What’s changing? Consultation period sees updates to the Employment Rights Bill

After the Employment Rights Bill was introduced to Parliament in October 2024, the government held various consultations and sought feedback.

Various amendments have now been made, and the bill is with the House of Lords for consideration. This is an ever-changing picture, but here are the key changes to note as of April 2025:

1. A new (higher) collective consultation protective award

Currently, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days or less, must collectively consult with a recognised union or with employee representatives before making any redundancies. Failure to comply means employees can claim a protective award of up to 90 days’ pay each.

The government has now amended the bill to increase the length of the award from 90 to 180 days’ pay per employee. This is significant and really increases the risk of failure to comply.

The government has, however, abandoned previous plans to extend interim relief to employees seeking a protective award which would have enabled tribunals to order an employer to either rehire the employee or keep paying their salary and benefits until the final hearing. This will no doubt come as a welcome relief to employers.

2. Changes to the threshold for collective consultation

The original draft of the bill suggested removing the words ‘at one establishment’, which meant that employers would have needed to count any proposed redundancies across all their sites or premises to work out if they needed to collectively consult. This would have been something of a moving target and hard to comply with.

In response to consultation, the government is retaining the words ‘at one establishment’ but plans a new threshold which will also trigger the duty to collectively consult. We don’t yet know what this is, but it is likely to be linked to either a percentage of the workforce who are expected to be made redundant or a set number of redundancies over more than one establishment.

3. Statutory Sick Pay

Currently, statutory sick pay (SSP) is payable from day four of sickness onward, and workers need to earn above the lower earnings limit of £123 to qualify.

The bill removes the “waiting days”, and SSP will be paid from the first day of illness. This is significant for those who only pay SSP.

The lower earnings limit will also be removed, meaning either SSP at the flat rate or 80% of the employee’s normal weekly earnings, whichever is lower. This brings more people into the eligibility threshold.

4. Zero-hour contracts

The bill is set to bring new rules for those on zero and minimal hour contracts to offer “guaranteed hours”. The details are yet to be revealed, but it looks likely that a 12-week reference period will be used to calculate which hours have been worked and an offer made that more closely aligns with this.

In addition, there will be penalties for failure to give reasonable notice of shifts, changes and cancellations. Again, “reasonableness” is yet to be defined, as is the detail.

Agency workers will be covered, following consultation. This is complicated, but it seems likely that the obligation to offer guaranteed hours will lie with the end user, subject to future secondary legislation.

The agency will, however, primarily be responsible for payments due to short-notice cancellations or curtailment, given that the worker will already be on the agency’s payroll. The anticipation is that the agency will then recoup those costs from the end user if/and when they are liable. This may prove tricky given that the end user is more likely to be the one changing/cancelling shifts.

It is still likely that seasonal and other work will be excluded, and that the worker can always decline the offer. Further, employers and trade unions may be able to mutually agree, through a collective agreement, not to adhere to these new provisions and to agree on other terms to deal with the same situations. More details will be required.

5. Further protection on return from maternity leave

In redundancy situations, pregnant women, those on maternity leave, and those returning to work from maternity leave (within 18 months from the expected week of childbirth) have the right to be offered a suitable alternative vacancy in priority to others when at risk of redundancy.

The original draft of the bill allowed for regulations to protect women from dismissal for reasons other than redundancy (which is already covered) for a period of time after they return to work from maternity leave, except in limited circumstances. Again, we do not know the details but await with interest.

6. New Fair Work Agency

The government has included new clauses to the bill empowering the (yet to be created) Fair Work Agency to issue a ‘notice of underpayment’ to an employer that hasn’t made payments to staff, including sick pay and holiday pay. Employers will have 28 days to pay the amount and could also be liable to a further penalty of 200% of the specified sum.

The Agency will be able to issue notices to recover underpayments going back up to six years (depending on the nature of the claim). In addition, the Fair Work Agency will have the power to bring any claim that an individual worker can bring in an Employment Tribunal.

In respect of the crackdown on holiday pay, the Working Time Regulations 1998 will also be amended to place a new duty on employers to keep records to show they have complied with their obligations to provide statutory holiday and holiday pay to their workers. These records must be kept for six years. This area seems rife for the new powers of enforcement to be exercised.

7. New extension to time limits for bringing Employment Tribunal claims

Although this was not included in the initial bill, this has now been added. It means that the time limit will be extended from three months to six in most types of claims (including unfair dismissal). This is likely to have a significant impact when brought into law. It is not yet clear how the already strained Employment Tribunal system will cope.

8. The Right to Switch off

This was campaigned on before the 2024 election as part of the “New Deal for Working People” but did not make the Employment Rights Bill. It had been anticipated that the right to ignore work-related emails and phone calls outside of work hours would be added at a later stage, but now appears to have been dropped altogether.