Preparing Your Business for the Biggest Shift in Employment Law in a Decade
The Employment Rights Bill (ERB) represents one of the most significant shifts in UK employment law in recent years. First introduced in late 2024 and progressing through Parliament during 2025–2026, the Bill is part of a broader government agenda to modernise employment rights, increase fairness in the workplace and strengthen enforcement.
For employers, particularly SMEs without large internal HR teams, this Bill should not be ignored. The changes it introduces will affect how organisations hire, manage, engage and exit employees. While some aspects are still subject to consultation and secondary legislation, the direction of travel is clear: more protection for workers, more accountability for employers, and more scrutiny of people practices.
A shift in the balance of power: day-one rights
One of the headline proposals is the move towards a day-one right to protection from unfair dismissal. Currently, employees need two years’ service before they can bring an unfair dismissal claim. The Bill proposes removing this qualifying period entirely, although current amendments may instead shorten it rather than eliminate it.
For employers, this means the days of ending employment during probation with little risk will be gone. Probation periods will take on greater importance, and organisations will need clear performance expectations, documented reviews and evidence of support offered.
Dismissals that are poorly justified or poorly documented will carry a much higher litigation risk.
Reforming zero-hours and agency work
The Bill strengthens rights for individuals on zero-hours contracts, low-hours contracts and agency work arrangements. Workers will gain the right to request a more predictable working pattern, and employers may be required to compensate workers for last-minute shift cancellations.
For SMEs that rely on flexible staffing – hospitality, care, retail, logistics – this will require a more structured staffing model. “On-demand labour” will be significantly harder to justify, and businesses that use it simply because it has been easy or convenient will need to rethink their workforce planning.
Strengthened protections around sick pay and parental leave
Another element of the Bill focuses on improving access to basic rights. Statutory Sick Pay could become payable from day one of absence, removing the current unpaid waiting period. Parental leave is also expected to become a day-one right, rather than only for those with 12 months’ service.
While these changes reflect modern expectations of fairness, they will introduce additional cost and administration for employers. Forward planning and budgeting will be essential, particularly for smaller organisations.
Harassment, NDAs and “fire and rehire”
The Bill also tightens expectations around workplace behaviour and culture. Employers will have a reinforced duty to take all reasonable steps to prevent sexual harassment, and the use of non-disclosure agreements (NDAs) will be restricted so they can no longer silence victims of harassment or discrimination.
Combined with new limits on “fire and rehire” – the controversial practice of dismissing employees and offering re-engagement on inferior terms – the Bill signals a clear message: businesses must adopt ethical, transparent and fair employment practices. The days of using contractual loopholes to push through unfavourable changes are ending.
Enforcement is about to get stronger
Another major development is the plan to establish a single enforcement body – the Fair Work Agency. This organisation will focus on enforcing holiday pay rules, minimum wage, statutory pay entitlements and worker protections.
In practical terms, this means businesses that take a “we’ll fix it if someone complains” approach to employment law will face increased scrutiny and potential penalties. Transparency and proactive compliance are becoming the standard.
What business owners should do now
Although not all provisions are in force yet, the Bill is moving and businesses that wait until the last moment will find themselves scrambling. A proactive approach protects the business and supports employees.
Start by reviewing the fundamentals: employment contracts, recruitment practices, probation management and zero-hours arrangements. Ensure that your reasons for hiring, changing roles or ending employment are clear and documented. Invest in management capability – as legal scrutiny rises, so does the expectation that managers know how to lead, coach and handle performance issues fairly.
Above all, communicate. Employees talk, compare and share. The organisations that navigate these reforms successfully will be those that remain open, transparent and consistent.
A stronger future for responsible employers
The Employment Rights Bill is not simply a legal update. It represents a philosophical shift: from “minimum compliance” to fairness, transparency and accountability.
For organisations that already invest in their people, nothing about this Bill should feel threatening. For those who rely on ambiguity or informal practices, this is the wake-up call. Businesses that build robust, fair and transparent foundations now will protect themselves from risk and build stronger employer brands in the process.
At Haus of HR, we are already supporting clients to assess their risk and prepare for the changes. If you would like to review your contracts, handbook, policies or HR processes in light of the Bill, we can help.
The legislation is moving – the question now is whether your organisation is moving with it.