Employment Rights Bill: 10 key amendments explained

On 5 March 2025, the government published a 200 page amendment paper containing a wide range of amendments to the draft Employment Rights Bill (the Bill). A number of the amendments follow the government's response to various consultations on some of the most significant proposed reforms.

Below, we highlight 10 of the key amendments and what they mean for employers.

1. Zero hours and agency workers

One of the most significant reforms proposed by the Bill seeks to address the 'one-sided flexibility' of zero or low hours contracts. Under the Bill's proposals, workers who meet certain criteria will be offered guaranteed hours in line with the number of hours regularly worked after the end of each reference period - if this is what they want. Workers will also have the right to reasonable notice of shift changes, with employers required to pay them compensation for any shifts cancelled at short notice.

Previously, agency workers were excluded from these proposed measures. However, this gap in protection will be closed, with the amendment paper confirming that the new measures will extend to agency workers (Gov NC32, p.1). The amendment paper also clarifies that:

• It is the end hirer's responsibility to make a guaranteed hours offer to a qualifying agency worker (Gov NS1, p.130). However, it also states that regulations may impose obligations on agencies or other entities in certain scenarios (Gov NS1, p.143).
• Both the agency and the end hirer will have responsibility for providing a qualifying agency worker with reasonable notice of shifts (Gov NS1, p.144) and, in the event of a successful claim in the employment tribunal, the tribunal will have the power to apportion liability according to each party's responsibility in the case (Gov NS1, p.148).
• The agency will have responsibility to pay any short notice cancellation or curtailment payments to agency workers (Gov NS1, p.148), but will be able to recoup from the end hirer the cost of any short notice cancellation, movement or curtailment payments where they have pre-existing arrangements with hirers (Gov NS1, p.154).

The exact nature of the obligations, for example how the agency worker should receive notification of shift changes or cancellations, will be subject to further debate, and once agreed, will be fixed by secondary legislation. 

It is important to note that the amendment paper enables employers and trade unions to agree, by way of a collective agreement, to expressly exclude the rights and obligations in relation to guaranteed hours and reasonable notice of shifts and to expressly replace them with new terms, provided that such terms are incorporated into the worker's contract (Gov NC33, p.4).

In response to stakeholders' concerns about genuinely temporary or seasonal work, the government acknowledged in its response to the consultation on the application of zero hours contracts measures to agency workers that it would not be appropriate to require businesses to provide qualifying workers with a permanent contract and confirmed that businesses will be able to offer temporary contracts where there is a 'genuine temporary work need'. Exactly what constitutes a temporary work need will be subject to consultation and secondary legislation.

2. Collective redundancy consultation

Currently, the Trade Union and Labour Relations (Consolidation) Act 1992 provides that where the employer is proposing to make 20 or more people redundant at one establishment within a 90-day period, it must consult with appropriate employee representatives and provide notification at least 30 days before the first redundancy takes effect. If the employer is proposing to make 100 or more people redundant, the employer has to provide the notification at least 45 days before the first redundancy takes effect.

The Bill, as initially drafted, proposed that the collective consultation obligations should apply regardless of whether the redundancies are taking place at one establishment or not. This would have had huge consequences for employers, particularly large multi-site employers, potentially resulting in every proposed redundancy triggering the obligation to consult collectively.

In response to these concerns, the amendment paper (Gov 91, p.91) restores the phrase "at one establishment" so that the obligations will be triggered if either:

            (i) there are 20 or more people being made redundant at one establishment; or

            (ii) another threshold is reached, where employees are being made redundant at more than            one establishment.

The details of the new threshold, which will be more than 20, will be confirmed in future regulations, for example as a specified percentage of employees (Gov 93, p.92).

The amendment paper also clarifies that employers will not be required to consult with all of the appropriate employee representatives together, or to undertake the consultation with a view to reaching the same agreement with all of the appropriate employee representatives (Gov 90, p.90).

The amendment paper provides that the government will extend the maximum protective award period, which applies in successful claims for breach of collective redundancy obligations, from 90 days to 180 days' pay (Gov NC34, p.6). According to the government response to the consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire, the doubling of the protective award is "to ensure that employers will not be able to deliberately ignore their obligations", adding that "it should never be the case that it is financially beneficial to do so".

Employment tribunals will continue to have discretion to vary the length of the protected period, up to a maximum of 180 days, as they consider just and equitable in all the circumstances, having regard to the seriousness of the employer’s actions, as well as any mitigating factors.

The government's response to the consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire also confirms that the previous proposal to make interim relief available in unfair dismissal claims relating to collective redundancy will not proceed, acknowledging that this would place too much of a burden on businesses and would be difficult to implement.

The government will issue further guidance for employers on best practice compliance with their collective redundancy consultation obligations.

