Thinking Time: HR needs to find space to consider The Employment Rights Bill

The Employment Rights Bill may not come into effect until next year but, now is the time for HR to consider the implications.

As the Labour government beds down into its term of office one of the biggest changes the new administration is delivering is in the workplace. The government’s Employment Rights Bill has attracted a great deal of attention and some concern about its impact on employers. On the one hand it represents a time of change and adaptation, but it may also signal a more challenging time for employers, and the need to address potentially costly issues alongside increases in taxes and the minimum wage. 

Although the Bill will not come in force until next year, and with the precise nature of the changes pending on the detail of the legislation – and any consequent impact on other parts of employment law – there’s no doubt that the measures being introduce will change how work is managed. There may be plenty of time for HR to prepare and understand what’s coming, but that’s not to say the function shouldn’t already be considering what they will need to do.

Unfair dismissal from day one

One of the most significant measures to be introduced by the government is the shift to day-one rights for unfair dismissal – a clear departure from the current requirement of two years of service. As Garvey Hanchard, partner at Bloomsbury Square Employment Law notes: “While this change aims to improve job security, it has drawn sharp criticism from business groups concerned about rising costs and reduced flexibility in hiring decisions.”

According to Hanchard the move has drawn reservations from many organisations representing employers and those involved in the recruitment process. The Federation of Small Businesses for example, estimates that day-one employment rights could cost UK businesses an additional £1.2 billion annually in legal fees, redundancy payouts, and administrative expenses. “Employers fear that these new protections could encourage an increase in employment tribunal claims, adding both financial and operational burdens,” explains Hanchard. And while there may be a positive impact on job security, Hanchard wonders if flexibility in employing people will also be compromised.

Cautious hiring or increased security

At the end of the day this move may make employers more cautious about hiring employees – especially those with less conventional backgrounds. Such hesitancy in turn could impact job creation, particularly in industries that rely on temporary or flexible labour.

On the flip side, however, this level of protection means workers can afford to feel more confident in their new position and may therefore be more committed and engaged in the workplace. Employers might actually see the benefit of the new arrangement as employees increase their engagement with a workplace and role they feel is reliable.

In addition it should be remembered that while day-one rights will exist the Bill will also provide employers with a Statutory Probation Period – expected to be between six and twelve months – which will still mean businesses can fairly assess their new hires before full Employment Rights apply. Despite everything, could this Bill actually present a more acceptable balance between the risk of employing someone and the opportunity for that person to bring real value to the organisation?

“Rather than resisting reform outright, businesses should focus on shaping the probationary framework to ensure it remains practical and fair,” advises Hanchard. “If implemented well, these changes could foster a more stable and productive job market, benefiting both employees and employers alike.”

Harassment prevention

Lydia Wawiye, Senior Associate, Employment Law Solicitor, Parfitt Cresswell highlights another aspect of the Employment Bill which stipulates that employers must take “all reasonable steps” to prevent harassment, noting that this now includes showing zero tolerance for such behaviour by third parties including customers and clients.

Direct discrimination, indirect discrimination, harassment (defined as ‘unwanted conduct’) and victimisation (you’ve made a complaint, and you can prove you’ve been punished for it) will now each be outlawed around ‘protected characteristics’ which are – and will continue to be – race, age, sex, disability, marital status, religion, pregnancy, gender reassignment and sexual orientation. 

Wawiye takes a positive view on the move: “The new law should make working life more comfortable for everyone, as it makes it illegal for your employer to accept, and not act, on discriminatory behaviour, whoever it comes from.”

There are several other elements of the Employment Rights Bill which will impact on HR to varying degrees, including family leave entitlements, flexible working rights, moves to address ‘hire and fire’ and, of course zero hours contracts.

Review, prepare, consult

“Although many of the Bill’s proposed changes are not due to take effect until late 2026, HR would do well to conduct a review of their existing policies as soon as possible to identify areas they need to update,” says Riaan Van Wyk, Senior Consultant at Barnett Waddingham. “In addition, they will need to implement training for HR personnel and managers to ensure understanding and compliance with any changes.”

Van Wyk also advises that where relevant, HR should engage with employee representatives early on to navigate changes in a collaborative way and follow a clear communication strategy when informing employees about their rights and workplace changes.

“The fact that several day-one rights are introduced might well mean a significant change in the employment experience and how workplaces are run,” he says. “Employers are likely to feel more exposed whilst employees would feel more protected, and it will be interesting to see how this change in dynamic plays out.”