The latest version of the Employment Rights Bill, now a 310‑page document, has been passed from the Commons to the House of Lords.
As expected, all of the government’s proposed amendments were accepted in the Commons. From an employer’s perspective, the Bill now incorporates several amendments that could significantly increase compliance burdens and operational costs:
- Enhanced Collective Redundancy Obligations: The Bill reintroduces the “at one establishment” test for collective redundancy consultations and raises the protective award from 90 to 180 days’ pay. Employers must now monitor redundancy plans on a site-by-site basis, which can increase administrative workload and expose companies to steep financial penalties if the required consultation is not properly conducted.
- Mandatory Guaranteed Hours for Agency Workers: To address gaps in the current system, the Bill now requires that even agency workers receive contracts reflecting the hours they regularly work. Although this measure aims to end exploitative zero-hours arrangements, it could force employers to commit to fixed staffing levels, thereby reducing flexibility and potentially increasing labour costs for businesses that rely on part-time or variable-hour contracts.
- Revised Statutory Sick Pay Provisions: Statutory Sick Pay (SSP) will now be payable from day one of an absence, calculated at either 80% of weekly earnings or a set flat rate, whichever is lower. This eliminates the previous waiting period, meaning employers need to be prepared for an immediate financial impact when employees take sick leave.
- Restrictions on Fire-and-Rehire Practices: The Bill continues its crackdown on fire-and-rehire tactics by making dismissals based on an employee’s refusal to accept contract changes automatically unfair, except in cases of exceptional financial hardship. This restricts employers’ ability to restructure and increases the risk of costly tribunal claims.
- Enforcement via the New Fair Work Agency: The establishment of the Fair Work Agency (with expanded enforcement powers such as issuing underpayment notices and launching tribunal proceedings on behalf of employees) signals a tougher regulatory environment. Employers may face heightened scrutiny and increased compliance costs as this agency begins enforcing the new standards.
The Bill’s second reading in the House of Lords is scheduled for 27 March 2025, during which further amendments could modify or add to the compliance requirements already imposed on businesses. Additionally, much of the operational detail, including the exact requirements for guaranteed hours, the methods for calculating enhanced protective awards, and the enforcement protocols for the Fair Work Agency, will be determined through secondary legislation. Until these details are finalised, employers face uncertainty over the full extent of the future compliance burden.
While the Bill is positioned as a landmark reform to modernise employment rights, from an employer’s perspective, it introduces significant administrative complexities and compliance challenges that may result in considerable new costs. Employers must now prepare for more detailed monitoring of redundancies, tighter restrictions on flexible working practices, and increased financial exposure under a more assertive enforcement regime.
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