Employment Rights Bill 2025: Key Reforms, Timelines and Implications for Practice

The Employment Rights Bill is nearing the final stages of the UK parliamentary process, meaning significant changes to employment law in England, Scotland and Wales are close to being enacted. Once passed, the legislation will represent the most sweeping overhaul of employment law in more than two decades and will reshape the way businesses across the UK recruit, contract with, and manage their staff.

In practical terms, the Bill – one of the central pillars of the Labour government’s 2024 election manifesto – will require employers to update their employment contracts, workplace policies, and HR practices across a wide range of areas. These include pay, flexible working, employee rights to sick pay, protection against unfair dismissal, minimum hours for workers on variable contracts, parental and bereavement rights, and protection from harassment.

Other provisions will impact how employers handle industrial relations, address the gender pay gap, support employees through the menopause, and manage risks around sexual harassment in the workplace. The government has also tied the Bill closely to its wider “new deal for working people,” a manifesto commitment intended to signal both social reform and a rebalancing of employer–employee relations.

Below, we examine the Bill’s current parliamentary status, the main issues still to be resolved, the government’s roadmap for phased implementation, and the practical implications for UK employers. We also highlight where business groups and parliamentarians have pushed back against some of the proposals, and how the final shape of the reforms is likely to affect employers’ timelines for compliance.

The Bill’s Parliamentary Progress

The Employment Rights Bill was introduced to Parliament on 10 October 2024, meeting Labour’s pledge to publish the draft within 100 days of taking office. The Bill quickly progressed through the House of Commons, where the government’s majority ensured relatively smooth passage. Debate in the Commons largely focused on technical details and on whether the government was moving too quickly in bringing forward such wide-ranging reform.

By spring 2025, the Bill entered the House of Lords, where detailed scrutiny and amendments began to accumulate. On 23 July 2025, the Bill passed its Report Stage in the Lords, with peers pressing for changes to the provisions on unfair dismissal, zero-hours contracts, and trade union reforms. The Lords also debated measures on NDAs (non-disclosure agreements), bereavement rights, and sexual harassment protections.

The Bill is now scheduled for Third Reading in the Lords on 3 September 2025, when Parliament returns from its summer recess. From there it is expected to move into the stage of parliamentary “ping-pong”, during which the Commons and Lords exchange amendments until a final version is agreed. Given the tight timetable before Parliament breaks again for the Labour party conference on 19 September, the government is expected to allocate time for the Bill to clear both Houses quickly.

Constitutional convention means that the unelected Lords rarely obstruct legislation that enacts a governing party’s manifesto commitment. As a result, most observers expect the Bill to receive Royal Assent by early autumn 2025, with secondary regulations and phased implementation to follow.

Issues Still to be Resolved

Although much of the Bill enjoys broad political support, a number of provisions remain contested. Key points of disagreement between the government and the House of Lords include:

Unfair Dismissal Rights

The government proposes that the right to claim unfair dismissal should become a “day one” right, ending the current two-year qualifying period. Ministers argue that this change reflects modern workplace expectations and will provide workers with greater job security.

However, the proposal includes consultation on a statutory probation period, during which dismissal would be permitted if employers follow a lighter-touch process. The government has indicated a preference for a nine-month probationary period, but details will be set in secondary legislation.

Peers in the Lords, by contrast, have pressed for a six-month qualifying period before unfair dismissal rights apply. This compromise, they argue, would strike a better balance between protecting workers and giving businesses flexibility to assess new recruits.

Minimum Guaranteed Hours

Zero-hours contracts are another flashpoint. The government has pledged to crack down on “exploitative” arrangements by requiring employers to provide contracts that reflect an employee’s average hours worked. This would give workers greater certainty and compensation for last-minute shift changes.

Employers, however, warn that this could create an administrative burden requiring constant monitoring of working hours. Seasonal industries such as hospitality and agriculture have raised concerns that the proposals will undermine their ability to manage fluctuating demand.

The Lords have pushed amendments to soften the measure, suggesting that the uplift to guaranteed hours should only apply if the employee requests it. Peers also endorsed a definition of 48 hours’ notice for last-minute shift cancellations – with penalties for employers who breach this threshold.

Trade Union Reforms

The Bill repeals large parts of the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023, and introduces a more permissive framework for industrial action. Provisions include simplified ballot rules, electronic voting, and new rights of union access.

Peers have sought to temper some of these changes. For instance, amendments were introduced to maintain the 50% threshold for strike ballots and to ensure that union members must opt in to contribute to political funds.

Non-Disclosure Agreements (NDAs)

In line with growing pressure to address workplace harassment, the Bill introduces a ban on using NDAs to silence employees in cases of discrimination or misconduct. However, the government has acknowledged the need for limited exceptions, particularly for protecting commercially sensitive information. The precise scope of these exceptions remains to be clarified in secondary legislation.

Extension of Tribunal Time Limits

One of the Lords’ most notable amendments extends the time limit for filing employment tribunal claims from three months to six months. Employers argue this will increase exposure to stale claims, while unions argue it gives vulnerable workers fairer access to justice. The government has so far signalled willingness to adopt this change, which is likely to take effect in October 2026.

Business and Sector Concerns

The reforms have provoked strong responses from business groups.

