The Employment Rights Bill (ERB) is set to bring about the most significant reforms in employment law in recent years. Expected to receive Royal approval by summer 2025, these changes will come into effect in early 2026, meaning businesses must start preparing throughout 2025 to ensure compliance.
We have set out below, what is planned, how it will affect businesses, and what you need to do to prepare. There are links to follow to help you prepare for these changes.
Key Changes in the ERB and Business Actions for 2025
✅ Day-One Protection Against Unfair Dismissal
What’s changing?
- Employees will no longer need two years of service to claim unfair dismissal. Protection starts from day one.
What should businesses do in 2025?
- Review hiring and probation policies to ensure proper assessments before confirming employment.
- Strengthen performance management processes and ensure managers document all performance-related concerns.
- Update dismissal policies to ensure all termination decisions follow fair procedures.
✅ Regulation of Zero-Hours Contracts
What’s changing?
- Workers will have the right to request a contract that reflects their actual average hours worked.
What should businesses do in 2025?
- Conduct an audit of zero-hours contracts to track actual hours worked.
- Prepare to offer more stable contracts where required.
- Adjust payroll and workforce planning to accommodate potential contract changes.
✅ Restrictions on ‘Fire and Rehire’ Practices
What’s changing?
- Businesses will no longer be able to dismiss employees and rehire them on worse terms.
What should businesses do in 2025?
- Review contract renegotiation strategies to ensure compliance.
- Avoid unilateral contract changes—ensure all changes are agreed upon with employees.
- Provide training for HR teams and managers on lawful contract changes.
✅ Enhanced Sick Pay Entitlements
What’s changing?
- Statutory Sick Pay (SSP) will be available from day one (no waiting period).
- The lower earnings limit will be removed, allowing more employees to qualify.
What should businesses do in 2025?
- Adjust payroll systems to account for sick pay changes.
- Update absence management policies to reflect the new SSP
- Ensure budgeting accounts for potential increased sick pay costs.
✅ Flexible Working Becomes the Default
What’s changing?
- Employers will have to allow flexible working by default unless there is a justifiable reason to refuse.
What should businesses do in 2025?
- Assess job roles to determine which can accommodate flexible working.
- Update flexible working request policies to ensure compliance.
- Provide manager training on handling flexible working requests fairly.
- Ensure technology and IT infrastructure can support remote or hybrid working.
Key Milestones for 2025
📌 Q1 2025:
✅ Audit current employment contracts, dismissal policies, and zero-hours arrangements.
✅ Review HR procedures in light of the new legislation.
📌 Q2 2025:
✅ Begin staff and management training on employment law changes.
✅ Update payroll and absence policies to reflect new Statutory Sick Pay rules.
📌 Q3 2025:
✅ Finalise updates to flexible working policies and ensure IT support for remote work.
✅ Conduct legal compliance reviews to prevent ‘fire and rehire’ risks.
📌 Q4 2025:
✅ Communicate policy changes to employees.
✅ Ensure HR teams are ready to implement new policies in early 2026.