The Employment Rights Bill (ERB) represents the most significant overhaul of UK employment law in decades. With Royal Assent expected in Autumn 2025, the clock is ticking for public sector employers to prepare for its wide-ranging reforms, which aim to strengthen worker protections and modernise workplace practices.
The urgency is underscored by the Government’s implementation roadmap, published in July 2025, which sets out a phased but ambitious timetable for change. (See our summary timetable for when the proposed changes are due to take effect.)
While the reforms apply across all sectors, the public sector faces unique challenges in implementation due to its scale, statutory duties, and budgetary constraints. From late 2025 through to 2027, organisations, including local authorities, NHS Trusts, and education providers, will need to undertake substantial operational and policy changes. This includes updating employment contracts, revising HR policies, and adapting internal processes to meet new legal standards.
The ERB reflects a broader political and social agenda focused on fairness, transparency, and giving workers a stronger voice. For public sector employers, this means not only legal compliance but also aligning with public expectations around ethical employment practices.
This article outlines some of the most significant changes and offers a practical roadmap to help public sector employers prepare for the transition.
1. Unfair Dismissal Rights from Day 1 – the Big Headline
The Employment Rights Bill will remove the current two-year qualifying period for ordinary unfair dismissal claims, allowing employees to bring such claims from day one of employment. This marks a significant shift for public sector employers, who may face a notable increase in tribunal claims, particularly in large, unionised workforces. It’s worth noting the ERB proposes an extension of the time limit for bringing most employment tribunal claims from three months to six months.
To balance Day 1 unfair dismissal rights, the ERB proposes a lighter-touch dismissal process during a new statutory ‘initial period’, which is likely to be for nine months. This lighter process may involve a meeting with the employee (with the right to be accompanied) and applies only to dismissals for conduct, capability, illegality, or some other substantial reason. The less onerous process does not apply to redundancy. Dismissals must occur within three months of the end of the initial period, with notice given during that time.
Employees dismissed under this process may be subject to a reduced compensation regime, though details are pending consultation. Importantly, the right to claim unfair dismissal will not apply where employment has been agreed but not commenced, except in cases of automatic unfair dismissal, or where dismissal is based on political opinion or a spent conviction.
Day 1 unfair dismissal rights with changes are expected to take effect in 2027 following an earlier consultation period.
Action points:
- Exercise greater caution in recruitment decisions ensure thorough vetting and clear role expectations from the outset.
- Monitor staff performance closely during probationary periods with structured reviews and documented feedback to support future decisions.
- Address concerns promptly rather than deferring action to ensure issues are managed within the proposed statutory, ‘initial period’ and to reduce legal risk.
2. ‘Ban’ on ‘Exploitative’ Zero Hours Contracts – the Other Big Headline
The ERB doesn’t ban zero-hours contracts, but it will introduce significant restrictions aimed at curbing what the Labour Government describes as exploitative use. This will affect public sector employers, particularly in health and social care.
Employers must offer a guaranteed hours contract to zero-hours or low-hours workers if actual hours worked exceed contractual minimums during a reference period (anticipated to be 12 weeks). This will also apply to agency workers with the end hirer (employer) generally responsible for making the offer.
Exceptions where the requirement to offer guaranteed hours will not apply is where a worker resigns, is fairly dismissed or where it has been agreed that a collective agreement disapplies the provisions. Furthermore, use of zero hours contracts may still be permitted where a fixed term arrangement is deemed to be reasonable (yet to be defined). Workers will gain a statutory right to request predictable hours. Employers must provide reasonable notice of shifts and cancellations, with compensation payable for late cancellations.
The zero hours changes are due to take effect in 2027 following earlier consultation.
Action Points:
- Audit and review zero hours and low hours contracts including for agency staff, to identify roles likely to trigger the guaranteed hours requirement.
- Strengthen Workforce Planning to reduce reliance on zero-hours arrangements and prepare for predictable working pattern requests.
- Engage unions consider negotiating updated collective agreements with recognised trade unions to allow more flexibility in the use of zero hours contracts.
3. Strengthening Protections Against Sexual Harassment and NDA’s
The ERB builds on existing legislation to create a more robust framework for preventing sexual harassment in the workplace. Since 26 October 2024, employers have been under a proactive duty to take reasonable steps to protect staff from harassment. Failure to meet this duty can result in increased compensation awards of up to 25% in tribunal claims.
