What Do Businesses Need To Know About The New Employment Rights Bill

Just yesterday, the new UK Employment Rights Bill was passed by the government, in an attempt to reform current employment laws across the nation. In fact, many are saying it’s one of the biggest reforms to UK employment law seen in decades.

As part of the Labour government’s new deal to ‘make work pay’, the new bill is designed to increase job security, make pay fairer and support working people whilst also giving businesses room to grow.

Whilst the bill still needs to receive Royal Assent before it becomes law, businesses are being encouraged to stay ahead of the new rules and prepare for them to come into effect over the coming months.

So, if you’re a business wondering what the bill means for you, we break it down.

What Is The Employment Rights Bill?

The Employment Rights Bill is designed to modernise current UK employment law and offer further protections for employees.

The bill aims to:

• Provide more secure working rights for employees.
• Protects employees from unfair dismissal and improve sickness pay and family leave.
• Modernises trade union laws.
• Lays out how the bill will be enforced.

For good employers, these changes are unlikely to have an impact on their operations, as many of these policies may be used already. For others, they will need to start working on new policies to help them stay compliant.

When Does The Employment Rights Bill Come Into Effect?

Now that the bill has passed through parliament, it has to receive Royal Assent, with many speculating that this could happen as soon as this week.

The good news is that even if it does become law, a lot of the reforms laid out won’t need to be implemented straight away. The government have said that they are planning to issue official guidance throughout 2026, so businesses can understand the new rules and what is expected of them.

What’s Changing?

There are a few key areas changing in the bill, these include:

Unfair Dismissal

Right now, employees usually need 2 years of employment before they can claim unfair dismissal. Under the new rules, this will drop to 6 months, likely in early 2027.

Fire and Rehire

From October 2026, employers will no longer be able to fire staff and then rehire them on worse terms unless there’s genuinely no other option. What this means is that companies won’t be able to force contract changes by threatening employees with dismissal, except in extreme circumstances.

Zero-Hours Contracts

From 2027, workers on zero-hours contracts will:

• Be able to ask for guaranteed hours.
• Get more notice of their upcoming shifts.
• Be paid if a shift is cancelled or cut short on short notice.

So companies will still be able to use flexible staff, they will just have to get tighter on rota management.

Sick Pay

Statutory Sick Pay will be paid from the first day off sick, rather than the current 4th day of sickness.

Additionally, currently you need to be earning at least £125 per week on average to qualify for UK Statutory Sick Pay, however under the new laws all employees, regardless of salary will be eligible.

Parental Leave

Currently, many companies have rules in place that prevent new employees being eligible for parental leave. Under the new laws, paternity leave and unpaid parental leave will be a day one right.

There will also be stronger protections for pregnant employees and those coming off maternity leave.

Flexible Working

Rejecting a flexible working request will now need to be qualified with a real reason, not just ‘it doesn’t work for us’. This gives more power to employees looking to work outside of normal hours.

Sexual Harassment

Employers must take greater measures to prevent sexual harassment and can be held responsible if staff are harassed by clients or customers.

Sexual harassment will also count as whistleblowing, meaning extra protection for anyone who speaks up.

Gender Pay Gap

Employers with 250 staff or more will need to publish ‘Equality Action Plans’ around how they are reducing the gender pay gap and how they are supporting employees through menopause.

Trade Unions Will Have More Power

Trade Unions will be given more power after years of being pushed back. These include elements like shorter notice for strikes, easier voting and a duty on employers to tell staff they have a right to join a union.

How Will The New Bill Be Enforced?

From April 2026, a new Fair Work Agency will be created by the government that will have the power to investigate businesses, issue penalties and enforce these employee rights.

This new department will exist to serve employees, making sure the new law is enforced straight away.

The New Bill: How Businesses Should Prepare

Whilst the government argues that the new bill will increase productivity, reduce turnover and improve rights for workers, the duty undoubtedly sits with the employer.

Even though the changes are still a year or two away, companies should start preparing now in order to stay ahead. For many, these rules will already be commonplace at their workplaces, for others, it may signal a need to catch up.

The good news? Businesses have time to prepare. But starting early can only be a good thing.