3. Fire and re-hire

In a bid to clamp down on the so-called practice of "fire and re-hire", where employers use the threat of dismissal with neither proper discussion nor engagement to impose detrimental changes on employees, the Bill provides that it will be automatically unfair to dismiss an employee because:

            (i) they failed to agree to an alteration to their contract of employment; or

            (ii) the employer intends to replace or re-engage them under an amended contract to          perform substantially the same duties as before.

Dismissal due to a failure to agree to a contract variation will only be fair if:

• the reason for the variation was to eliminate, prevent or significantly reduce, or significantly mitigate the effect of, any financial difficulties which would affect the employer's ability to carry on the business as a going concern, and
• the employer could not reasonably have avoided the need to make this variation.

Simply enhancing business efficiency does not meet this requirement; there must be a 'genuine lack of alternatives', setting a high bar for justification. In reality, therefore, the exception is likely to apply only in rare and limited cases.

The government's response to the consultation on strengthening remedies against abuse of rules on collective redundancy and fire and rehire confirms that the government's previous proposal to make interim relief available in unfair dismissal claims relating to fire and re-hire will not proceed, acknowledging that this would place too much of a burden on businesses and would be difficult to implement.

4. Fair work agency

The Bill proposes to create an enforcement agency called the Fair Work Agency (FWA), which will bring together existing state enforcement functions and over time take on enforcement of a wider range of employment rights.

The FWA, which will have rights of enforcement relating to unpaid holiday pay, national minimum wage and statutory sick pay, will aim to resolve issues upstream by supporting employers that want to comply with the law, but it will also have strong powers to investigate and take legal action against businesses that flout the law to level the playing field for compliant businesses. The Bill requires the Secretary of State to establish an advisory board, with equal representation from businesses, trade unions and independent experts, to advise the FWA.

The amendment paper sets out the FWA's extensive, and unparalleled, powers. These include:

• the power to bring any employment tribunal claim in place of a worker who appears not to be bringing the claim themselves (NC57, p.24);
• the ability to assist in legal proceedings (NC58 - NC59, p.25-27); and
• the power to recover costs of enforcement (NC60, p.27).

Employers will need to track further developments on the FWA's increasingly prominent role in employment law matters, following the government's indication that further enforcement powers will be added as the Bill progresses. These include powers to issue civil penalties and to order employers to compensate workers, based on existing powers in the National Minimum Wage Act 1998.

5. Trade union rights

The Bill creates a framework to modernise industrial relations and strengthen trade union rights, which, in the government's view, are restricted unnecessarily by the existing legislation, the Trade Union Act of 2016, which was brought in by the previous Conservative government.

One of the many proposed reforms is facilitating trade union access to the workplace for the purposes of meeting, representing, recruiting, or organising workers, whether or not members of a trade union, or to facilitate collective bargaining. The amendment paper explicitly adds "supporting a trade union member with an employment-related matter" as an access purpose. The amendment paper has confirmed that, as well as physical access, this also extends to cover virtual access. Further detail on what virtual access entails, such as its definition and the functions it would cover will be set out in secondary legislation.

The amendment paper sets out numerous other amendments in relation to trade union rights and industrial action, including:

• enabling a quicker route to achieve an access agreement by permitting a single person at the Central Arbitration Committee (CAC) to decide on whether access should be allowed, provided the proposed access agreement fulfils prescribed terms, the details of which will be set out in secondary legislation (if such prescribed terms are not met, the CAC panel would sit in its normal tripartite manner) (Gov 184, p.112);
• providing a framework via secondary legislation for the CAC to issue fines to employers who fail to comply with the right to access;
• reducing the amount of information that unions are required to include in ballot and industrial action notices (NC42, p.11-12);
• extending the industrial action mandate expiration from the current six to 12 months (NC43, p.12);
• in respect of notice to employers of industrial action, amending the notice period to ten days, rather than seven days (Gov 201, p.120);
• extending the application of provisions and the Code of Practice on access and unfair practices during recognition and derecognition ballots to cover the entire recognition process (NS2, p.155-196);
• requiring employers to share the number of workers in a proposed bargaining unit within ten working days of the statutory application for recognition being submitted, after which employers would be prevented from altering that number in relation to statutory recognition applications;
• setting a maximum of 20 working days for an access agreement to be agreed and bring this forward to the point where the CAC accepts the union’s recognition application - if no agreement is reached, the CAC to adjudicate and issue an order requiring access to the workforce;
• changing legislation to make it easier for unions to win cases where an unfair practice has occurred, and requiring unions to show the CAC only that the unfair practice has occurred and not how it influenced workers' votes;
• extending the time limit when a complaint against an unfair practice can be made after the closure of the ballot; and
• enabling independent unions to apply for recognition where an employer has voluntarily recognised a non-independent union, following receipt of a formal request for voluntary recognition by the independent union.

