The Employment Rights Bill promises sweeping reform of British employment law, yet many important details remain uncertain. This article highlights 10 key areas of uncertainty, why these matter to employers and expected next steps.
The Employment Rights Bill (ERB) is scheduled to return to Parliament this week, where it will undergo further scrutiny and debate. The House of Lords has proposed several significant amendments, including changes to the proposed "day one" right to claim unfair dismissal. The House of Commons will need to consider which of these (if any) to accept. Once the final version is agreed, the ERB will receive Royal Assent and become the Employment Rights Act. However, many of its substantive provisions are not expected to take effect until at least 2026 and some, including day one unfair dismissal rights, are expected to be delayed until 2027. Much of the detail of the reforms will be set out in secondary legislation, which will be subject to phased consultation and implementation. As a result, employers face a prolonged period of uncertainty and will need to monitor developments closely.
This article highlights the top 10 areas where the ERB remains silent or very high level, leaving employers without the clarity they need to prepare for the upcoming changes. For more detailed information, please see our dashboard which tracks the headline reforms and their anticipated implementation dates.
One - Day one unfair dismissal
Abolishing the current two-year qualifying period for unfair dismissal is probably the single most impactful part of the ERB, but key details are still unknown. The ERB provides for a light touch procedure during an initial period of employment, but key uncertainties include:
- The duration of the "initial period" (i.e. when the "light touch" dismissal process will apply). The government has expressed a preference for nine months but has said it will consult extensively on this reform.
- What will the "light touch" dismissal process entail, and how will it interact with the ACAS Code?
- What compensation regime will apply to employees who are unfairly dismissed during the initial period?
This is a fundamental change to employment law that will affect all employers and employees. Implementation is expected in 2027 and you can read more about this reform here.
The House of Lords has passed an amendment allowing for a qualifying period of six months (rather than unfair dismissal rights applying from day one). However, given that day one unfair dismissal was a Labour manifesto commitment, this amendment is likely to be overturned by the House of Commons.
Two - Collective redundancy
The ERB introduces a new test for when collective redundancy consultation is required, and changes to the maximum penalty for not complying. Key uncertainties:
- What criteria will apply under the new threshold test for triggering collective consultation, where redundancies are proposed across multiple sites rather than at a single establishment?
- Will the minimum consultation period for 100 or more redundancies be increased from 45 to 90 days?
- The protective award will double from April 2026 but there is some uncertainty on when the new penalties will bite.
These factors will significantly impact the cost, complexity, and timing of redundancy exercises. Getting the collective consultation process wrong can be extremely costly for employers, especially with the increase in penalties. Whilst the additional threshold test for collective redundancies is expected to be introduced in 2027, the change to the protective award will take effect much sooner.
You can read more about collective redundancy reform here.
Three - Union recognition
The ERB allows the threshold for union membership in a bargaining unit required for statutory recognition to be set anywhere between 2% and 10%. What will the exact percentage be? Further consultation is expected in autumn 2025.
Four - Protection for employees who are pregnant or on/returning from family leave
The ERB contains a power for the government to introduce regulations restricting the dismissal of maternity returners, and employees who are pregnant or on/returning from family leave. Key uncertainties include:
- In what circumstances (other than redundancy) will dismissals be permitted during pregnancy, maternity leave (or other types of family leave), or following return to work?
- What evidence will employers need to produce to dismiss lawfully and what other procedures will need to be followed?
This is significant as this will impact a large number of employees and employers. Monitoring and meeting these requirements could be quite complex (particularly in larger companies) and employers will need to make sure their systems and processes are fit for purpose. Further consultation is expected in autumn 2025, with the measures then taking effect in 2027. You can read more about this reform here.
Five - Ban on non-disclosure agreements covering harassment and discrimination
A new NDA ban was added to the ERB late in the process, but the key details remain unclear, including:
- Definition of "excepted agreements" where the ban does not apply.
- When will the ban come into effect, given the lack of a published implementation target date?
The new provisions will have a major impact on the settlement of harassment and discrimination allegations as well as for confidentiality wording in contracts, policies and settlement agreements. You can read more about this reform here.
