The Employment Rights Bill (ERB) has finally become law, 18 months on from Labour’s landslide election victory.
But the passage of this flagship legislation has not been smooth, and not without U-turns either.
Let’s take a look at what is in the final piece of legislation.
The bill contains a raft of measures “to make work pay”. It promised to deliver a new deal for working people, with basic individual rights covering:
Flexible Working
The bill will require employers to justify the refusal of flexible working requests, such as working from home.
Zero-hours contracts
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Zero-hours contracts will not be banned outright, but workers will be given the right to guaranteed contracted hours if they want them. The bill also includes a right to reasonable notice of shifts and compensation for changed or cancelled shifts.
Statutory sick pay
It removes the current three-day wait period before being eligible for statutory sick pay (SSP). It will also remove the lower earnings limit (currently £125 per week) as a condition of eligibility for SSP. A new rate of SSP will be set at 80% of average weekly earnings or the flat rate (currently £118.75), whichever is lower.
Family leave
There will be a day one right to paternity and parental leave by removing the existing qualifying service requirements, which are 26 weeks and one year, respectively.
Bereavement leave
Under the new law, there is a day one right to bereavement leave to grieve the loss of a loved one, including pregnancy loss before 24 weeks. Currently, bereavement leave is only mandatory for the loss of a child under 18, or a miscarriage after 24 weeks.
Unfair dismissal
The qualifying period to protect workers against unfair dismissal is currently two years, and Labour said in their manifesto that they would bring it down to one day. But this has been watered down to six months, after opposition from businesses.
Fire and rehire
Fire and rehire refers to when employers dismiss staff and then rehire them, or others, on worse terms. Labour’s manifesto promised to end fire and rehire, but the bill only restricts it, so it is allowed in limited circumstances.
The initial ERB sought to ban fire and rehire by making a dismissal automatically unfair if an employee was let go after refusing to accept changes to their contract.
A dismissal will now be automatically unfair only in cases of a “restricted variation” to the contract. This does include changes to pay, pensions, working hours and shift patterns. However, there is an exception for employers if they are in financial difficulty.
Unite, the UK’s leading union, has described the Labour government’s commitment to ban the practice of fire and rehiring workers as now nothing more than a “burned out shell”.
They say the bill means fire and rehire is allowed in local government, where councils have issued a section 114 bankruptcy notice, so public sector staff, like the bin workers on strike in Birmingham, could be subject to this practice.
Trade unions
It introduces rights for trade unions to access workplaces, and repeals the Strikes (Minimum Service Levels) Act 2023 and most provisions of the Trade Union Act 2016, which made it harder for unions to strike.
Collective redundancy rights
If an employer wants to dismiss 20 or more employees at one establishment within a 90-day period, they must consult unions and staff. The bill will double the award for failure to consult, from 90 days’ pay to 180 days’ pay.
And a new threshold will be introduced, requiring employers to aggregate redundancies across the business, rather than just at one single site. This exact threshold will be set out in regulations later down the line.
Sectoral collective bargaining
The School Staff Negotiating Body, which was abolished by the Conservatives in 2010, has been reintroduced. Also created is an Adult Social Care Negotiating Body, which could determine pay and other terms and conditions for workers in these sectors.
Enforcement
It has established the Fair Work Agency, which will bring together the enforcement of current domestic agency rules, the National Minimum Wage, licensing of labour providers and action against serious labour exploitation. The bill bakes in the potential for the FWA to expand its remit, and will report to parliament.
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‘Day one’ right rowed back
A key aspect of this bill was that many of the rights would come in immediately. But last month, the government U-turned on its manifesto commitment to offer all workers the right to claim unfair dismissal from their first day in a job, replacing it with a six-month qualifying period.
The government said this was necessary to get the bill through the House of Lords, after some peers objected to the provisions, suggesting they would deter some businesses from hiring.
While in opposition, Labour had also promised an outright ban on zero-hours contracts. But the manifesto added the word “exploitative”, allowing some workers to opt to stay on zero-hours contracts – but only if they want to. The change is that they can legally be guaranteed hours, something not currently available to them.
When will the changes come into effect?
The bill has just received royal assent. Some protections will come into effect straight away, such as the changes making it easier to go on strike.
Protections coming into force from April include new sick pay and paternity leave rights.
The changes to fire and rehire are among those coming into force in October 2026, while the changes to zero-hours contracts, bereavement leave and unfair dismissal will come into force in 2027.
