the detail of which will be confirmed in secondary legislation.
Zero hours contracts will not be banned in their entirety, but there will a legal requirement that a “qualifying” zero hours worker must be made an offer for regular hours on the basis of the hours worked by them in a 12-week reference period. Secondary legislation will provide further detail on the nature of the guaranteed hours offer to be made and how long this offer must stay “open” for.
It will be possible for employers to waive this requirement where it is covered in a collective agreement; if the individual is not deemed to be a “qualifying worker” ; or if the individual resigns.
Form April 2026, the current three-day waiting period for Statutory Sick Pay will be abolished and there will be no requirement for employees to reach the minimum earnings threshold before SSP is paid. However, if an employee earns below the given rate of SSP, their pay entitlement during statutory sick leave will be 80% of their average weekly earnings, instead of the statutory rate.
From April 2026, the maximum award available for an employer’s failure to comply with the duty to enter into collective consultation will increase from 90 days gross pay per employee to 180 days’ gross pay per employee.
From 2027, the threshold triggering the duty to embark on collective consultation for redundancy will also change. Secondary legislation will confirm the precise nature of the changes but commentary on the issue predicts that the duty will arise where a percentage of the workforce will be made redundant.
From 2027, employers with over 250 employees will be required to report pay gap figures for ethnicity and disability. This will be in addition to the existing Gender Pay reporting obligations. Secondary legislation will provide further details on the precise nature of what will need to be reported. As well as reporting obligations, employers will need to have action plans in place which detail – how they will respond to gender pay reporting and, separately, how they will support employees during menopause.
Individuals wishing to bring a claim in the Employment Tribunal will now have up to six-months from the act complained of.
Although implemented before the Act, the period of ACAS conciliation has increased from 6 weeks to 12 weeks from 1 December 2025.
From October 2026, it will be automatically unfair to dismiss an employee because they refuse to agree to contractual changes (on in relation to changes to pay, pensions or statutory entitlements), Another reason for dismissal that will be deemed to be automatically unfair will be where the employer has the intention of replacing employees or re-engaging them on new terms (in the same role) or equally, replacing the employee with a contractor. Secondary legislation is expected to confirm exceptions when such dismissals will not be deemed to be automatically unfair.
Kate Sullivan comments:
The changes set out in the Employment Rights Act are extensive. Now the wait begins for secondary legislation and the official government guidance without which employers will still be in the dark. We will keep employers informed of that detail as and when it is published, but we certainly do have a busy couple of years ahead of us.
If you have any questions in respect of the Employment Rights Act or any of the upcoming changes, please contact a member of the team here.
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