The ERB raises this standard to all reasonable steps and extends the duty to cover harassment by third parties, including customers, patients, and service users. This change is particularly relevant for public sector employers—such as local authorities, NHS Trusts, and education providers—where staff often interact with the public and vulnerable groups. The risk of third-party harassment is higher, and the legal duty to prevent it is now more demanding.
The Bill also proposes new restrictions on the use of NDAs (non-disclosure agreements), particularly those that prevent employees from speaking out about harassment or discrimination. Note the new provision only deals with harassment or discrimination by the employer or colleagues, excluding third-party harassment. Public sector employers should review settlement agreements, template clauses, and legal guidance to ensure NDAs are used lawfully and appropriately.
Action Points:
- Update anti-harassment policies and training to cover third-party harassment, with clear guidance for staff interacting with the public.
- Review and implement the Equality and Human Rights Commission’s technical guidance (September 2024) to meet the “all reasonable steps” duty.
- Audit and revise settlement agreements to ensure NDAs comply with the Bill’s restrictions and do not prevent disclosure of harassment or discrimination.
4. Flexible Working: Moving Towards a New Default
Since 6 April 2024, employees have had the right to request flexible working from day one of employment, with up to two requests allowed per year under a statutory process. The Government now proposes to go further by making flexible working the default, unless the employer can show it is unreasonable.
Under the new legislation, employers will still be able to refuse requests based on one or more of the eight existing statutory grounds (such as the burden of additional costs or the inability to reorganise work). However, they must explain why they consider the refusal reasonable.
This reform is not expected to create significant new obligations for employers. The penalty for breach remains capped at eight weeks’ pay.
However, public sector employers, particularly local authorities, NHS Trusts, and education providers, face unique challenges in implementing flexible working. Many roles involve frontline service delivery, fixed shift patterns, or statutory duties that limit flexibility. However, the expectation to accommodate flexible working wherever possible is increasing, especially in the context of recruitment and retention pressures.
Balancing operational needs with employee expectations will require careful planning, clear communication, and consistent decision-making.
Action Points:
- Review flexible working policies, to reflect the day 1 right and prepare for the shift to flexible working as the default.
- Identify roles where flexible arrangements may be operationally challenging, and document the rationale.
- Train managers to assess requests, fairly and consistently, and to explain refusals clearly with reference to statutory grounds.
5. Fire and Re-hire Restrictions
The ERB proposes sweeping restrictions on “fire and rehire”, where employers dismiss staff who reject contractual changes and re-engage them (or others) on less favourable terms. Under current law, such dismissals can be justified by citing a substantial business reason. The ERB would make this automatically unfair (other than for narrow reasons of financial difficulty) if the change involves a “restricted variation”—such as reductions to pay, pensions, hours, holidays, or the addition of flexibility clauses.
Public sector bodies, especially local authorities, would be given a specific narrow exemption to the automatic unfair dismissal rule. This defence is only available where financial difficulty affects the delivery of statutory functions for public bodies, and for local authorities where a formal intervention direction is in place.
Currently, employers are expected to follow the Statutory Code of Practice on Dismissal and Re-engagement, which outlines a framework for meaningful consultation. This includes explaining the rationale, sharing information, exploring alternatives, and allowing time for feedback. While not legally binding, tribunals use the Code to assess fairness of dismissals. The ERB would remove this Code’s relevance for restricted variations, but an updated version would be applicable to other contractual changes.
Action Points:
- Review any planned contractual changes, will they occur under the new rules and trigger corresponding risks or do you want to time changes earlier.
- Document clearly to confirmfinancial pressures and statutory obligations
- Engage early with legal advisers and trade unions, to explore alternatives and ensure compliance with the ERB’s new standards.
6. Collective Redundancy Consultation: Expanded Duty to Consult
The Employment Rights Bill will strengthen protections for employees in collective redundancy situations by reversing the legal position established in the Woolworths case amongst other measures that include increasing the maximum on protective awards.
The Woolworths case arose during the retailer’s collapse, when it was argued that the duty to collectively consult should apply across the whole organisation, rather than at individual store level. The European Court of Justice ruled that the threshold of 20 or more redundancies applied per establishment, meaning stores with fewer than 20 staff were excluded from consultation. This significantly reduced the scope of the employer’s collective consultation duty.
Under the new legislation, this threshold will apply across the entire organisation, not just individual sites or departments. This change increases the likelihood that public sector employers, particularly those with multiple service locations or departments, will be required to engage in collective consultation, even where redundancies are spread across different teams or sites.
