In the last two weeks there have been numerous amendments put forward on the Employment Rights Bill (the Bill) at the same time as the Government published its responses to five consultation papers.
The list of proposed amendments continued to grow right up to 11 March when the Bill reached the Report stage in the House of Commons. At that point there were two days scheduled for the Bill to be debated. On 11 March, the amendment paper was 274 pages long. The original Bill was 158 pages long.
On 11 and 12 March 2025, the selected amendments were discussed. The Government-backed ones were passed and the others, mostly from the other parties, were not.
The third reading took place on the evening of 12 March 2025 and the Bill was passed.
It will now proceed to the House of Lords, where it will repeat the same process: 1st reading - 2nd reading - Committee stage - Report stage - 3rd reading. Then it’s back to the Commons for consideration of amendments and finally Royal Assent.
One barrister has stated that if the Bill follows a normal process through the Lords, it should receive Royal Assent before the recess of Parliament in July 2025 and that some provisions may be in force in October 2025.
The Bill has already had its first reading in the House of Lords and the second is scheduled to take place on 27 March 2025.
However, implementation of the provisions so quickly seems unlikely particularly as the original 158 page Bill has now, following the approved amendments, doubled in size to 310 pages. Many of these new amended parts of the Bill are likely to be considered in more detail as the Bill proceeds through the Lords. It should be remembered that it was only through debate in the House of Lords that third-party harassment liability doesn’t already exist. That topic is again likely to lead to challenges in relation to the threat it might cause to free speech and the burden it may place on employers in the hospitality and education sectors.
It remains more likely that the provisions will start to come into force in 2026 with further consultation in relation to the practicalities taking place this year. However, it cannot be entirely discounted that a select few provisions will have an earlier implementation date.
Below is an update on how a number of the key aspects of the Bill are progressing.
Collective redundancy consultation
The changes to the collective consultation provisions are arguably the most important of all the March 2025 amendments to the Bill.
Currently, if proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days, collective information and consultation requirements are triggered and there must be notification to the Secretary of State completing the HR1 Form.
The original Bill as presented in October removed the reference to ‘at one establishment’ in section 188 of TULRCA. This would, in effect, mean that the duty to go through collective consultation would apply where there were 20 or more redundancies across the entire business. This threshold number will be defined in regulations but may be either a specified number of redundancies or an overall percentage of the workforce.
The Regulation may, for example, state that if there are 100 redundancies across the business they will need to consult, even if there are less than 20 in any one establishment. On the other hand, they may provide that the trigger point is reached when a percentage of the workforce is to be made redundant.
In terms of remedies, the maximum protective award will rise from 90 to 180 days’ gross pay per employee.
In a ‘fire and rehire’ situation, it should be taken into account that where an employer has been found to have not reasonably followed the Code of Practice on Dismissal and Reengagement, an employment tribunal may apply an uplift in compensation of up to 25% to a protective award. The doubling of the award to 180 days means that the 25% uplift could now increase the protective award by up to the equivalent of 45 days compared to the current 22.5 days.
There had been consultation on the remedy doubling to 180 days or the cap being removed completely. In addition, it had been proposed that the remedy of interim relief would be extended to protective award claims.
The decision to double the cap but not remove it was the best outcome that employers could have achieved from the proposals, although most would have preferred it to remain the same.
Guaranteed hours for zero/ low hour workers
The original Bill gave workers on zero hours/ low hours contracts the right to receive an offer of fixed hours based on their normal work pattern over a period of time, which was indicated as likely being 12 weeks.
It had been recognised that one loophole to get around this protection was for employers to engage the staff through an agency. The amendments entitle agency workers to the new right to be offered guaranteed hours if they are on a zero hours or ‘low hours’ contract.
The amendment will place this responsibility on the end hirer, on the basis that they are best placed to manage the current and future work requirements. There will be regulations that will also provide that the obligation may fall on the agency but only in specific situations where it would be more practicable.
Agency workers will also benefit from the right to receive reasonable notice of shifts and compensation for late changes/ cancellations. This responsibility will be placed on both the employment agency and the end hirer, on the basis that either party might be responsible for giving notice.
The liability for paying compensation will be on the employment agency as the party responsible for paying the individual but there will be a right to recover this cost from the hirer. It is expected that the agreement between the agency and hirer will deal with the issue of recovery of costs after the provisions are in force.
Perhaps surprisingly, a further amendment allows for these rights to be excluded through the use of a collective agreement. This would mean that the employers’ obligation to offer guaranteed hours and the employees’ rights to reasonable notice in relation to shift changes or cancellations would not apply and there would be no entitlement to compensation.
The prospect that an independent trade union may agree to exclude these new rights might be a means to encourage more employers to welcome union recognition. Going forward, it may be an important selling point for an agency which may be able to get a higher fee in relation to providing workers who are covered by a collective agreement which is incorporated into their contract and opts out of the rights.
The Government response to the consultation states that the Conduct of Employment Agencies and Employment Businesses Regulations 2003 will still apply where the agency is contracted directly by the hirer. These Regulations provide that the agreement with the agency may provide for a fee, but only where there is also the option of an extended period of hire. The current amendments do not address how the option of an extended period of hire will be able to operate alongside the new requirement to offer a permanent contract.
