The Employment Rights Bill (ERB) continues to progress through Parliament and will implement some of the biggest changes to employment law in decades. For reward, benefits and payroll teams, there will be some key changes to prepare for.
One of the most significant changes is the overhaul of statutory sick pay (SSP). The bill proposes SSP from day one of absence, eliminating the current three-day waiting period. The lower earnings limit will also be removed, bringing lower-earning employees in scope for SSP for the first time. This will be one of the first changes to be implemented, likely with effect from April 2026, and employers should review the budget impact of these changes by examining current absence rates and the cost of funding additional SSP.
The introduction of guaranteed hours is another significant change to prepare for. It is crucial to recognise that the changes extend beyond those on zero-hours contracts and will, in reality, have a far wider impact. Employers will be required to offer certainty to employees by making offers of guaranteed hours that reflect prior working patterns, and this will include agency workers. The reference period over which average hours should be calculated will be specified in regulations and is anticipated to be 12 weeks.
There will also be a new right to reasonable notice of shifts and a right to payment for shifts cancelled or curtailed at short notice. Employers can prepare for this by carrying out an audit of where flexible hours are being currently deployed and carrying out a snapshot of the impact of those becoming guaranteed contractual hours. It is likely that these changes will not come into force until 2027, giving employers some time to start planning systems, budgeting and resourcing. Organisations which have significant seasonal fluctuations in demand for staff will be the most significantly impacted by the changes and could consider new resourcing models, which could include more use of fixed -term contracts to respond to fluctuating demand.
The removal of the two-year qualifying period for unfair dismissal is probably the most high-profile change proposed by the bill and is likely to also come into place in 2027. The practical implication is that there is an increased risk of an employment tribunal claim from day one of employment. The government want employers to have the confidence to hire, but organisations have expressed concerns that these changes make it more difficult for them to take risks on recruitment. Updating probationary policies and procedures to ensure absolute clarity as to the required standard during the probationary period remains the best way to prepare for this change and protect the business from increased exposure to risk of claims.
Changes in policy should be accompanied by changes in operation, easing a transition period and protecting a business in the long-term often comes down to reviewing, replanning and re-strategising.
Karen Bates is head of employment and chair of the board at Foot Anstey
