By Sam Mann, Payroll Team Leader, Armstrong Watson
The Employment Rights Bill 2024 has been hailed as representing ‘the biggest upgrade in employment rights for a generation’, aiming to bring an end to what is perceived as being one-sided flexibility benefiting the employer.
The Bill is progressing through Parliament and is scheduled to receive its third reading in the House of Lords on 3rd September. It will then be reviewed again, and once both houses agree on the final wording, it can receive Royal Assent and become law.
Employers need to be aware of the measures included in the bill, and keep updated on its progress and expected implementation dates of areas that will impact payroll costs and practices in 2026/2027.
Changes in the Employment Rights Bill
The Employment Rights Bill will introduce a string of significant reforms including (but not limited to):
Ending ‘exploitative’ zero hours contracts
The Bill will introduce the right for workers to have guaranteed hours, based on representative hours, and to be given reasonable notice of shifts, as well as payments in the event of short notice change or cancellation of shifts.
Amending the Statutory Sick Pay (SSP)
A new framework to ensure that everyone, regardless of their earnings, will receive an element of SSP from the first day of absence due to ‘incapacity.’ It is predicted that these changes, i.e. the removal of the Lower Earnings Limit (£125) as a qualifying feature, will provide access to 1.3 million lower-paid employees who currently cannot access SSP, but not forgetting that employers wholly fund the cost of SSP.
Levelling the frameworks and protections of Statutory Family Leave
Like maternity leave, the right to paternity leave and unpaid parental leave will be available from the first day of employment, while a new right to unpaid bereavement leave for the purpose of grieving the loss of a loved one will be introduced; currently an employee has a legal right to unpaid leave in the event of the loss of a loved one, however, not for grieving but instead to ‘take action’ such as attend a funeral or make funeral arrangements.
Parents currently have the right to take two weeks leave to grieve the loss of a child from 24 weeks of gestation and up to the age of 18, which may also be paid, subject to qualifying conditions. As a result of an amendment, the right to time off to grieve for parents who suffer pregnancy loss before 24 weeks of gestation has also been included in the Employment Rights Bill – this amendment comes as a result of significant campaigning and has the potential to benefit thousands of employees when implemented.
Improving the enforcement of employment rights
The Fair Work Agency will be established to bring together existing enforcement of the National Minimum Wage, gangmasters licensing and taking action against modern-day slavery. It will also include the enforcement of holiday pay and Statutory Sick Pay (SSP). Disputes over the payment of SSP and other family statutory payments are currently managed by HMRC Statutory Payments Dispute Team or, in the worst cases, Employment Tribunals, which can be costly and time-consuming to the employee and employer.
The time limit that employees can bring forward a claim to an Employment Tribunal will be increased from three to six months.
Further tightening of tipping policies
Building on new legislation brought in from 2024, further changes are proposed that require far greater transparency of procedures and worker participation with the distribution and administration of tips, gratuities and service charges.
When will the changes be implemented?
The stated aim of the legislation is to bring about economic growth by ensuring the Government fulfils its manifesto promise to ‘Make Work Pay’ - improving job security, helping more people stay in work, and work for longer, as a result of the reforms.
In early July a roadmap for the delivery of the Employment Rights Bill was published, so whilst final details have yet to be confirmed, we now know when the changes could be implemented. This will be on either 6th April or 1st October in any given year.
Given the volume of change planned, further details, and in some cases, consultation, have yet to be concluded, however, the first reforms are expected to be introduced next year.
6th April 2026:
Statutory Sick Pay
Day one right to paternity leave and unpaid parental leave
Fair Work Agency body established
1st October 2026:
Tightening of tipping laws
Employment tribunal time limits
From 2027, we can expect to see developments from a consultation on the rights for pregnant workers and the rules on flexible working together with the introduction of bereavement leave.
Prepare for change
For business owners, the Employment Rights Bill represents a major shift in legislation that will directly impact staffing, payroll, and HR practices, and it is essential to start preparing now for the financial and operational impact it will bring.
Reviewing contracts, updating policies, and seeking professional advice where needed, ahead of the initial changes being implemented in April 2026, will ensure your business is ready to adapt and thrive under the new framework.
For support and advice regarding your business payroll needs please get in touch. Call 0808 1444 5575 or email help@armstrongwatson.co.uk.
