The Employment Rights Bill has hit another hurdle as it progresses through Parliament after the House of Lords rejected several major proposals, sending the legislation back to the Commons for further debate in what’s known as parliamentary “ping pong”.
Described as the most significant upgrade to UK employment law in a generation, the Bill is expected to be passed this month; however, both houses must agree on the Bill’s final wording before it can receive Royal Assent and become law.
Among the measures blocked by the House of Lords were:
Guaranteed hours for zero-hours workers
Day-one protection against unfair dismissal
Changes to trade union ballot rules and political levy arrangements
These setbacks mean the Bill, which had been edging closer to becoming law, will now undergo another round of scrutiny before any final agreement is reached. However, if they are passed, they could affect how businesses recruit staff, manage contracts, and handle sick pay.
Why are these changes controversial?
One of the most debated elements is the proposal to grant employees the right to claim unfair dismissal from their first day of employment. Currently, workers need two years of continuous service to qualify. Critics argue that removing this threshold could discourage hiring, particularly for entry-level roles, while supporters say it would strengthen job security in an uncertain economy.
Similarly, plans to provide guaranteed hours for zero-hours workers based on average earnings have sparked debate. While intended to curb exploitative practices, opponents claim it could reduce flexibility for both workers and employers, especially smaller businesses.
How can businesses prepare?
Even though the Bill isn’t law yet, it is wise to start thinking ahead. Employers will need to:
Stay informed, the Bill is still changing, so don’t rush into major policy updates yet.
Check your contracts, make sure they can be easily updated when the law changes.
Think about flexibility and if the guaranteed hours rule is implemented, how would this affect your business model?
Finally, begin to budget for extra costs. If changes to sick pay are rolled out, then sick pay and leave entitlements could increase payroll expenses.
The Government’s roadmap for the delivery of the Employment Rights Bill, published in July, suggests changes could be implemented on either 6th April and 1st October in any given year. The earliest changes, expected to take effect on 6th April 2026 (once the bill becomes law), are day one rights to paternity leave, removing the Statutory Sick Pay lower earnings threshold, and the establishment of a Fair Work Agency, though these dates are subject to change.
The next few weeks will be critical as the Bill moves back to the House of Commons. We will continue to keep you updated with practical guidance so you can prepare without unnecessary stress.
For support and advice regarding your business payroll needs please get in touch.
