After almost a year, the Employment Rights Bill is now awaiting royal assent. Whilst many of the key principles remain, wide ranging amendments were made to the Bill in both the House of Commons and House of Lords. These included some significant concessions from the government on topics such as day one rights, collective redundancy thresholds and fire and rehire provisions and (crucially) a last-minute addition of measures to remove the cap on unfair dismissal compensation. 

Other amendments increased the scope of certain rights, including the guaranteed hours regime and trade union rights. Some entirely new provisions were also introduced alongside the removal of the cap, most notably miscarriage leave and a whole new section on non-disclosure agreements.

Here’s our summary of where some of the key topics have landed. Our full analysis of the Bill and all the reforms can be found here.

Day one unfair dismissal dropped

In a dramatic U-turn, the government dropped its plans for day one unfair dismissal protection. During parliamentary ping pong, the government succumbed to the House of Lords’ insistence on a six-month qualifying period. The government’s plans to introduce an “initial period” of employment, where a lighter touch procedure could be used for some dismissals, were also dropped.

The new qualifying period is expected to apply to employees who have six months qualifying service on 1 January 2027, with regulations to be issued early 2026. The qualifying period has traditionally shifted with political power, but this will become more difficult for future governments as the Bill removes the statutory power to change the qualifying period by order. This means that future changes would need to be made through primary legislation.

The dropping of day one unfair dismissal protection will be widely welcomed by business. It means less change for how probationary periods will operate, although businesses will now need to consider whether to shorten existing probationary periods or at least tighten up probation management, to be sure that final decisions are implemented before the six month mark.

Other day one rights survived the parliamentary journey – including SSP being available from day one, as well as rights to paternity leave and unpaid parental leave.

Cap on unfair dismissal compensation removed

After conceding on the qualifying period, the government unexpectedly also introduced amendments to remove the compensation cap on unfair dismissal claims. Currently, compensation is either 52 weeks’ gross salary or a statutory cap (currently set at £118,223), whichever is lower. 

This is a significant change, which will make the UK an outlier among similar economies and could substantially increase the cost of dismissals, especially to businesses with high earners. The government has promised to publish an impact assessment, but it’s not clear that there will be any further consultation on this measure before its introduction. The timing of this change is also slightly unclear, although it seems most likely that the government plans for it to take effect for dismissals from 1 January 2027, at the same time as the change in qualifying period.

Although it was introduced at the last minute and with no prior consultation, this may turn out to be among the most significant measures in the final Bill.  It is likely to change the practice of negotiated settlements for very senior and highly paid employees and effectively upend long standing assumptions about risk profile which underpin (whether consciously or not) lots of HR processes. Once this change takes effect, unfair dismissal will no longer be less risky financially than discrimination. So, assumptions about which topics or types of termination process require more careful treading may no longer hold up.

Collective redundancy amendments are a mixed bag

The Bill initially proposed removing references to the "at one establishment” test from collective consultation legislation.  Under the current law, employers proposing 20+ redundancies “at one establishment” within a period of 90 days must go through a process of collective consultation before making any redundancies. 

A major amendment in March reinstated the “at one establishment” test, but also introduced a different threshold test, with details of that threshold to be set out in further regulations.  The alternative threshold is likely to be based on redundancies across the employing entity as a whole and could be a percentage, or a higher number (e.g. the lower of 10% or 100 employees across the business as a whole).  We will need to wait and see where the government now sets the alternative threshold. 

Another amendment (and this time a change not in an employer’s favour) was a doubling of the maximum protective award for failure to collectively consult on redundancies, from 90 to 180 days. This will materially increase the risks associated with not handling collective redundancy processes correctly. The change will make it harder to “buy out” collective consultation rights. Whilst this new penalty is due to come into effect from April 2026, it is unclear when it will begin to bite.

Softening of fire and rehire

A late concession from the government saw the fire and rehire provisions significantly softened. The Bill now makes the practice of fire and rehire/replace automatically unfair only for changes to certain core terms, including:

• pay
• required number of working hours
• pension
• shift times and length
• time off rights

Other restricted changes will also be defined in regulations (note that this might include benefits). The ban also covers dismissals to impose a new flexibility clause covering the above changes.

A separate government amendment has also extended the ban to cover the “fire and replace” practice, which is what happened in the controversial P&O Ferries case. So the replacement of employees with self-employed independent contractors, workers who are not employees, agency workers or any other individuals who are not employed by the employer will also be banned, if the replacement is going to do substantially the same work. 

There is an exception in situations where the business is in extreme financial distress. In those (narrow) circumstances, an employer would need to comply with the Code of Practice on dismissal and re-engagement, which the government has promised to update. 

