Government publishes significant changes to the UK Employment Rights Bill

Why should I read this?

The Employment Rights Bill (“Bill”) is currently progressing through its final parliamentary stages and is anticipated to receive Royal Assent this autumn, with staged implementation over 2025, 2026 and 2027.

This week, the government has published further proposed amendments, some of which are significant. It is expected that they will be approved by parliament, however, it is possible that they are subject to change before being finalised. Additional amendments have been proposed, but they do not appear to be supported by the government and are not expected to progress.

In summary, the changes: provide that certain confidentiality agreements (e.g. NDAs) will be void if they relate to harassment and discrimination; seek to clarify the scope of the “fire and rehire” automatic unfair dismissal protections; provide new protections for employees dismissed and replaced with workers who are not employees (e.g. contract labour); extend bereavement leave; and, make further changes to zero/low hour workers’ rights.

What should I do?

Employers should keep abreast of these amendments and assess how to respond, including whether to act ahead of the Bill taking effect (read our tracker which will be updated to reflect the latest developments on the Bill).

What else do I need to know about the changes?

“Fire and rehire”

Currently, the Bill provides that most dismissals for failing to agree to a varied contract of employment, or to enable the employee to be re-engaged or replaced by another under a varied contract, will be automatically unfair (subject to a narrow justification). Concerns have been raised that the changes may have unintended consequences, such as constraining the ability of businesses to legitimately change and adapt.

Presumably in response to these concerns, government amendments seek to limit the scope of the Bill’s fire and rehire provisions to particular types of “restricted” contractual variations, such as: reducing pay or time off; changing how pay is determined – where it is calculated by work done; variations to pensions, working hours, shift timing/duration; introducing (without employee consent) flexibility clauses addressing these particular variation types; and any other variation the government might add by future regulations.

Even where an employer’s variation falls outside the above description (potentially, for example, location changes), or can be justified, see below, meaning that the dismissal is not automatically unfair, the question remains whether it is a fair dismissal under “normal” rules. In that respect, the Bill also sets out a number of relevant factors to be considered when considering the fairness of the dismissal. These include the nature of any consultation with the employee and workers’ representatives, and any incentives offered to employees to agree the change. Further regulations may be introduced providing additional factors for a tribunal to consider.

The changes detailed above will require careful consideration by employers and will significantly limit an employer’s ability to enforce contractual change ( in the absence of agreement), notably to pay, hours and holiday provisions in light of the introduction of these specific “restricted variations".

A further amendment to the Bill concerns the possibility of an employer justifying a fire and rehire dismissal due to its financial difficulties. The change concerns the public sector, for example, providing that the financial difficulties necessitating the variation must, for public sector employers (not local authorities), affect the financial sustainability of carrying out the employer’s statutory functions. For local authorities, an amendment provides that the justification is only available if a “relevant intervention direction” applies (conditions apply).

Finally, the Bill has been extended to include, broadly, situations where employees are dismissed and the principal reason is to replace them with agency workers or contractors – workers who are not employees. Such dismissals will be automatically unfair where the replacements are carrying out the same, or substantially the same, activities and the employees’ dismissals are not due to a reduced need for those activities. Again, a narrow justification may apply (the dismissal addressed financial difficulties and the employer could not reasonably have avoided the need to replace the employee).

Zero hours and low hours workers, including certain agency workers

Various amendments include new requirements for the offer of guaranteed hours made by an end hirer to a qualifying agency worker relating to pay. The end hirer must meet one of four new conditions (A to D) to ensure a qualifying agency worker’s pay is set at a minimum level (as per those conditions). This includes, broadly speaking, an option for the end hirer to offer minimum pay rates reflecting certain directly employed comparators (subject to certain conditions and definitions). The amendment appears to address concerns that, under previous drafting, qualifying agency workers risked becoming directly employed by the end hirer on higher rates of pay than comparable directly engaged workers.

A further amendment clarifies that, where a qualifying agency worker accepts a guaranteed hours offer from a hirer, they will become a “worker” of the end hirer. The use of the term “worker” is interesting and potentially significant, given the potential risk that a qualifying agency worker could be held to be an “employee” of the end hirer given the new mutuality of obligations in the relationship. There was some concern that, where the agency worker had been employed by the agency, the end hirer would have to offer that status to them when making a guaranteed hours offer. Some employers may choose to offer employment contracts rather than have another category of labour to manage.

Finally, the government has included broad scope for potential exemptions to the duty to offer guaranteed hours offers to both qualifying workers and qualifying agency workers. This includes the Secretary of State having regard to both the benefit to workers of receiving a guaranteed hours offer but also any significant adverse effect on employers who are dealing with exceptional circumstances.

A consultation on these, and other zero and “low hours” worker measures, has been proposed for autumn 2025 and which will provide further detail and there may be further changes.

Bereavement leave extended to pre-24 week pregnancy loss

The right to unpaid bereavement leave is extended to employees who have suffered “pregnancy loss”, defined as pre-24 week pregnancy loss, or the failure of an embryo to become implanted following a transfer carried out in the course of providing treatment services within the meaning of the Human Fertilisation and Embryology Act 1990.

This right to leave will also be available to those with a relationship to the person who has suffered the pregnancy loss, or the child that was to be born had the pregnancy loss not occurred. The nature of that relationship is to be determined in further regulations, following consultation.

Non-disclosure agreements (NDAs) and harassment/discrimination

A significant amendment to the Bill will make any provision in an agreement between an employer and a worker void if it seeks to prevent the worker from making certain allegations or disclosures of information relating to certain work-related discrimination and harassment.

The amendments make provision however for exceptions to this. We expect further information to follow, including further regulations.