UK Employment Rights Bill changes workplace rules
The UK Parliament has passed the Employment Rights Bill, which is now being debated within the House of Lords, as reported by the BBC on March 3, 2025.
The bill, part of the government’s plan to “Make Work Pay,” introduces reforms ranging from stronger dismissal protections and Paid Time Off (PTO) rules, to expanded family leave and flexible working rights.
The new legislation sets out significant changes in UK labour law for both employers and employees. While employee groups have welcomed the move, organizations, especially Small and Medium Enterprises (SMEs), are debating whether the changes will add too much pressure to employers, making some businesses unviable.
What’s Changing Under the New Employment Rights Bill?
The Employment Rights Bill sets new rules on several key employment standards. Among the most prominent changes:
- Day-one protection: Employees can now claim unfair dismissal from their first day of work. Previously, they needed two years of continuous service.
- Expanded leave: New hires will have immediate access to paternity leave, unpaid parental leave, and bereavement leave.
- Statutory sick pay: Paid sick leave will be available to all employees from the first day of sickness, rather than after three days, and the minimum earning threshold will be removed.
- Flexible work by default: Workers can request flexible schedules from day one, and employers must now provide valid business reasons for rejections.
Implications for Businesses and Employers
For business owners, particularly SMEs, the bill signals an urgent need to update employment contracts and internal processes. Organizations will have to react to the changes or face significant penalties.
The removal of the two-year qualifying period for unfair dismissal has sparked concern among employers about potential misuse and higher tribunal claims. With immediate access to leave and protections, businesses fear increased costs and legal exposure when hiring new staff.
HR managers must now navigate a more legally complex environment. Dismissal processes, time off tracking, and flexible work arrangements will all demand closer documentation and legal compliance.
Definitions and clarifications
Unfair dismissal: When an employer terminates a contract without a fair reason or proper procedure. Under the new bill, employees can claim this from day one of employment.
Statutory sick pay (SSP): A minimum amount employers must pay employees who are off sick. Previously, only workers earning at least £125/week were eligible. That threshold is now removed, and employees can now claim SSP from the first day of sickness.
Flexible working: Includes part-time roles, adjusted hours, compressed workweeks, and remote work. Employees can now formally request these arrangements from day one of employment.
What this Means for Employees?
The Employment Rights Bill significantly boosts protections for UK workers. Employees will now have stronger safeguards against unfair dismissal, redundancy, and workplace discrimination, offering greater job stability and financial security.
Mandatory pay scale disclosures aim to close wage gaps and promote fair compensation, while expanded rights to request flexible working are designed to support better work-life balance.
Gig workers and freelancers also stand to gain from new rules, offering fairer treatment and similar benefits to those directly employed.
What Happens Next?
The Employment Rights Bill is currently being debated in the House of Lords, with implementation expected once it clears all legislative stages.
In the meantime, businesses and employers should start preparing by reviewing contracts, updating HR policies, and planning for compliance with new job security, leave policies, and flexible working arrangements.
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