The Employment Rights Bill is advancing through Parliament and is expected to become law by summer 2025. However, most of the reforms outlined in the Bill will not take effect until 2026.
This comprehensive legislation introduces 28 distinct employment law reforms, many of which will be clarified through regulations and codes of practice over time.
Below, we highlight some of the key changes set to reshape employment rights in the near future.
Day one rights for sick pay, parental leave and unfair dismissal
Currently, employees need to meet specific qualifying periods to access certain rights. For example, protection from unfair dismissal typically requires two years of continuous employment. The Employment Rights Bill introduces significant changes to these qualifying periods:
Unfair Dismissal
Employees will gain protection from unfair dismissal starting from day one of their employment. To address employer concerns about underperforming new hires, the Bill proposes a statutory probationary period of nine months, allowing employers to confirm whether the job is a good fit for both the employee and the employer. During this period, a “lighter touch” and less onerous process for businesses to fairly dismiss someone who is not suited to the role will apply. The government will consult on:
- The length of the statutory probation period.
- How the “lighter touch” dismissal process will operate.
- The unfair dismissal compensatory award regime for dismissals during that period.
Statutory sick pay (SSP)
Currently, SSP is payable from the fourth day of sickness absence, provided the employee earns £123 per week. Under the new legislation, SSP will become a day-one right, with the earnings threshold removed. This change could significantly impact employer costs.
Paternity and parental leave
Paternity leave currently requires 26 weeks of continuous service, while unpaid parental leave requires one year. The Paternity Leave Act 2024, expected to take effect in 2025, will make paternity leave a day-one right for bereaved fathers or partners, ensuring immediate support for families facing such circumstances.
Changes to zero-hours contracts
The Bill introduces critical changes to zero-hours contracts, aimed at increasing stability for workers:
- Employers will need to offer workers a guaranteed hours contract based on their average hours worked over a 12-week period.
- Workers must be compensated for shifts cancelled, moved, or curtailed on short notice.
While these changes stop short of abolishing zero-hours contracts, they could challenge employers relying heavily on seasonal workers, their period of work will probably be shortened to under 12 weeks.
Statutory Code of Practice on Dismissal and Re-engagement
From January 2025, employers who unreasonably fail to follow the Statutory Code may face penalties, including a 25% increase in protective awards. This aligns with the Code introduced in July 2024.
Neonatal Care (Leave and Pay) Act 2023
Parents whose newborns require extended hospital care will soon be entitled to 12 weeks of neonatal care leave and pay, potentially becoming effective in 2025. This provision will be a day one right for eligible employees.
Statutory Rates and National Wage Increases (April 2025)
Employers should prepare for the following increases:
- National Living Wage (21+): £12.21 (6.7% increase)
- National Minimum Wage (18-20): £10 (16.3% increase)
- National Minimum Wage (16-17 & Apprentices): £7.55 (18% increase)
- Statutory Sick Pay: £118.75 per week
- Statutory Maternity and Family Leave Pay: £187.18 per week
- Lower Earnings Limit: £125 per week
While many of these reforms won’t take effect until 2026, employers should begin reviewing their policies and practices now. Anticipating these changes will help businesses remain compliant and mitigate potential risks.
Factsheets covering the various measures included in the Employment Rights Bill can be found here.
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