Last month saw the usual flurry of employment law-related activity from the Government prior to the parliamentary recess. Significant amendments to the Employment Rights Bill have been agreed by the House of Lords at the Report stage, including a number of opposition amendments which would substantially water down key proposed reforms to unfair dismissal eligibility and zero hours (although these are unlikely to make it into the final Act). Various other (old and new) initiatives have also been announced. Employers will want to keep a close eye on developments when parliament returns in the Autumn (when the ER Bill will have its third reading in the Lords on 3 September, before returning to the Commons).
Key Government amendments to the ER Bill, agreed by the Lords:
- The original 'fire and rehire'
provisions in the Bill made it automatically unfair to dismiss an
employee for failure to agree a change in contractual terms of
employment, or to enable an employer to employ them or someone else
to carry out the same job on varied terms; the only exception was
if the changes were necessary for the employer's business
survival (and in that event the dismissal could still be ordinarily
unfair depending on the circumstances, to include what consultation
was carried out and incentives offered). The House of Lords agreed
significant and welcome Government amendments watering down these
provisions, confining the automatic unfairness provisions to cover
only 'restricted variations'.
Restricted variations are defined as reductions in pay or time off or changes to pension or hours, or such other variations as are set out in regulations; it will also be a restricted variation to add a clause permitting variation of any of these matters without the employee's consent (although it would seem that variation clauses in place before the law comes into force will remain valid). Dismissal as a means of making non-restricted variations only (for example, to location or duties) will not be automatically unfair, but tribunals will be required to consider the reason for the change, the consultation carried out and incentives offered, when determining whether a dismissal was ordinarily unfair.
A new provision has also been added rendering automatically unfair the dismissal of an employee in order to replace them with a non-employee worker (such as an agency worker or self-employed contractor) carrying out essentially the same job (unless the severe financial difficulties test is satisfied).
Consultation is due this Autumn and the provisions are expected to be brought into force in October 2026 (according to the Government's Roadmap – see our blog post here).
- A new clause renders void confidentiality
clauses/NDAs in agreements (including employment contracts
and settlement agreements) other than 'excepted agreements'
in so far as they attempt to prevent a worker from making
allegations or disclosures of information relating to harassment,
including sexual harassment, or discrimination in the workplace, or
an employer's response to the harassment/discrimination or the
making of the allegation/disclosure. It covers conduct engaged in
by the employer or a work colleague, or where the victim is
the worker or a colleague (therefore including conduct by third
parties) and, in contrast with current whistleblowing protection,
the provisions apply regardless of to whom the disclosure is made
(therefore including disclosure to the media). Regulations will
define the scope of 'excepted agreements' and will also set
out the categories of individual (eg lawyers) to whom workers can
still speak in those cases. The impact assessment published on 17 July
suggests that 'excepted agreements' will include where a
worker requests the inclusion of an NDA. Regulations may also
extend the protection beyond 'workers'.
The impact assessment acknowledges that this proposal may mean employers are less willing to offer financial settlements, fewer disputes are settled and there is a corresponding increase in tribunal claims.
The Roadmap predates and so does not address this change specifically, but it may well be brought in with the other changes to harassment law scheduled for October 2026. It was confirmed during the Lords debate and subsequent correspondence from Baroness Jones, here, that there will be consultation on the regulations required. (Note employers may need to make changes to template settlement agreements before then to reflect the Victims and Prisoners Act coming into force on 1 October 2025 – see our blog post here.)
- The ER Bill's provision for a new day one entitlement to
unpaid bereavement leave has been extended to cover early
pregnancy loss (which includes the ending of pregnancy
after less than 24 weeks in any way other than live birth, or the
failure of IVF embryo transfer) of a kind to be specified in
regulations. Details of the entitlement, including eligibility and
leave length (subject to a minimum of one week), will be the
subject of consultation and secondary legislation. The Roadmap
provides for consultation on bereavement leave in Autumn 2025 and
implementation in 2027.
- The Government also made amendments to the detail of the zero
hours provisions (not due to come into force before 2027),
including to allow employers required to make a guaranteed hours
offer to an agency worker to align the pay offered with that of
comparable direct hires (given that the agency workers are often
paid a premium).
