UK Employment Rights Bill – The Next Stage

The House of Lords considered the Employment Rights Bill in considerable detail during the Report stage in July 2025. A number of significant non-government amendments were passed in the House of Lords but have already been rejected by the House of Commons during a debate on 15 September 2025.

The Government will be hoping to obtain Royal Assent this autumn so there will now be a period during which these amendments are debated and an eventual compromise reached.

The key non-government amendments were on two areas of considerable concern to business.

Unfair dismissal

The House of Lords voted in favor of a six-month qualifying period for the right not to be unfairly dismissed instead of the 'day-one' right proposed by the Government. Whilst the recent Government reshuffle had led to speculation about the watering down of some of the most controversial aspects of the Bill, on 15 September this amendment was rejected by the House of Commons, where the Government has a large majority. It is worth remembering that the 'day-one' right represents a manifesto commitment by the Labour Party.

Many would agree however that the House of Lords' proposal represented a sensible compromise and would avoid the potential complexity of the Government's proposals for dismissal procedures during probationary periods.

Zero hours contracts

The House of Lords voted in favor of:

• converting a zero-hours worker's right to be offered a guaranteed hours contract into a right to request one, which could considerably reduce the regulatory burden on employers in sectors that are reliant on zero hours workers;
• inclusion in the Bill of a definition of the 'short notice' that will entitle those whose shifts are cancelled to compensation. The House of Lords opted to define 'short notice' as 48 hours.

As with unfair dismissal, the House of Commons declined to accept these amendments.

The Bill has now returned to the House of Lords, with reasons for the rejection given by the new Secretary of State for Business and Trade, Peter Kyle.

The House of Lords also passed some important government amendments that will now be included in the final form of the Bill.

Bereavement leave

The House of Lords agreed amendments tabled by the Government allowing for bereavement leave following pre-24 week pregnancy loss. There will be consultation about the kinds of loss that will be covered, e.g. whether this will include failed embryo transfers after IVF.

Fire and rehire

A new provision in the Bill has introduced the concept of a 'restricted variation', limiting the type of contract variation that will expose the employer to claims of automatic unfair dismissal.

The amendment means that only variations related to pay, pension, hours of work, time off work or the inclusion of a variation clause in the contract will be 'restricted'. It will therefore be automatically unfair to dismiss someone either for refusing to agree to a restricted variation in their contract of employment or in order to replace them with someone on varied terms and conditions doing essentially the same work.

There is one further significant change which is to restrict employers' ability to replace employees with non-employees such as agency workers. A new s104K ERA 1996 will make it automatically unfair to dismiss an employee in order to replace them with someone doing substantially the same work who is not an employee, unless there has been a diminution or cessation of the work the employee was employed to do. This would make the wholesale replacement of a cohort of employees with cheaper agency workers or contractors automatically unfair.

The Government's 'roadmap' for implementing the Bill has indicated that there will be consultation on fire and rehire during this autumn.

We will continue to keep you informed as the Bill moves further towards implementation.

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.