The Labour government has proposed sweeping updates to its Employment Rights Bill, with more than 250 amendments reportedly added since the draft was first unveiled in October 2024.
The proposals represent one of the most significant shake-ups of UK workplace law in recent years — and many of the measures are likely to have direct implications for small and medium-sized employers.
Agency Work Rules Tighten — But With Some Grey Areas
One of the more immediate shifts concerns how businesses engage temporary staff. Under the revised proposals:
- Agency workers must be compensated if their shifts are cancelled or changed at the last minute
- Employers will need to provide clear contracts stating the number of guaranteed hours per week
However, the government hasn’t yet defined what constitutes “short notice”, which may leave some confusion for both businesses and staffing agencies during implementation.
Clampdown on ‘Fire and Rehire’ Tactics
Controversial dismissal-and-reengagement practices are set to attract tougher sanctions:
- Penalties for breaching dismissal rules could double from 90 to 180 days’ pay
- The rules would apply to both “fire and rehire” and “fire and replace” scenarios
This is likely to raise the stakes for businesses navigating restructures or cost-cutting exercises — especially those without dedicated HR teams or legal advisors.
New Employment Rights from Day One
Labour’s promise to boost job security is taking clearer shape, with a proposed package of day-one rights for all employees, including:
- Statutory sick pay
- Parental leave
- Protection against unfair dismissal
In addition, mothers returning from maternity leave would be shielded from dismissal for six months after returning to work, a move aimed at reducing workplace discrimination.
Probation Period Extended — But Codified
While trade unions had called for a six-month cap, the government is leaning towards a formal nine-month probation period for new hires. A consultation is expected, but the shift is intended to provide employers with more time to assess suitability — while still offering new staff early-stage legal protections.
Umbrella Company Workers Brought Into Scope
The bill also targets the often-overlooked world of umbrella employment. Workers engaged via umbrella companies could soon receive the same rights and protections as those working through recruitment agencies, including entitlement to holiday pay and written terms.
Importantly, enforcement is on the agenda too — non-compliant umbrella companies could face new regulatory action.
The Missing Right to Disconnect
Not everything from Labour’s original proposals has survived into this latest version. The much-discussed “right to switch off” — designed to give employees freedom from out-of-hours work communications — has been dropped.
According to a government source quoted in The Times, the decision was taken to avoid adding “unnecessary compliance costs” for businesses.
Other Key Measures Still in Play
A number of major changes remain on track from Labour’s earlier draft:
- Scrapping the two-year wait for unfair dismissal protection — rights would start from day one
- Making flexible working the default, where it’s feasible
- Requiring businesses to publish action plans on:
– Tackling gender pay gaps
– Creating a Fair Work Agency to consolidate enforcement and provide guidance for employers on new obligations
What Next for SMEs?
With the Employment Rights Bill still evolving, it’s worth keeping a close eye on developments — particularly for SMEs without in-house HR.
While the changes aim to improve protections for workers, they will also require employers to adapt processes, contracts, and workplace culture in ways that may demand time, money, and legal clarity.
We’ll continue to monitor the bill’s progress and provide sector-specific updates as more detail becomes available.
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