Key non-Government amendments to the ER Bill agreed by the Lords:
- retaining a qualifying period for unfair dismissal, of six months, with the statutory probation provisions applying thereafter;
- providing that the requirement to make a guaranteed hours offer to zero or law hours workers would only apply "if requested by an employee" (although there is no detail as to how that request must be made) and that employers will not need to make payment for cancelling a shift if at least 48 hours' notice has been given (the original provision allowed for this period to be set by regulations at no more than 7 days);
- giving special constables a new right to (unpaid) time off to perform their duties;
- requiring regulations to be made to extend circumstances of unfair dismissal protection on whistleblowing and require employers to take reasonable steps to investigate protected disclosures where they are: larger employers (50 or more employees or over certain financial thresholds), financial services employers or an employer with vulnerabilities re money laundering or terrorist financing;
- extending the right to be accompanied at disciplinary/grievance meetings to allow for a certified professional companion (currently this is limited to trade union officials or a work colleague);
- requiring the government obligation to consult on the impact of Part 1 of the Act on SMEs;
- retaining the current law requiring a 50% turnout threshold in a ballot for industrial action and for trade unions to opt out their members from contributions to political funds unless they have expressly requested to opt in.
The Government is opposed to most of these amendments and they are therefore highly likely to be reversed when the Bill returns to the Commons. The Bill would then go back to the Lords for a period of 'ping pong' until agreement is reached. It is parliamentary convention that the House of Lords ultimately will not insist on their amendments where the Bill implements manifesto commitments. Depending on how long 'ping pong' lasts, this could delay Royal Assent for the Bill until after the party conference season, in mid-October.
Other consultations and proposals
The following updates were given in the course of the Lords debates (often to persuade opposition members to withdraw amendments on the same theme):
- the Government will publish its consultation on employment status by the end of 2025, including additional measures to strengthen protections for the self-employed. The Roadmap did not include a timeline for this consultation, which appears to have been brought forward in response to opposition amendments proposing new rights for freelancers (which were tabled then withdrawn). However, given the complexity of this issue, formulating its approach is still likely to take the Government a considerable time and therefore changes before 2027/2028 would be surprising;
- the Government is still planning on consulting in due course on AI in the workplace, including on 'how best to make the introduction of surveillance technology in the workplace subject to consultation and negotiation with trade union or employee representatives';
- the Government will be consulting on options for reform of non-compete clauses in employment contracts in due course. (The previous Conservative government had consulted on and proposed, but not had time to implement, a three month statutory limit on the length of non-competes (see here); this is the first comment from the Labour government on this issue);
- although proposed amendments to statutory paternity rights, a right to kinship leave, carer's pay and leave to care for seriously ill older children were not made, these issues will be considered as part of the parental leave regime review. (The call for evidence on the parental leave regime noted that the Government also intends to commence the right to (unpaid) bereaved partner's paternity leave in 2026). A timeline for the review of carers' entitlements is to be set out in autumn 2025 and a public consultation held in 2026;
- an "official-led" review has been commenced into the list of duties entitled to reasonable time off work; a summary of the findings will be published in the first half of 2026;
- the provision to allow the Secretary of State to bring employment tribunal proceedings instead of a worker and without their consent will be exercised through the Fair Work Agency in accordance with detailed guidance to be developed. The intention seems to be to provide for its use in cases involving a large group of workers, for example to clarify holiday pay entitlement or employment status;
- the HSE is reviewing the approved code of practice for the Workplace (Health, Safety and Welfare) Regulations 1992 to ensure it is fit for purpose for a modern workforce. This includes monitoring emerging evidence around the impact of extreme temperatures on workplaces. The HSE will bring forward detailed proposals on workplace temperature in due course and there will be an opportunity to comment;
- the Government will reflect on amending the current 6 week early conciliation period (which can be done by secondary legislation), in light of the Bill's doubling of the limitation period for most tribunal claims.
Other reform initiatives
- In addition to the call for evidence in relation to the parental leave regime review (closing on 26 August 2025), the Government has launched Making Work Pay: Call for evidence on unpaid internships, unpaid work trials, voluntary work and work shadowing. This will remain open for comments until 9 October 2025 with a response expected in February 2026.
- A call for evidence by the Commons Work and Pensions Committee on the reasons for the disability employment gap is open until 29 September 2025.
- The Government has finally published the independent report into the whistleblowing regime commissioned by the Sunak government in 2023. This contains various proposals as to possible changes, but as yet the Government has not confirmed its intentions.
- On 5 August the Government asked the Low Pay Commission to proceed with a consultation on how to achieve the removal of the discriminatory age bands for the adult minimum wage rate 'in the years ahead' and to use its findings to inform the 2026 rate recommendations.
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