Earlier this month, the Employment Rights Bill passed its third reading in the House of Commons and is now scheduled for its second reading in the House of Lords on 27 March 2025. This marks a significant step towards strengthening employee protections and introducing new employer obligations.

This article explores the latest updates to the Bill, its implications for both employers and employees, and steps businesses should take now to prepare.

Fire and Rehire: New Limits

The Bill introduces strict limitations on “fire and rehire” practices, which have been heavily scrutinised since the P&O Ferries scandal in 2022. While the Bill does not impose an outright ban, it restricts employers from using fire and rehire except in cases of severe financial distress, such as insolvency.

• Non-compliance could result in a 25% increase in compensation for unfair dismissal claims.
• Dismissing an employee for refusing contractual changes will now be automatically unfair.
• Rehiring employees under new terms after dismissal may also trigger unfair dismissal claims.

Updated Guidance from March 2025

There is ongoing debate regarding the public sector, where contract changes often follow funding adjustments. If an employee resigns, claiming constructive dismissal due to imposed contract changes, legal challenges may arise. How tribunals will interpret “reasonableness” in these cases remains to be seen.

 

Unfair Dismissal Protections Extended from Day One

One of the most significant changes in the Bill is the introduction of day-one unfair dismissal rights, with a nine-month probationary period replacing the current two-year requirement.

Key March 2025 Updates

• The repeal of Section 108 of the Employment Rights Act 1996 has been confirmed in the latest reading.
• Employers will need to justify dismissals more clearly, even during the probationary period.
• Implementation is expected by autumn 2026, meaning businesses have time to adapt their employment policies.

 

Collective Redundancy Obligations Now Apply Across Multiple Locations

Employers will need to consult employee representatives and notify the Secretary of State if they plan redundancies across different sites.

Recent Developments

• Employers can no longer treat individual sites separately to avoid redundancy consultation rules.
• Failure to comply could lead to penalties or legal challenges.
• HR teams should start preparing for these procedural changes now.

 

Mandatory Gender Equality Action Plans

A new provision added in March 2025 will require large employers (250+ employees) to publish Gender Equality Action Plans annually.

• These reports must include efforts to close the gender pay gap and support menopausal employees.
• The Bill stops short of imposing financial penalties, but public pressure and reputational risk could incentivise compliance.

 

Parental and Paternity Leave

Under the new Bill:

• Parental and paternity leave will become a day-one right (no qualifying period).
• Fathers and partners can take paternity leave alongside shared parental leave.

March 2025 Update

• Employers must now offer clearer policies on parental leave entitlements to ensure compliance.
• HR teams should ensure that internal communications reflect these updates.

 

Bereavement Leave Now Covers More Family Members

A broader bereavement leave policy has now been finalised, including:

• Two weeks’ leave for the loss of a child.
• One week’s leave for other close relatives or dependents.

 
New Requirement from March 2025

• Employers must offer separate leave periods for multiple bereavements rather than a single entitlement.

 

Statutory Sick Pay (SSP) Enhancements

Key SSP changes include:

• Day-one eligibility (instead of day four).
• The removal of the minimum earnings threshold, making more employees eligible.

 

March 2025 Update

• Employers should assess the financial impact of these changes on payroll costs.

 

Flexible Working Rights Expanded

The Bill now guarantees the right to request flexible working from day one.

• Employers must provide a valid reason for refusal.
• Requests must be handled within two months (down from three).

 

March 2025 Update

• Employers should update their flexible working policies now to ensure compliance.

 

Zero-Hours Contracts: Stronger Safeguards

The Bill introduces minimum guaranteed hours for zero-hours workers based on their recent work history.

• Employers must give reasonable notice for shift changes or compensate for last-minute cancellations.

 

March 2025 Update

• New regulations on notice periods for shift changes are expected later this year.
• Businesses should prepare for increased workforce planning obligations.

 

Stronger Protections Against Workplace Sexual Harassment

Employers will now have a statutory duty to prevent workplace sexual harassment, including:

• Liability for third-party harassment.
• A new category of protected disclosure under whistleblowing laws.

Recent Amendments

• Failure to take “reasonable steps” to prevent harassment can lead to legal liability.
• Employers should conduct workplace risk assessments and strengthen harassment policies.

 

Fair Tip  Allocation

The Bill builds on the Allocation of Tips Act 2023, requiring:

• Employers to consult trade unions or employee representatives before setting tip policies.
• Mandatory policy reviews every three years.

 

March 2025 Update

• New Code of Practice on tip allocation is expected later in 2025.

 

Preparing for the New Employment Rights Bill

The Bill is expected to be fully implemented by 2026, so businesses should act now to stay ahead.

Review employment contracts to build flexibility without relying on fire and rehire.

• Assess the use of zero-hour contracts and consider alternative staffing models.
• Conduct risk assessments for workplace harassment prevention.
• Budget for higher SSP costs and expanded leave entitlements.
• Develop a Gender Equality Action Plan ahead of the 2026 requirement.
• Update policies and provide training on the new legal framework.
• Refine recruitment and probationary policies to reduce potential dismissal risks.
• By preparing early, businesses can foster a supportive workplace, ensuring compliance and positioning themselves to meet the new standards.

Need support? For expert HR guidance to align your business with the Employment Rights Bill, we can connect you with an HRi accredited consultant to ensure compliance and best practices.

Stay ahead—prepare now for the most significant employment law changes in years.

Author: Mary Asante| HRi