• A Peninsula HR survey found that 62% of employers believe day-one unfair dismissal rights will harm their business, with nearly 40% describing the risk as “very significant.”
• The hospitality sector has criticised reforms to zero-hours contracts as “detached from reality,” stressing that seasonal demand makes guaranteed hours unworkable in practice.
• Employers also warn that increased tribunal exposure and new statutory leave entitlements will raise compliance costs and worsen the already record-high tribunal backlog.

Some employers have expressed concern that the new Fair Work Agency, which will be tasked with enforcing aspects of the reforms, could bring about taxpayer-funded litigation against businesses. Critics say this risks encouraging an adversarial approach rather than constructive engagement between employers and employees.

At the same time, trade unions and employee groups have welcomed the Bill, describing it as a long-overdue modernisation of UK labour law. Unions argue that the reforms will address insecure work, strengthen bargaining power, and create a more level playing field between employers and employees.

Key Reforms in the Bill

Beyond the headline debates, the Bill encompasses a broad package of reforms. Among the most significant are:

• Unfair dismissal: Day-one right (with probationary exceptions still under consultation).
• Zero-hours contracts: Right to guaranteed hours based on average worked, subject to amendments.
• Trade union law: Repeal of 2016 and 2023 Acts, introduction of electronic balloting, union access rights.
• Parental leave: Day-one right to paternity leave and unpaid parental leave.
• Sick pay: Removal of lower earnings limit and waiting period.
• Sexual harassment: Duty on employers to take all reasonable steps to prevent harassment, including by third parties.
• NDAs: Ban on gagging clauses in harassment or discrimination cases.
• Bereavement leave: To be a day-one right.
• Fire and rehire: Prohibition of contractual variation through dismissal and re-engagement.
• Fair Work Agency: New enforcement body with investigatory and enforcement powers.
• Menopause support: Requirement for larger employers to introduce menopause action plans, phased in from 2026.
• Gender pay gap reporting: Expanded obligations, with annual action plans mandated from 2027.

Implementation Timeline

The government has published a phased roadmap for implementation, which will spread reforms over the next two years to give employers time to adjust.

• Autumn 2025 (Royal Assent)
  • Repeal of the Strikes (Minimum Service Levels) Act 2023
  • Repeal of large parts of the Trade Union Act 2016
  • Protections against dismissal for lawful industrial action
• Winter 2025 / Early 2026 (Consultations)
  • Day-one unfair dismissal rights and statutory probationary period
  • Fire and rehire prohibition
  • Zero-hours contracts reform
  • Rights for pregnant workers
  • Bereavement leave and parental leave expansion
  • Trade union rights of access and recognition processes
• April 2026
  • Day-one paternity leave and unpaid parental leave
  • Statutory sick pay reforms
  • Establishment of the Fair Work Agency
  • Double protective awards for collective redundancy failures
• October 2026
  • Ban on fire and rehire practices
  • Duty to prevent sexual harassment and protect from third-party harassment
  • Six-month tribunal limitation period
  • Strengthened trade union rights of access
• 2027
  • Day-one unfair dismissal right formally in force
  • Mandatory menopause and gender pay gap action plans
  • Enhanced protections for pregnant workers
  • Zero-hours contract reforms extended to agency workers
  • Regulation of umbrella companies introduced

With the Employment Rights Bill moving into its final parliamentary stages, legal advisers should be encouraging clients to begin their preparation now for phased implementation. Key considerations include:

1. Employment Contracts
   Practitioners should review template contracts in light of the proposed reforms. Particular attention will need to be paid to probationary clauses, dismissal procedures, and working hours provisions, given the changes to unfair dismissal rights and minimum hours obligations.
2. Zero-Hours and Casual Arrangements
   Where clients rely on variable-hours staff, practitioners should advise them to start auditing and recording average working hours. This will help them prepare for future obligations to offer contracts that reflect regular hours worked.
3. Workplace Policies and Training
   Clients will need to refresh policies on harassment, family leave, sickness absence, and parental rights. Practitioners should also highlight the importance of training for managers, particularly in relation to new duties to prevent sexual harassment and to handle family-related leave requests consistently.
4. Tribunal Risk Management
   The extension of limitation periods and the broadening of unfair dismissal rights are likely to increase tribunal claims. Practitioners should review clients’ grievance, disciplinary, and dismissal procedures, and consider offering litigation-readiness training for HR teams.
5. Engagement with Consultations
   A large proportion of the detail will be left to secondary legislation and statutory codes of practice. Practitioners should ensure clients are aware of forthcoming consultation opportunities, particularly around probationary periods, zero-hours reforms, and family leave, and advise them to contribute where appropriate.
6. Budgeting and Compliance Planning
   Practitioners should flag to clients that new entitlements and monitoring duties will bring additional administrative and financial burdens, with SMEs particularly exposed. Advisers should encourage early financial planning and staged compliance strategies.

Conclusion

The Employment Rights Bill represents the most significant reform of UK labour law in a generation. While the government is determined to see it on the statute book before the end of 2025, the shape of the final legislation will be influenced by ongoing debate in the Lords and subsequent consultations.

For employers, the reforms will require careful planning, contractual updates, and investment in compliance. Businesses that act now to review contracts, HR policies, and workforce structures will be best placed to navigate the changes.

With Royal Assent expected this autumn, the countdown is already under way.