Public sector employers often manage restructures across dispersed services, such as schools, care homes, or administrative offices. Under the new rules, these redundancies may now need to be aggregated for consultation purposes, increasing the administrative and legal burden.
Action Points:
- Review redundancy planning processes ensuring consultation thresholds are assessed organisation-wide, not by site or department.
- Update internal guidance and HR templates to reflect the new legal threshold.
- Engage early with recognised trade unions or employee representatives where collective consultation may be required.
7. Outsourcing, TUPE and Two-Tier Workforce Proposals
The Employment Rights Bill will amend the Procurement Act 2023 to prevent a “two-tier workforce” in outsourced public services, where ex-public sector employees and private sector staff work side by side on unequal terms. Clause 36 enables future regulations requiring similar treatment for both TUPE-transferred workers and new hires. These powers may apply to outsourced services such as facilities management, social care, IT, catering, and cleaning across local authorities, and NHS bodies.
Reviving the principles of the former “Two-Tier Workforce Code,” the reforms aim to ensure parity in employment conditions. Contractors may be required to maintain terms for transferred staff and avoid disadvantaging directly employed workers. A statutory Code of Practice is expected to provide practical guidance.
Early planning will help avoid compliance risks and ensure smooth workforce integration.
Action Points:
- Audit existing outsourcing contracts to identify any risk of unequal treatment between transferred and directly hired staff.
- Update procurement templates to anticipate future requirements on workforce parity.
- Engage early with contractors to align expectations around fair treatment and employment standards.
8. Pay Reporting and Menopause Action Plans
The Employment Rights Bill proposes new mandatory workforce reporting duties for employers with 250 or more employees, with a particular focus on enhanced pay transparency and menopause-related workplace support.
For public sector employers, this builds on existing obligations under the Public Sector Equality Duty, but introduces more specific, standardised, and publishable reporting expectations. Employers with 250+ employees will be required to publish menopause action plans as part of an Equality Action Plan, which will also promote gender equality alongside existing gender pay gap reporting duties.
The Roadmap indicates these measures will be introduced for employers who meet the 250 threshold on a voluntary basis from April 2026, before coming into force in 2027. There may be pressure on smaller public bodies to adopt voluntary reporting, especially where they deliver frontline services or have significant female workforces.
Action Points:
- Audit current pay data and ensure systems can report by role, grade, and employment type.
- Develop or review menopause support policies, including guidance for managers, flexible working options, and access to occupational health.
- Prepare for publication of workforce data and consider voluntary reporting even if below the threshold, especially where values or sector expectations align.
9. Trade Unions, Collective Bargaining, and Strengthening Employee Voice
The Employment Rights Bill introduces a range of measures to enhance trade union access and strengthen employee voice. These changes are especially relevant for public sector employers, where union engagement is often central to workforce relations.
The ERB introduces a series of proposals aimed at strengthening trade union rights and promoting employee voice. A key measure is the creation of a new duty on employers to inform employees of their right to join a trade union, with this information to be included in the contract of employment or offer documentation. The Bill also enhances unions’ rights to access workplaces, including digital platforms, to engage with existing members and recruit new ones. Support for collective bargaining is set to be reinforced, with potential reforms to simplify the process of trade union recognition. In addition, the Bill seeks to clarify and potentially reform the rules governing industrial action, including notice periods and ballot procedures.
Action Points:
- Prepare to employment contracts and onboarding materials to include clear information about trade union membership rights.
- Engage proactively with recognised unions and prepare for increased expectations around access and consultation.
- Strengthen employee voice mechanisms, such as staff forums or representative bodies, particularly in non-unionised areas.
10. Fair Pay Bodies and Sectoral Standards
Among the ERB’s more ambitious proposals is the creation of Fair Pay Bodies, including sector-specific institutions designed to set minimum standards for pay, working hours, and core employment terms. The Roadmap positions these bodies as a key mechanism for advancing collective voice, particularly in sectors where public sector employers play a commissioning or oversight role.
The Adult Social Care Fair Pay Body is identified in the Roadmap as the first to be established, with implementation expected from early 2026. This has direct implications for local authorities and NHS bodies involved in care commissioning, who may need to align future contracts with sector-wide standards. The Roadmap also signals potential expansion into facilities management and school support services, where many roles—such as cleaners and caterers are outsourced and may fall outside collective agreements. Public sector employers may therefore face increased scrutiny over procurement practices and workforce conditions in these areas.