According to the government's response to the consultation on creating a modern framework for industrial relations, it plans to consult further on:

• repealing the 50% industrial action ballot turnout threshold via regulations;
• delivering e-balloting and workplace balloting for trade union ballots; and
• reducing the admissibility requirements for the statutory trade union recognition ballot process.

6. Statutory sick pay

Under the Bill's proposals, statutory sick pay (SSP), which is the minimum amount that employers are required to pay their employees when they are off sick, will be available to all employees from the first day of their sickness.

Following the outcome of this consultation, the amendment paper states that:

• the weekly rate of SSP will be the lower of £118.75 (in line with the new National Living Wage changes) and 80% of an employee’s weekly earnings (Gov 80 and 81, p.84-85).
• where an employer has failed to pay a worker an amount due to the worker under a provision of legislation listed in Part 1 of Schedule 5 (for example statutory sick pay), the Secretary of State may give the employer a notice of underpayment, which can cover a period of up to six years, requiring the employer to pay the amount due (Gov NC44, p.13).
• within three months of the Bill becoming law, the Secretary of State must consult on how the government can best support small employers with SSP costs (NC71, p.70).

7. Maternity and pregnancy

In a bid to strengthen protection for workers who are pregnant, on maternity leave, or are in the six month period of their return from maternity leave, the Bill proposes to introduce regulations to prohibit employers from dismissing or making redundant such employees. The protection will also extend to employees who are on, or are returning from, adoption or shared parental leave.

The amendment paper provides that regulations will prescribe the notices that should be given, evidence to be produced, and other procedures to be followed by employees and employers, as well as the consequences of failing to comply with these procedures (Gov 87, p.89).

8. Umbrella companies

Umbrella companies are employment intermediaries that employ temporary workers on behalf of recruitment agencies and end client businesses. In contrast to employment agencies and employment businesses, they are generally unregulated.

Typically, they employ workers under contracts of employment and are responsible for paying individuals and deducting income tax and National Insurance contributions (NICs). As employers, they are also responsible for providing employment rights.

However, there are concerns that workers are not always clear on whether or not they are entitled to employment rights and on who is responsible for providing such rights, with some umbrella companies being used to evade obligations to provide employment rights. There is also evidence of widespread tax non-compliance.

In its response to the consultation on tackling non-compliance in the umbrella company market, the government has confirmed that it will legislate, via amendments to the Bill, to:

• define umbrella companies;
• allow for the regulation of umbrella companies; and
• bring them into the scope of the Employment Agency Standards Inspectorate's – and subsequently, the Fair Work Agency's – remit.

Umbrella companies will be regulated in a similar way to the existing Conduct Regulations. There is a statutory duty to consult before making any amendment to the Conduct Regulations, and the government will consult again prior to any amendments to these.

Addressing the problem of tax avoidance, and as first announced in the Autumn budget 2024, where an umbrella company is used in a labour supply chain to engage a worker, the government will bring forward legislation to move the responsibility to account for PAYE from the umbrella company that employs the worker, to the recruitment agency that supplies the worker to the end client. Where there is no agency in a labour supply chain, this responsibility will sit with the end client. This will take effect from April 2026 (see HMRC's response to the consultation on tackling tax non-compliance: umbrella company market for further information).

9. Parental bereavement leave and pregnancy loss

Currently, mothers and their partners who experience a pregnancy loss are entitled to two weeks of statutory parental bereavement leave but this is only available in the case of a stillbirth, where the loss occurs after 24 weeks of pregnancy.

By amending s.80EA(5) of the Employment Rights Act 1996, the amendment paper confirms that the right to such bereavement leave will extend to parents who experience miscarriages, ie where the loss occurs before 24 weeks of pregnancy (Gov 85, p.87).

10. Flexible working

Currently, employees have the right only to request flexible working from day one of their employment and the employer can refuse a request where it considers that one or more of the existing eight statutory business reasons applies.

The Bill proposes to make flexible working the default from day one for all employees, with employers required to accommodate this "as far as is reasonable". If the employer refuses an application for flexible working, it must state the ground(s) for refusal and explain why it considers that it is reasonable to refuse the application on that ground(s).

The amendment paper introduces a new requirement on the government to report on employers' compliance with the flexible working duties set out in the Bill (NC27, p.50).

Regulations are required to detail exactly how the strengthened flexible working arrangements will work in practice.

What's next?

The Bill is now at report stage and had a third reading on 11 and 12 March 2025. Amendments can be made to the Bill at this stage. 

While the majority of these reforms are unlikely to become law until at least 2026, we expect the Bill, including the amendments detailed above, to continue to evolve and alter over the coming months.

Therefore, as well as familiarising themselves with the details of the Bill, employers will also need to keep a watchful eye on the Bill's progress and the wording of upcoming secondary legislation, which will implement the reforms.

All information is correct at the time of publication.