Six - Right to guaranteed hours for zero and low hours workers
The ERB will require employers to make offers of guaranteed hours to workers on zero and low hours contracts, reflecting the actual hours they've worked over a reference period. The proposed right is complex and what is particularly notable here is just how many uncertainties remain in relation to this change, including:
- What will the length of the reference period be (12 weeks currently anticipated) and how this will be calculated?
- What will the definition of a "low-hours contract" be?
- What specific working pattern/dates must be offered?
- What counts as a "temporary work need" or a "specific task" to justify a fixed-term offer?
- What will be the maximum award for a successful claim?
- The extent of obligations on agencies (as opposed to end hirers).
The House of Lords has passed an amendment which would mean that employers would only need to grant guaranteed hours if workers request them, rather than proactively offering them. However, we expect this change will be struck down in the House of Commons.
Consultation on this reform is expected in autumn 2025, with measures (including application to agency workers) expected to take effect in 2027. You can read more about this reform here and here.
Seven - Reasonable notice of shifts
Again, this will be a fundamental change in practice, and it is particularly notable just how many uncertainties remain at the moment, including:
- What constitutes "reasonable notice" of a changed or cancelled shift (this will depend on circumstances, but regulations will set a specific minimum time)?
- What constitutes "short notice" (the ERB caps this at seven days but the actual threshold could be shorter)?
- The amount of any payment due to cancellations/curtailments.
- Any exceptions and which situations might justify non-compliance.
The House of Lords has passed an amendment which would define "short notice" cancellations as those made less than 48 hours before the shift is scheduled to begin. However, we expect this change will be struck down in the House of Commons.
Consultation is expected in autumn 2025 with measures expected to take effect in 2027. You can read more about this reform here.
Eight - Fair Work Agency
The ERB establishes a new state body responsible for enforcing employment law, to be called the Fair Work Agency (FWA). Key uncertainties include:
- How long before the FWA is fully up and running?
- What approach will the FWA take to enforcement (e.g. proactive/reactive approach) and the prioritisation of enforcement?
- What method will the FWA use to calculate enforcement costs to be recovered from non-compliant employers?
- Whether (and, if so, in which ways) the FWA's remit will be expanded into other areas not currently identified by the ERB?
This reform is particularly consequential as the FWA's remit will extend to holiday pay. Holiday pay is not currently subject to state enforcement, applies to all workers and is notoriously difficult to calculate correctly. The approach to enforcement taken by the FWA will determine just how significant this reform is for employers.
The FWA is expected to launch in April 2026, but it is uncertain how long it will take for it to become fully functional. You can read more about this reform here.
Nine - Duty to take "all reasonable steps" to prevent workplace sexual harassment
The bill strengthens the existing duty to take reasonable steps to prevent sexual harassment and makes employers liable for harassment by third parties. Key uncertainties:
- What constitutes "all reasonable steps"?
- Will compliance with the latest EHRC guidance be sufficient, or will employers be expected to take additional measures?
This issue is significant as it potentially affects all workplaces and employers and often comes up in practice. Ambiguity could lead to inconsistent tribunal decisions and uncertainty for all parties.
The call for evidence closed on 30 June 2025, with the obligation expected to take effect in October 2026. You can read more about this reform here.
Ten - Equality action plans (impacts employers with 250+ employees)
Employers in scope of this new requirement will need to publish action plans covering their plans to address their gender pay gaps and support employees through the menopause, plus potentially other information. Key uncertainties include:
- What specific information will be required in "equality action plans" relating to gender equality?
- What penalties will apply for non-compliance?
These measures will be introduced on a voluntary basis in April 2026, before mandatory compliance is required in 2027. As the voluntary phase is short, preparation is key.
What's next?
The ERB represents the most significant reform of British employment law in decades but, as this article explains, many of the crucial details are unknown. In many ways, the passing of the ERB marks the beginning rather than the end of the discussion about key points. As has been widely pointed out, the rush to get the Bill introduced to Parliament has meant that it is very high level in places, with gaps to be filled in by implementing regulations. The upcoming consultations are expected to provide greater clarity over the coming months (and even years). In the meantime, we recommend that employers monitor the ERB's progress, refer to our dashboard for the latest updates, and be ready to prepare for the changes ahead.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
