UK Employment Rights Bill: Amendments Employers Should Know

Quick Hits

• On March 6, 2025, the UK government announced amendments to the Employment Rights Bill, which outlined updates to the bill relating to zero-hours and agency workers, changes to statutory sick pay (SSP), and expanded bereavement leave entitlements.
• The amended Employment Rights Bill proposes the establishment of a Fair Work Agency with the authority to enforce employment rights and issue underpayment notices, potentially imposing penalties for unpaid wages, holiday pay, and SSP.
• The bill, which has passed its first and second readings in the House of Lords, is expected to become law by summer 2025, with many changes anticipated to take effect from spring 2026, subject to further consultations and amendments.

Zero Hours Measures: Extension to Agency Workers

The initial draft of the bill included complex provisions granting zero hours and low hours workers the right to a guaranteed hours contract, reasonable shift notice, and compensation for cancelled, shortened, or rescheduled shifts. Although there is no longer a proposal for an outright ban on “exploitative” zero contracts, a series of protections are set to be introduced.

Through consultation and mounting criticism by trade unions, these zero hours provisions have now been extended to include agency workers. New clauses in the bill would insert a new schedule into the Employment Rights Act 1996 which would mean that end hirers must also offer guaranteed hours to qualifying agency workers, although the minimum number of hours remains unconfirmed. Responsibility for providing guaranteed hours would be shared between employment agencies and end hirers.

Employment agencies would also be required to compensate workers for shifts cancelled or changed at short notice. This includes agency work arrangements made more than two months before the bill comes into force, as they may be eligible to recover certain backdated costs from end hirers. For arrangements made after the bill is enacted, cost recoveries would be subject to negotiation between agencies and end hirers.

Statutory Sick Pay

Statutory sick pay (SSP) has also been amended, with the original proposal to remove the lower earnings limit now scrapped during consultations.

This amendment seeks to achieve a balance whereby lower earners are excluded from the scheme, but equally are not financially better off receiving SSP than they are while at work. Therefore, workers earning less than the lower earnings limit (currently £123 per week) would have the right to SSP at 80 percent of their normal weekly earnings or the existing flat rate of SSP whichever is lower. This change would only take effect after further secondary regulations are published, likely coming into force in 2026.

The bill is also set to abolish the “waiting days” rule, meaning SSP would be payable from the first day of absence (instead of after the first three days, as is the current rule).

Fair Work Agency

It was previously stated in the bill that a Fair Work Agency (FWA) would be established. Further consultations have now expanded on this area and clarified the powers the FWA may hold, including the power to bring employment tribunal proceedings on an employee’s behalf and provide legal assistance during proceedings.

Initially, the FWA’s powers will take over specific areas that are already covered by existing enforcement agencies, with the addition of holiday pay enforcement for inaccurate records. The bill would also grant the government a broad authority to expand the FWA’s mandate to include other forms of work rights.

However, under the amended bill, the secretary of state would also gain new powers to issue underpayment notices for unpaid wages, holiday pay, and SSP. This could result in penalties of 200 percent of the sum due (capped at £20,000 per individual) being payable to the secretary of state, if the payment is not resolved within the timeframe.

The FWA is unlikely to be fully functional before Autumn 2026 at the earliest.

Right to Switch Off

There is speculation that the proposed “right to switch off,” which was featured in the original bill, may now be scrapped due to concerns that it will negatively impact business activities, however, no formal announcement has been made.

Day One Rights

New day one rights, such as for unfair dismissal, would apply from the first day of employment, although an “initial period of employment” would allow for a lighter-touch dismissal process. This period is expected to range from three to nine months, though the exact duration has not yet been announced and will be examined further in a separate consultation.

The changes to day one rights are unlikely to come into effect before Autumn 2026 at the earliest.

Bereavement Leave

Bereavement leave was set to be expanded in the original bill, as the amendments propose to grant one week of leave for all grieving employees. Further regulations are expected to set out eligibility for this leave and how the leave can be taken.

Currently, employees have a right to take two paid weeks off work for the death of a child under the age of eighteen or for pregnancy loss after twenty-four weeks of pregnancy. The bill may extend this to provide two weeks of leave for mothers and their partners who experience pregnancy loss before twenty-four weeks of pregnancy. The amendments to the bill could now mean the right could encompass a wider scope of employees who have experienced bereavements, including those who suffer pregnancy loss as a result of a miscarriage, ectopic pregnancy, molar pregnancy or termination, or unsuccessful in vitro fertilization (IVF) as a result of embryo transfer loss.

Next Steps

The bill has now progressed through its first and second readings in the House of Lords and will proceed to the committee stage on 29 April 2025. Subject to further consultations and possible amendments, the bill is expected to be given Royal Assent and to become the Employment Rights Act in the summer of 2025, with many changes expected to come into force from spring 2026. The bill will continue to undergo extensive parliamentary scrutiny before it can be passed. Consultations on most reforms are due later this year, and it is likely that more details will be addressed in secondary legislation. This topic is therefore likely to continue evolving for some time.

The current bill amendments signal a move towards enhanced agency worker protections, but they also impose substantial new responsibilities on employers, whether through day one rights, expanded leave entitlements, SSP changes, or compliance obligations under the FWA. Employers should continue to keep aware of the possible changes and may want to review their current policies and procedures to ensure their compliance with any changes.

Ogletree Deakins’ London office will continue to monitor developments and will provide updates on the Cross-Border, Global Reorganizations, and Leaves of Absence blogs as additional information becomes available.

Emma Thomson is an associate in the London office of Ogletree Deakins.

Lorraine Matthews, a practice assistant in the London office of Ogletree Deakins, contributed to this article.

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