Employment Rights Bill reaches the House of Lords

The Employment Rights Bill had its third (and final) reading in the House of Commons on 12 March 2025, and passed across to the House of Lords for its first reading on 14 March.  

A new version of the Bill was published on 14 March to reflect the amendments voted through by the Commons. The Bill has expanded in size again and is now 310 pages long.  

As anticipated, the proposed Government amendments were all accepted. See our previous article for details of the key changes confirmed by the Government following the various consultations conducted late last year. 

The Bill now incorporates the following amendments: 

Statutory sick pay

Statutory sick pay (SSP) is payable at the rate of 80% of an individual’s weekly earnings, or at the applicable flat rate of SSP, whichever is the lower amount. This means that all employees, including those earning below the Lower Earnings Limit, will be entitled to receive SSP from the first day of absence.  

Collective consultation

Collective consultation obligations will continue to apply when the employer is proposing 20+ redundancies ‘at one establishment’.  

In the original version of the Bill, the ‘one establishment’ wording was removed – which would have had the effect of applying the collective consultation obligations in circumstances when proposed redundancies across multiple sites totalled 20 or more employees. In a concession to businesses who raised concerns over the implications of this amendment, the ‘one establishment’ wording has been reinstated. However, the Bill now includes a provision for separate regulations to be introduced to apply a different threshold if redundancies are proposed across multiple establishments. This may be a specified number, defined by a specified percentage of total employees, or a combination.  

The maximum protective award will increase from 90 days’ (uncapped) pay to 180 days’ pay, which represents a significant financial penalty if the collective consultation obligations are not followed by an employer. 

Dismissal and reengagement

Dismissal and reengagement (‘fire and rehire’) will remain an ‘automatic’ unfair dismissal and only permitted in very exceptional circumstances of severe financial difficulties. However, following the Government’s consultation, interim relief will not be introduced as a potential remedy – either in claims for a protective award or automatic unfair dismissal on grounds of ‘fire and rehire’.  

Tribunal time limits

Tribunal time limits are extended from three to six months as a result of an amendment to the Bill previously approved by the Commons at the committee stage. 

Industrial relations and trade unions

A wide range of amendments have been introduced in the revised Bill, following the Government’s consultation: 

• A streamlined process for trade union recognition, with a lower threshold of trade union membership in the bargaining unit for an application to the CAC (between 2% and 10%, to be specified in regulations) and removing the current 40% workforce threshold for support of trade union recognition. 
• Strengthened protections against unfair practices by employers during the statutory recognition process. 
• New workplace access provisions to cover digital access, and a fast-track route for trade unions to enter into an access agreement with an employer, with penalties for non-compliance. 
• Abolishing the current 10-year requirement for unions to ballot members on the maintenance of a political fund. 
• Simplifying the current information requirements for industrial action ballots and notice to employers, and a 10-day notice period for industrial action (rather than 7 days as originally provided in the Bill). The current minimum notice period is 14 days. 
• Making balloting more accessible by introducing digital e-balloting. 
• Extending the expiry of mandates for industrial action from 6 to 12 months. 

Guaranteed hours contracts

Guaranteed hours contracts are extended to agency workers as well as zero and low-hours workers, along with the right to be given ‘reasonable notice’ of shift changes.  

Where a qualifying agency worker is entitled to a guaranteed hours contract offer it will be the responsibility of the end hirer to make the offer, although separate regulations may also place obligations on agencies or other entities in certain circumstances. Where work is genuinely temporary, the end hirer will be able to offer temporary contracts. An agency worker is under no obligation to accept the offer of a guaranteed hours contract if they want to remain on their existing working arrangement. 

Responsibility for providing a qualifying agency worker with reasonable notice of shifts is placed on both the employment agency and the end hirer. Any payments for short notice cancellation or curtailment of shifts will be the responsibility of the employment agency, but they will have the right to recoup these costs under pre-existing arrangements with hirers. 

An amendment in the latest version of the Bill now provides that under the terms of a collective agreement, employers will have the ability to opt out of the new duty to offer workers a guaranteed hours contract. 

Working time records

A new provision in the Bill will amend the Working Time Regulations 1998 and introduce new obligations on employers to keep certain records relating to compliance with annual leave and pay, for a period of six years.

Umbrella companies

Umbrella companies are brought within the remit of the Employment Agency Standards Inspectorate. The intention is that workers can access comparable rights and protections when working through an umbrella company as they would when taken on directly by a recruitment agency.  

Bereavement leave

Bereavement leave provisions will be extended to those suffering from pregnancy loss before 24 weeks. This has been confirmed by the Government in principle but the proposed amendments at the Report Stage were not approved at the third reading. Further amendments to the Bill will be considered during the passage of the Bill in the House of Lords.  

Next steps  

The second reading of the Bill in the House of Lords is due to take place on 27 March 2025, at which the first debate on the Bill will take place. The debate will consider key principles and any specific concerns or areas where the Lords think amendments will be needed. Then the Bill goes to the committee stage for more detailed scrutiny. Any amendments made by the Lords will have to be considered by the House of Commons, and will potentially ‘ping-pong’ between the Lords and the Commons before the final text is agreed. 

We can expect to see further consultations issued shortly on some of the key provisions in the Bill that will require secondary legislation before they take effect. This will include the requirement for employers to make an offer of a guaranteed-hours contract to zero, low-hours and agency workers, and the operation of an ‘initial period of employment’ (probationary period) when the day one rights to claim unfair dismissal are introduced.