An update on the Employment Rights Bill

The Employment Rights Bill is once again before Parliament following the summer recess, with the House of Commons scheduled to consider the House of Lords’ amendments to the Bill on 15 September 2025. Some of the changes introduced by the Lords were significant and, if accepted, would cause major changes to the Government’s plans for reform. We look at the current position of the Bill and what impact the changes made by the Lords could have.

Background

In October 2024, the Employment Rights Bill was put before Parliament, within 100 days of the Labour party entering Government. Its provisions are intended to bring major changes to employment law which will affect every employer in Great Britain.

There have been many changes to the Bill as it has progressed through Parliament. In July 2025, during the report stage in the Lords, several non-governmental amendments, i.e. those that were not put forward by the Government, were made to the Bill..

These included a proposal by Ruth Cornish which was taken up by her professional body the Chartered Institute of Personnel and Development (CIPD) to allow trained HR professionals to sign settlement agreements which was proposed by Lord Pitkeathley and the subject of considerable debate.  Ruth wishes to influence SME’s having greater choice beyond solicitors. This amendment was withdrawn but is being pursued separately by the CIPD,

Below we look at what some of those changes were and what they mean for the Employment Rights Bill

Unfair dismissal

Currently, employees can only bring unfair dismissal claims once they have two years’ continuous service with their employer. If they are dismissed prior to reaching that, they cannot challenge their employer’s decision to dismiss them with an ordinary unfair dismissal claim.

The provisions of the Bill will change this. Under it, the Government intends to remove qualifying service entirely. This would mean that employers will only be able to dismiss an employee if the reason for dismissal is for one of the five potentially fair reasons (conduct, capability, redundancy, statutory ban, some other substantial reason) and the dismissal satisfies the fairness and reasonableness tests under the Employment Rights Act 1996.

The provisions in the Bill do allow for an initial period of employment during which a statutory probationary period will apply so that employers can carry out a proper assessment of an employee’s suitability for the role. During this probation period, a lighter-touch process to dismissal is intended to be introduced with a less onerous approach for employers to follow to dismiss an employee who is not right for the role (this will not apply where the reason for dismissal is due to redundancy).

There have been significant concerns about the removal of qualifying service for unfair dismissal. In the second sitting of the report stage in the Lords, it was agreed by peers that whilst a two-year qualifying period was too long, removing it entirely would have a "perverse effect", risking the creation of jobs as employers become less willing to take the risk of making bad hiring decisions.

Instead, it preferred a six-month qualifying period which would give employers time to assess new employees. The Bill was subsequently amended by the Lords in July 2025 to replace the removal of qualifying service with this six-month statutory probation period.

Zero-hours contracts

Several changes are proposed to be made to zero and low hours contracts, which will also apply to agency workers.

Under these changes, zero-hours contracts will not be banned outright, as some have said, but the Government intends to provide a greater structure to their use to end “one sided flexibility” by banning “exploitative” zero-hours contracts.

For those on these contracts, the Bill will introduce various new rights and entitlements including:

• a requirement to give reasonable notice of changed shifts or working time

• compensation for cancelled shifts of an amount proportionate to the notice given of the cancellation or curtailment

• a right for everyone to have a contract that reflects the number of hours they regularly work based on a 12-week period. This could be, eg a zero-hours employee who has been provided with 20 hours of work per week for 12 weeks — in these circumstances, the employee would be entitled to a new contract of 20 hours

• a right for employees to receive relevant information regarding guaranteed hours contracts where they may become eligible in future.

These changes will mean that some businesses will need to make substantial changes to their practices and the reality is that these changes will mean that businesses may not be able to be as agile and reactive to peaks and troughs in demand as they currently are.

However, these reforms are now uncertain following amendments made to the Bill in the Lords in July 2025. Under those changes, the proposed duty for employers to offer a guaranteed hours contract to zero, low hours and agency workers was removed. Instead, workers would have the right to request a guaranteed hours contract. A further change was that “short notice” in cancellation of shifts was defined to be 48 hours.

What are the next steps?

These amendments will now be considered in the House of Commons. This is scheduled to take place from 15 September 2025. As these changes would effectively block key commitments made by the Government in its 2024 manifesto, it is unlikely that they will be accepted. This could lead to the Bill passing back and forth between the Commons and the Lords as the final details are debated in a form of parliamentary “ping pong.”

We will keep you updated!

This briefing was produced using content created by CIPD HR Inform.