The proposed Fair Work Agency (FWA) is expected to play a central role in supporting the development and operation of Fair Pay Bodies. The FWA is anticipated to act as a coordinating and advisory body monitoring compliance, and providing guidance to employers and workers.
- Assess commissioning and procurement processes to ensure readiness for alignment with Fair Pay Body standards.
- Monitor developments from the Fair Work Agency, including sector-specific guidance and implementation timelines.
- Engage with workforce providers to review employment terms and promote fair work principles across outsourced roles.
Looking Ahead: Preparing for Change
Employers should act now to review policies, update procedures and engage with staff and unions to ensure readiness. Organisations can also take part in ERB consultations by submitting responses via the GOV.UK website, helping to shape reforms that reflect practical workplace realities.
We will continue to publish guidance articles and deliver training including webinars to support employers in understanding and implementing the changes. Please sign-up to our mailing list if you wish to receive updates and invitations to upcoming events.
This article reflects the current proposals and commentary surrounding the Employment Rights Bill as of August 2025. Some provisions remain subject to consultation and final legislative approval. Employers should seek legal advice before making significant changes to policy or practice.
Labour Government’s Roadmap Timetable for Changes in the Law:
| Measure (or change in the law) | Date when the Government has said the change will take effect |
| Repeal of the Strikes (Minimum Service Level’s) Act 2023 | At Royal Assent/ soon afterwards |
| Repeal of the great majority of the Trade Union Act 2016 | At Royal Assent/ soon afterwards (With some provisions to be repealed via commencement order at a later date) |
| Removing the 10 year ballot requirement for trade union political funds | At Royal Assent/ soon afterwards |
| Simplifying industrial action notices and industrial action ballot notices | At Royal Assent/ soon afterwards |
| Protections against dismissal for taking industrial action | At Royal Assent/ soon afterwards |
| Collective redundancy protective award, doubling the maximum period of the protective award from 90 days to 180 days | April 2026 |
| Day 1 paternity leave and unpaid parental leave | April 2026 |
| Additional whistleblowing protections to encourage reporting of wrongdoing without fear of retaliation | April 2026 |
| Fair work agency body established to enforce rights and promote fairness in the workplace | April 2026 |
| Statutory sick pay – removing the lower earnings limit and waiting period | April 2026 |
| A package of trade union measures including simplifying trade union recognition process and electronic and workplace balloting. | April 2026 |
| Limiting fire and rehire practices | October 2026 |
| Public sector “exception provisions” for fire-and-rehire – evidence of financial difficulty and compliance with intervention directions | October 2026 |
| Procurement – two-tier code | October 2026 |
| Requiring employers to take “all reasonable steps” to prevent sexual harassment of employees | October 2026 |
| Introducing an obligation on employers not to permit the harassment of their employees by third parties | October 2026 |
| Employment tribunal time limit changes | October 2026 |
| Tightening tipping law | October 2026 |
| A package of trade union measures including duty to inform workers of their right to join a trade union, strengthening trade unions’ right of access to the workplace, new rights and protections for trade union representatives, and extending protections against detriments for taking industrial action | October 2026 |
| Launch of a Fair Pay Agreement Negotiating Body for adult social care | October 2026 |
| Mandatory gender pay gap and menopause action plans | Introduced on a voluntary basis in April 2026 to become mandatory in 2027. |
| ‘Day 1’ right to protection from unfair dismissal | 2027 (Consultations due to begin in Summer 2025 and continue into early 2026) Following House of Lords amendments, this may instead become a 6-month qualifying period with simplified dismissal procedures during the first 9 months. |
| Ending the exploitative use of zero hours contracts and applying zero hours contracts measures to agency workers | 2027 |
| Public sector employers will be required to offer guaranteed minimum hours and compensation for cancelled shifts, including for agency staff. | 2027 |
| Improving access to flexible working | 2027 |
| Collective redundancy – changes to the collective consultation threshold | 2027 |
| Enhanced dismissal protections for pregnant women and new mothers | 2027 |
| Rights for pregnant workers | 2027 |
| Blacklisting | 2027 |
| Industrial relations framework | 2027 |
| Regulation of umbrella companies | 2027 |
| Further harassment protections, specifying reasonable steps which will help determine whether an employer has taken all reasonable steps to prevent sexual harassment | 2027 |
| Bereavement leave | 2027 |
If wishing to discuss this further please get in contact with Laura McFadyen in our Employment team or call us on 0345 540 5558.