The Employment Rights Bill 2025 represents the most comprehensive reform to employment law in decades. Containing more than twenty-eight separate changes, it will reshape how businesses hire, manage and support staff.
For employers, the Bill brings both challenge and opportunity. It strengthens worker protections, expands day-one rights, and introduces new proactive duties: all designed to make the workplace fairer and more productive. But it also means greater compliance requirements, new risks of tribunal claims, and the need to update HR practices before the reforms come into force between 2026 and 2027.
Introduced by the Labour Government in October 2025 as part of its “Make Work Pay” manifesto, the Bill responds to an economy transformed by flexible work, skills shortages and rising costs. Whether you employ two people or two hundred, preparation is essential to stay compliant and avoid unexpected liabilities.
- Preventing Sexual Harassment: A New Proactive Duty
From October 2026, every employer will have a legal duty to take “all reasonable steps” to prevent sexual harassment during employment.
This marks a shift from a reactive position, dealing with incidents once reported, to a proactive requirement to demonstrate prevention measures before any complaint arises. Employment tribunals will be able to increase compensation by up to 25 % where this duty has not been met.
What employers should do now
- Review anti-harassment and whistleblowing policies.
- Train all managers and staff regularly on acceptable conduct and reporting routes.
- Keep written records of training, investigations and follow-up actions.
- Review relationships with third-party contractors and clients, as liability will extend to harassment by third parties.
- Whistleblowing protection will also extend to disclosures about harassment, and the use of non-disclosure agreements (NDAs) to silence victims will be prohibited. Larger employers may later face mandatory action-plan requirements.
- “Fire and Rehire”: Stricter Limits Ahead
The Bill sets a much higher bar for businesses relying on “fire and rehire” practices, where employees are dismissed and re-engaged on new terms.
A dismissal linked to an employee’s refusal to accept variations to key terms such as pay, hours or flexibility will be automatically unfair unless the employer can demonstrate:
- serious financial difficulty threatening the business’s viability,
- that the changes directly address those difficulties, and
- that no reasonable alternative existed.
Even where this threshold is met, the process must still be fair, meaning thorough consultation, exploration of alternatives and clear written communication.
Action points
- Audit your employment contracts for flexibility and variation clauses.
- Document business reasons and consultations before changing terms.
- Seek legal advice early when restructuring or cost-saving proposals are being considered.
Replacement of employees with agency workers to avoid cost is also restricted and may be automatically unfair.
- “Day-One” Employment Rights
Perhaps the most significant change for business owners: protection from unfair dismissal will apply from day one of employment rather than after two years’ service.
A limited “initial period” (expected to be around nine months) will allow a simplified process and capped compensation, but full protection will apply thereafter. Dismissals on redundancy or discriminatory grounds will still trigger full rights immediately.
Implications for employers
- Strengthen probationary review processes.
- Document all performance or conduct concerns from the start.
- Update disciplinary and dismissal procedures to reflect the shorter qualifying period.
The same “day-one” principle will also apply to paternity and parental leave (from April 2026) and a new entitlement to unpaid bereavement leave (from 2027).
- Zero-Hour and Casual Workers: Predictable Working Requests
To tackle one-sided flexibility, workers on zero- or low-hours contracts will be able to request a predictable working pattern after 26 weeks’ service. Employers must respond within a set timeframe and cannot dismiss or penalise workers for making a request.
Employers must also provide reasonable notice of shift changes and compensate for last-minute cancellations.
Practical steps
- Identify all casual and variable-hours staff in your workforce.
- Introduce a clear policy and response procedure for predictable-work requests.
- Review scheduling practices to avoid inadvertent breaches.
This reform aims to give workers greater stability, but it will also require employers to manage resourcing more carefully.
- Flexible Working: Higher Burden on Employers
The right to request flexible working already applies from day one, but the Bill makes refusals harder to justify. From 2027, any refusal must be reasonable and supported by written evidence referencing one of nine statutory grounds.
Employers must consult the employee before refusing and respond within two months (unless otherwise agreed).
To prepare
- Review all flexible-working decisions made in the last year for consistency.
- Train managers on the new standards for consultation and documentation.
- Update template letters and policy wording to ensure compliance.
With hybrid and remote models now embedded across many industries, these changes formalise expectations for fairness and transparency.
- The Fair Work Agency (FWA): A New Enforcement Regulator
One of the biggest structural changes is the creation of a Fair Work Agency, which will oversee compliance with key employment rights such as holiday pay, sick pay and minimum wage.
The FWA will have power to investigate, impose penalties, and prosecute.
Financial penalties may reach 200 % of the unpaid amount (up to £20,000 per worker), and the agency can also pursue costs of enforcement from non-compliant employers. Senior managers and directors may be held personally responsible in some cases.
What this means for your business
- Conduct a compliance audit covering pay, holidays and working time.
- Rectify any underpayments or anomalies promptly.
- Assign responsibility within your organisation for responding to FWA notices.
This marks a move from reactive, employee-led enforcement to proactive state-led regulation; meaning non-compliance is more likely to be discovered and penalised.
- Trade Union and Collective-Action Reforms
The Bill significantly relaxes barriers to trade-union recognition and industrial action:
- Lower thresholds for strike ballots (below 50 %) and longer mandate periods.
- Shorter notice requirements for industrial action (10 days).
- Removal of limits on dismissal protection during strikes.
- Simpler access for unions to workplaces and a new right for employees to receive written information about union rights from day one.
For employers, this means a greater likelihood of union activity and the need to review engagement strategies and contingency plans.
The House of Lords Amendments
At the time of writing, several points remain under discussion between the Commons and Lords:
- Whether unfair-dismissal rights should start after six months rather than day one.
- Whether zero-hours workers can opt out of guaranteed-hours schemes.
- Recognition of seasonal-work patterns within predictable-hours rules.
- Maintenance of a 50 % turnout requirement for industrial-action ballots.
Although final wording may evolve, the direction of travel is clear, stronger protections for workers and greater procedural duties for employers.
- Preparing Your Business: Practical Next Steps
Implementation will begin in early 2026 and continue through 2027. Every business should start planning now.
Key actions
- Audit employment contracts: identify terms affected by “day-one rights” and fire-and-rehire restrictions.
- Review and update policies: harassment, whistleblowing, flexible working, zero-hours, and disciplinary procedures.
- Train line managers: they will be the first to apply these new duties in practice.
- Strengthen HR documentation: written justifications, consultation notes and equality training records will be crucial evidence.
- Budget for compliance: anticipate potential costs of additional leave, training, and policy rollout.
- Engage early with advisors: staying ahead avoids rushed last-minute changes when legislation takes effect.
Why Preparation Matters
Failing to act early could expose businesses to:
- costly tribunal claims,
- financial penalties from the FWA,
- reputational damage, and
- operational disruption from unprepared managers.
Conversely, proactive compliance offers advantages: smoother employee relations, stronger culture, and enhanced reputation as a fair and responsible employer — increasingly valued by clients, investors and staff alike.
How Ellisons Can Help
The Ellisons Employment Team advises businesses of all sizes on preparing for the Employment Rights Bill and other workforce changes.
With so many reforms due over the next 18 months, early advice is essential to protect your business and keep your workforce confident and compliant.
