Employment Rights Bill update

UPDATE – 19 December 2025. 

What is happening with the Employment Rights Bill?

On 18th December 2025, the Employment Rights Bill received Royal Assent and passed onto the statute books. This updated blog details the final passed law.

When the Labour government came to power, they heralded that the Employment Rights Bill would be the most significant change to working practices for a generation. Since it was introduced in the Autumn of 2024, it has proven controversial, not only for business but also in the House of Lords. Following significant challenge, the Employment Rights Bill is now law.

Employment Rights Bill changes from April 2026

From April 2026 there will be changes to Statutory Sick Pay (SSP). Whereas there are currently 3 waiting days before SSP becomes payable, SSP will from April be payable from the first day of absence. If you pay enhanced sickness pay, then this will not require any changes (unless the employee has already exhausted their entitlement to enhanced sick pay). The second change will be the removal of the lower earnings limit. This means that there are no pay related qualifying rules for SSP.

Employees will also be eligible for Statutory Paternity and Parental pay from day one.

One of the most significant new developments is the introduction of the Fair Work Agency. The Department of Business and Trade describe the purpose of the Fair Work Agency as follows:

The Fair Work Agency (FWA) will bring together existing state enforcement functions and, over time, take on enforcement of a wider range of employment rights. This will be a single place where workers and employers can turn for help. It will improve efficiency by ensuring there is one leadership team to oversee work in line with a unified strategy. The FWA 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 action against businesses that flout the law, to level the playing field for compliant businesses.

The FWA will have enforcement powers and will be able to inspect workplaces to ensure compliance with legislation. This will be phased in during 2026.

Employment Rights Bill – October 2026

October 2026 will see the practice of Fire and Rehire banned as a means of changing terms and conditions. Hire and Fire has always been a controversial ‘nuclear’ option of pushing changes through and has never been one that we at Cornerstone would advocate. It is much more engaging to negotiate changes than to enforce them.

There will also be changes to Sexual Harassment legislation, including guidance on prevention of harassment (from 2027) that will detail steps employers should take to protect their teams. We await more detail on how this will work.

Employment Tribunal time limits are also likely to increase for most claims from 3 to 6 months. ACAS early conciliation timelines will also increase from 6 weeks to 12 weeks from 1 December 2025 so it could be several months before you know if a claim has been made against you.

Employment Rights Bill – 1 January 2027

On the 1st January 2027, there will be a change to the service requirement to bring claims of unfair dismissal. Instead of the current 2 years service requirement, it will reduce to 6 months.

What this means is that once an employee has 6 months service, they cannot be dismissed without following a fair process or you risk a claim of unfair dismissal at the Employment Tribunal.

Other major changes are the end of exploitative zero hours contracts. However we don’t know exactly how ‘exploitative’ will be defined.

What can you do now?

Although there is much to be confirmed, there are steps you can take now. Some thoughts are below:

• Revisit your probationary process. We’d advise that for most roles, you implement a 6 month process. However, this can’t just be added to your contract, it needs to be properly monitored. Clear objectives with relevant support regularly reviewed is the mantra. Lazy dismissals of employees with less than 2 years service won’t work anymore. With the cap on unfair dismissal awards also being removed, businesses that don't follow a fair procedure as well as having a reasonable excuse to dismiss an employee could face a hefty bill.
• Sick pay processes will need to change from next April. As SSP can’t be reclaimed, tighter management of sickness absence is key. This doesn’t mean an end to compassionate leadership but implementing return to work interviews and tracking absence is going to be more important.
• Zero hour contract should be used where they are required but not as a blanket rule. If you can offer guaranteed hours, then you should do it.
• Record keeping will become even more important. Breathe HR will help you to demonstrate compliance to the Fair Work Agency should they come to your business.
• If you haven’t assessed your risks yet, contact us for a Sexual Harassment Risk Assessment. The requirements are only going to get more onerous so why not get ahead of the curve and mitigate your risks now.