What is the Employment Rights Bill? A plain English guide for employers

If you've seen the Employment Rights Bill mentioned in the news and wondered what it actually means for your business, you're not alone. It's one of the most significant pieces of employment legislation in a generation — and for small and growing businesses in particular, the changes it introduces will require attention.

Here's what you need to know, in plain English.

What is the Employment Rights Bill?

The Employment Rights Bill was introduced by the Labour government in October 2024. It represents a substantial shift in the balance of rights between employers and employees — the most wide-ranging reform to UK employment law since the Employment Relations Act 1999.

The Bill has now completed its passage through Parliament and received Royal Assent in July 2025, becoming the Employment Rights Act 2025. However, most of its provisions will come into force gradually, through a series of commencement regulations. The government has indicated that the majority of changes will not take effect before 2026, with some later still.

That means the window to prepare is open — but it won't stay open indefinitely.

What are the main changes?

Day one unfair dismissal rights. This is the most significant change for most employers. Currently, employees need two years' continuous service before they can bring an unfair dismissal claim. Under the new Act, that qualifying period is removed. Employees will have the right not to be unfairly dismissed from their first day of employment.

The government has confirmed there will be an initial statutory probationary period — expected to be nine months — during which a lighter-touch dismissal process will apply. The detail of what that looks like in practice is still being worked through in secondary legislation.

Strengthened protection against fire and rehire. The practice of dismissing employees and re-engaging them on less favourable terms is being significantly restricted. Employers will only be able to use this approach in very limited circumstances — where the business is facing genuine financial difficulties that threaten its viability — and even then, the process will be tightly regulated.

Flexible working as a default. The Act strengthens flexible working rights further, building on changes introduced in 2024. Employers will need stronger justification to refuse flexible working requests, and the grounds for refusal are being narrowed.

Strengthened trade union rights. The Act introduces significant changes to trade union recognition, access rights, and industrial action balloting. For most small businesses without recognised unions this will have limited immediate impact, but it signals a broader shift in the legislative environment.

Zero hours contract reforms. Workers on zero hours contracts will have the right to request a contract that reflects their regular hours — the hours they actually work — after a set reference period. Employers will also be required to give reasonable notice of shifts and to compensate workers for late cancellation.

Extended redundancy and family leave protections. Protections for employees on maternity leave and other forms of family leave are being extended, making it harder to make these employees redundant.

What does this mean for small businesses?

The removal of the two-year qualifying period for unfair dismissal is the change that will affect most small employers most immediately. It means that every dismissal — including dismissals during probation — will need to be handled with appropriate process and documentation. The days of dismissing someone in their first two years without detailed justification are coming to an end.

This doesn't mean you can't manage performance, address conduct issues, or exit someone who isn't working out during probation. It means you need to do it properly — with clear communication, documented concerns, and a fair process — from the very start of employment.

The message for employers

Start now. Review your employment contracts and probationary period clauses. Audit your onboarding and performance management processes. Make sure your managers understand what fair process looks like and are equipped to have difficult conversations early. The businesses that will feel the least disruption from these changes are the ones that already have good HR foundations in place.