Statutory sick pay
The Bill already proposed scrapping the three-day waiting period for statutory sick pay (SSP), so that it becomes payable from day one of sickness. As was widely reported in advance, the amendment adopted will give those earning below the lower earnings limit a right to sick pay at 80% of average weekly earnings. This means that all employees will be entitled to the lower of the SSP weekly flat rate or 80% of average earnings as soon as they are off sick from work.
Good news for all workers, but unwelcome news for employers?
Maybe not for some. From 6 April 2025, the new level of statutory sick pay will be £118.75 or 80% of an employee’s weekly earnings. An employee with weekly earnings of £125 would at present receive the current rate of £116.75. When the changes are brought under the new system, they would receive only £100.
Fair Work Agency enforcement
There are a number of amendments that increase the powers of the proposed Fair Work Agency. This was already in the Bill creating a new state enforcement agency that brought together under one heading the existing enforcement powers used by HMRC and government bodies in relation to breaches of entitlements to minimum wage and SSP, and which also policed agencies, labour exploitation and modern slavery.
The addition of holiday pay enforcement to the list of enforcement areas was probably the most notable.
The amendments now impose a new obligation on employers to keep records demonstrating compliance with holiday entitlement (including the amount of leave and pay). There’s no set format for these records, but they must be kept for six years and failure to comply will be a criminal offence punishable with (potentially unlimited) fines.
The Agency will also have the power to enforce failure to pay certain statutory payments to workers – including holiday pay and statutory sick pay. A notice of underpayment can be served on an employer.
The penalty provisions as currently apply for minimum wage enforcement will also be in place, so potentially 200% of the sum due will also need to be paid to the Secretary of State.
There are also powers to bring Employment Tribunal (ET) proceedings on behalf of a worker, if the worker has the right to bring a claim but it appears they are not going to. Although quite how the Agency will be aware of claims that the individual is not pursuing is not that clear and if aware of claims which would they choose to pursue.
There is also the interesting addition of powers to provide legal aid. The proposal is not new, but it has been rejected in previous years because of the costs. The ET is already under strain to meet the demands of the current claim numbers and with the other changes in the Bill likely to see even more claims being brought it will be unlikely that the costs position will change.
The Agency will also have the new power to recover enforcement costs incurred from employers in breach. The method for calculating and charging these costs will be set out in regulations. This provision may help resource the Agency which will be the key factor in whether the Fair Work Agency will have a real impact on change going forwards or just take on the current enforcement practices.
Umbrella companies
There are provisions to tackle potential abuse by ‘umbrella companies’ that have individuals on their books being supplied through agencies to hirers. These bodies are currently not within scope of the 2003 Agency Conduct Regulations. The amendments change this so that they will be regulated by the Employment Agency Standards Inspectorate, or rather the Fair Work Agency, which will take over the enforcement duties of that body.
The main concerns raised about the operation of umbrella companies have been the denial of employment rights and the tax treatment of the individuals registered with these bodies.
Trade unions
Reforming the regulations that governed the relationship between union and employer formed a major part of the Bill as first presented. The amendments build on that, making some significant changes.
The creation of access agreements was in the original Bill and the amendments provide that these arrangements can include digital/ virtual access. In practice, this reflects the understanding that virtual meetings/presentations may give the union much wider access and be more in line with modern day work practices, in particular where there are remote or hybrid work arrangements.
In relation to recognition procedures which the Bill aims to simplify, it is now provided that 10 days after the Central Arbitration Committee (CAC) receives a recognition application from a union, the number of workers in the proposed bargaining unit cannot be increased for the purposes of the recognition process. This is designed to stop the recruitment of new workers or the reorganisation of staff for the purpose of defeating an application for union recognition.
The membership requirement for an application for union recognition remains at 10% of the bargaining unit at the current time. The Bill provides that the Government has the power to reduce the required threshold for union membership to as low as 2% of the proposed bargaining unit, but this will be in future regulations if it is acted upon.
In relation to industrial action, a number of provisions in the Bill made it simpler for a union to organise industrial action. There is to be a reduction in the information required in ballot notices, and a reduction in the information unions are required to provide employers in notices of industrial action.
In relation to when those notices had to be served, the current 14 days’ notice minimum notice was to be halved under the Bill to just 7 days. However, an amendment has compromised that to a 10-day minimum notice period.
On a similar note, the removal of the requirement for a minimum 50% turnout before industrial action could be validly called will not go ahead at least for now following an amendment. There is to be consultation on electronic balloting with a view to that being introduced at the same time as the 50% rule is repealed. These changes are to be the subject of future regulations.
Where there has been a vote in favour of industrial action, this will be valid for 12 months rather than the existing 6-month duration.
Bereavement leave and pay for pre-24-week pregnancy loss
The Bill already contains provisions to convert the existing right to statutory parental bereavement leave to a more general form of bereavement leave, although, as currently drafted, it would not apply in the event of pregnancy loss before 24 weeks.
An amendment tabled during the Report stage to entitle those suffering pregnancy loss due to a miscarriage to two weeks paid bereavement leave was given government support during the debate, although it was not passed at the end of the day.
The Government’s acceptance of the principle of bereavement leave for pregnancy loss though means that the Bill is now likely to be amended during its passage through the House of Lords.