Changes to other terms and conditions, for example to alter an employee’s job title, will not be automatically unfair but will remain subject to the usual unfair dismissal tests. However, tribunals will need to take account of the reason for the variation, any individual or collective consultation and anything the employee was offered in return for the change.

The restrictions are due to come into effect from October 2026.

Guaranteed hours and shift scheduling increasingly complicated

The Bill sets out detailed and complex rules which require employers to make an offer of guaranteed hours to a qualifying worker after the end of every reference period, if the hours regularly worked exceed the minimum number set out in their contract. Key details, such as the reference period and exactly who will qualify, will be set out in regulations. 

A broader category of workers will also have a right to reasonable notice of a shift, as well as notice of any changed or cancelled shift. Once again, key details (such as what is “reasonable” notice) is yet to be determined.

Ultimately, the amendments made have done little to ease the complexity or impact of the new guaranteed hours regime. The amendments were vast but mostly technical, adding to the intricacies of these provisions whilst leaving the overarching principles unchanged. 

One of the most notable amendments was to extend the scope of these provisions to cover agency workers. This closes any possible loophole which would encourage businesses to move to an agency model to evade the new guaranteed hours regime. Given agency workers are very often employed on zero hours contracts, this is a significant change. However, extending these provisions to agency workers is complicated, on a practical level, and it is difficult to understand the possible impact for end clients and agencies until details of the underlying regimes have been confirmed in regulations.

Many employers, particularly in the retail and hospitality sectors, have been concerned about the impact these provisions are going to have in practice. During the House of Lords debates, it was reiterated by the government that detailed guidance to the changes will be published, considering the needs of different sectors. 

Although the House of Lords passed an amendment to make this a right to request (rather than have) guaranteed hours, this did not make it into the final Act. However, fairly late amendments require regulations that provide for potential exceptions to the duty to offer guaranteed hours to balance the benefit to the workers of receiving the offer against preventing the guaranteed hours regime from having a “significant adverse effect” on employers who are dealing with “exceptional circumstances”. 

Some businesses are already exploring possible ways of staying out of scope of the regime which is due to come into force in 2027. This could include offering more than the number of hours deemed “low” (a threshold which is yet to be decided). Under the Bill, limited-term contracts can be offered when reasonable and employers should consider when it is reasonable to use these (e.g. for seasonal work). It is possible that further exceptions will be included in regulations. 

Trade unions also have a new role to play in this area. An amendment was made introducing a right to contract out of the rights in a collective agreement. This means that the employer and an independent trade union can reach an agreement that excludes the new rights and replaces them with something else, so long as these new terms are incorporated into the contract. But it remains to be seen how easy this will be to achieve.

Family leave and flexible working provisions unchanged

The Bills’ clauses relating to paternity and parental leave made it through unscathed and are due to take effect in April 2026. These relatively uncontroversial changes mainly relate to the removal of a length of service requirement.  

One of the more substantial changes is the ban on dismissals during family leave or following a return to work. The original explanatory notes to the Bill confirm an intention to ban dismissals (except redundancies) during family leave or following a return, except in specific circumstances. In a recently launched consultation, the government have now proposed two more nuanced options: either introducing an additional, stricter standard for dismissal or removing or narrowing the scope of some of the fair dismissal reasons when dismissing a pregnant woman or new mother. We explore the two options here. We will need to await the regulations for the precise detail of what this will require when it comes into force in 2027. 

The flexible working provisions were also untouched. Also expected in 2027, the refusal of any flexible working request will need to be reasonable (although the current eight business reasons for refusal will remain). Employers will also need to explain in writing what the ground for refusal is and why that is reasonable.

Bereavement leave for pregnancy loss

The original version of the Bill introduced a new right to at least one week of unpaid bereavement leave. This new right has now been extended to include employees (and their partners) who experience pregnancy loss before 24 weeks. A consultation has been launched seeking views on who should be eligible for this right, when the leave can be taken and any notice and evidence requirements.

The introduction of miscarriage leave has been campaigned for some time and will be welcomed by many. However, the practical impact of introducing unpaid leave is likely to be limited, particularly when employees could take other forms of paid leave (i.e. statutory sick pay) for the same period.

Harassment provisions unchanged

This is another area where no significant amendments have been made. The Bill will strengthen existing law to require employers to take “all” reasonable steps to prevent workplace sexual harassment. The Bill would also make employers liable for third party harassment unless the employer took all reasonable steps to prevent this - which covers all types of harassment, not just sexual harassment. 

Peers in the House of Lords raised concerns about the third-party harassment provisions, noting that employers have little control over the acts of third parties (compared to their employees). The government responded by clarifying that the expectations on employers will be lower when considering third party harassment. Further details are needed but this remains one of the most significant measures in the Bill.

