9 all-important FAQs on the Employment Rights Bill

From what it is, to when it's expected to come into force, to changes to sick pay and redundancy; we've answered the key question on the Employment Right Bill here.

Last Updated: 21st July 2025

The Employment Rights Bill is changing a number of things, especially for those working in the retail sector. But what are the key things independent retailers need to know?

We've put together 9 commonly asked questions and answered them in bitesize chunks, with the help of legal experts and Bira Legal partner WorkNest, getting straight to the point for small businesses that need a quick breakdown.

• What is the Employment Rights Bill 2025?
• When will the changes from the Employment Rights Bill take effect?
• How does the Bill affect unfair dismissal claims?
• What changes are being made to zero-hours contracts?
• How is Statutory Sick Pay (SSP) affected by the new legislation?
• What new rights do parents have under the Bill?
• How does the Bill address workplace harassment?
• Will there be changes to redundancy consultation processes?
• How should retailers prepare for these changes?

1.  What is the Employment Rights Bill 2025?

The Employment Rights Bill 2025 is legislation introduced by the Labour Government aiming to enhance worker protections, improve job security, and reform various aspects of employment law in the UK.

2.  When will the changes from the Employment Rights Bill take effect?

As the Bill progresses through Parliament, the expected timing for its provisions to take effect has shifted. Although many provisions were originally anticipated to come into force later in 2025, delays in consultation and implementation mean that these changes may now be introduced at a later date. Retailers should continue to track the Bill’s development to ensure they are prepared for compliance once the new measures are implemented.

The Bill has completed the Report Stage in the House of Lords, a phase during which several additional amendments—including those put forward by both the government and the opposition (i.e. non-government) —were tabled and some were approved. This has resulted in the publication of a further updated version of the Bill.

The subsequent step will be the Third Reading in the House of Lords, which is scheduled to begin on 3 September 2025. Following this, the Bill will return to the House of Commons, where Members will consider the amendments accepted by the Lords. While several opposition amendments have been accepted, it should be noted that most are unlikely to be included in the final legislation, given the Labour government’s significant majority in the Commons. Nonetheless, these amendments could result in a delay to the Bill receiving Royal Assent.

When the Bill was first published, the government’s “Next Steps” document indicated that some of the central reforms, such as the introduction of unfair dismissal as a day one right, would not be implemented until at least autumn 2026, to allow sufficient time to finalise the details. However, the  Implementation Roadmap states that public consultation will now begin in summer 2025, with the intention for further regulations to be introduced in 2027.

3.  How does the Bill affect unfair dismissal claims?

The Bill proposes granting employees protection against unfair dismissal from the first day of employment, removing the previous two-year qualifying period. This change means retailers must ensure fair procedures are followed for all employees, regardless of tenure. Short service dismissals will still be possible in an Initial Period of Employment (anticipated to be 9 months, but to be confirmed). A fair reason for dismissal will be needed in the “Initial Period of Employment”(IPE), but only for conduct/performance/illegality or SOSR (not relating to terms and conditions) – not redundancy. Retailers are also expected to be able to follow a light-touch process in this IPE to dismiss, which could include at least a meeting with the employee to address concerns and the right to be accompanied prior to dismissal.

A notable event at the Report Stage in the House of Lords was the introduction of an opposition amendment proposing that the current qualifying period for unfair dismissal be reduced from two years to six months, rather than adopting the previously suggested IPE process. This amendment was accepted following a vote in the House of Lords. However, these changes will need to be considered by the House of Commons, where it is unlikely they will be accepted, given that granting day one unfair dismissal rights was a key commitment in the election manifesto. This could, however, either result in further concessions being made or a delay in the Bill receiving Royal Assent.

4.  What changes are being made to zero-hours contracts?

The Bill seeks to ban ‘exploitative’ zero-hours contracts and introduces the right for workers on zero-hour and certain (as yet to be determined) minimum-hour contracts to be offered a contract with guaranteed hours that reflect their usual working patterns and to implement penalties to employers for late changes or shifts being curtailed. The Bill aims to provide more stability for workers and will require retailers to adjust staffing arrangements.

• These provisions will also apply to qualifying agency workers, whereby:
• The obligation to offer guaranteed hours will land on the end hirer.
• The obligation to give reasonable notice of shifts will be held jointly between the agency and end hirer.

The agency will be liable for any compensation due for failing to give reasonable notice of cancelled, moved or curtailed shifts, although a pre-existing arrangement may allow for the agency to recoup that from the end hirer.

Another interesting change to the Bill that was accepted by Parliament in March 2025 was the ability to contract out of these provisions. The catch, though, is that this needs to be done via a collective agreement with a Trade Union. It will also be necessary for the collective agreement to be in writing, expressly exclude the duties and rights regarding these new provisions, and expressly replace the duties/rights. The latter will also need to be incorporated into contracts of employment. To what degree an employer can avoid these provisions via a collective agreement, therefore, may very much depend on what the Trade Union will agree to.

On 7th July, the Government released a 64-page document setting out proposed changes to the Employment Rights Bill, including both government-backed and non-government-backed proposals. One non-government-backed suggestion is to soften zero hours obligations, so employees could request guaranteed hours rather than employers being required to offer them—similar to a flexible working request.

If the softer approach were to be adopted (keep in mind this may well change again) this right would only apply to workers averaging at least 8 hours a week over a rolling 26-week period. Additionally, employers would not have to pay ‘short notice’ cancellation payments if a shift is withdrawn at least 48 hours in advance. As this proposal is not government-backed, it may be less likely to proceed.

5.  How is Statutory Sick Pay (SSP) affected by the new legislation?