Fair Work Agency gets more teeth

The Bill creates a new state enforcement agency, the Fair Work Agency (FWA). This brings together existing enforcement functions, including minimum wage and statutory sick pay enforcement, labour exploitation and modern slavery, and adds holiday pay enforcement. The Bill also includes powers to add other areas of enforcement. Whilst the body is set to be created in April 2026, it is unclear when it will start enforcement. 

As the Bill has progressed throughout Parliament, amendments have significantly increased the FWA’s remit. The FWA will have extensive powers to enter premises (including homes), require information and enforce failure to make statutory payments (including holiday pay) combined with significant powers to impose penalties. The regulation of umbrella companies will also fall within the remit of the FWA – a late amendment to the Bill extended the definition of employment businesses to include umbrella arrangements.

One key amendment was to introduce a power for the FWA to bring tribunal claims (relating to any employment claim) on behalf of individuals and offer legal assistance in civil proceedings. The government have confirmed that guidance will be published on how the FWA will exercise this power. 

With tribunal systems quite significantly back logged, it’s clear that the FWA will play a key part in future enforcement. In a response to concerns raised by the Business and Trade Committee, the government have committed to ensuring the FWA is well resource to deliver “real results”. Significantly, amendments to the Bill introduced a power for the FWA to recover its enforcement costs, which will help the FWA self-fund.

Increased collective rights 

The Bill makes some significant changes to the trade union recognition framework and the ability of unions to organise industrial action. Amendments tinkered with these provisions but the headline points are:

• There is a significant new right for trade unions to access workplaces for recruitment and organising purposes. Amendments to the Bill clarified that this will include digital/virtual access (with detail to be set out in regulations). There is an open government consultation on how this right should work in practice, which closes on 18 December 2025.
• There is a new duty to inform workers of their right to join a trade union. Consultation on how this right should be implemented is underway, and also closes on 18 December 2025.
• Reduced threshold for unions to secure statutory trade union recognition, removing the current threshold of 40% of all workers in the bargaining unit voting for recognition. This could be reduced to as low as 2% of the proposed bargaining unit.
• A package of reforms to strike action which will make it easier for unions to secure mandates for industrial action. This includes removing the 50% turnout threshold for strike action, reducing the notice period required from trade unions to employers for industrial action from 14 days. The Bill originally decreased this to 7 days, but it has settled on 10 days. Mandates for action have also been increased from 6 months to 12 months.
• Repeal of previous restrictions on calling industrial action, such as minimum service levels in certain sectors.

Consultations are already underway on some of these proposals – which we consider here – as well as a draft code of practice on electronic and workplace balloting for statutory union ballots.

Non-disclosure agreements ban

Entirely new provisions restricting the use of non-disclosure agreements were introduced fairly late on in the parliamentary process.  Any agreement preventing a worker from making allegations or disclosures about harassment or discrimination will be void.  This is wide enough to cover any alleged discriminatory conduct, and also appears to cover allegations about harassment by a third party. A further amendment extended these provisions to expressly cover a failure to make reasonable adjustments. The Bill does not expressly refer to victimisation, but it does cover the employer's response to the incident, allegation or disclosure.

These provisions are seemingly directed at settlement agreements, but further regulations are expected which will define “excepted agreements” which will not be void. It is possible that this will allow agreements which are made at the employee's request with prior independent legal advice, as in Ireland. 

This topic was not included in the government’s implementation roadmap and the date of implementation is unknown. 

Employment tribunal limits increased

An early amendment to the Bill extended time limits for bringing Tribunal claims – increasing from three months to six months. This is expected to take effect in October 2026. On the one hand, this gives a longer timeframe for parties to resolve matters without litigating, but it could also lead to greater uncertainty and possibly an increase in claims overall.

What happens now?

The Bill now awaits royal assent, after which it will become (another) Employment Rights Act. 

Very few provisions will come into force on passing. Two months after royal assent, various trade union changes will take effect. However, the vast majority of changes require commencement regulations before they come into force. Many also require substantive regulations setting out further details of the new regimes, as well as consultation.

According to the government’s roadmap most changes are scheduled to take effect in 2026 or 2027. The government has come under intense pressure from businesses not to put additional employment costs on businesses in the current economic climate, but has so far stuck to its message that the new Act will be implemented in line with the roadmap. Time will tell.

Implications for employers 

Promised to introduce the “biggest upgrade to workers’ rights in a generation”, the end result delivers a significant shift in the employment law landscape. The changes will be wide-ranging and unavoidable.

However, we are still lacking clarity on a number of key issues. The government is planning over 80 accompanying regulations and (according to a statement in November) at least 26 specific consultations. A lot now therefore turns on the detail of accompanying regulations and whether some compromises can be found there. 

Nevertheless, change is well and truly underway. 

Please get in touch with your usual Lewis Silkin contact if you are a client or contact and would like a copy of our Employment Rights Bill readiness checklist.