Why has the Employment Rights Bill stalled?

Last week, the landmark Employment Rights Bill continued its journey through Parliament after the House of Commons rejected all the amendments proposed by the House of Lords.

These contested amendments included proposals on day-one unfair dismissal rights, reforms to zero-hour contracts, and trade union rules – issues that employers have been watching closely because they could directly affect hiring practices in the UK.

Now that the Bill remains in parliament, business owners are once again waiting for clarity on when these laws will take effect and what the final requirements will be.

What just happened in Parliament?

The Employment Rights Bill is still progressing through Parliament, but last Wednesday the Commons rejected several amendments proposed by the Lords which would have significantly watered down the Bill. 

As outlined in our Employment Rights Bill timeline, by 2027, the previous iteration of the Bill would have made it mandatory for employers to guarantee workers on zero-hour contracts more predictable hours. Employees would also be able to take their bosses to tribunal for unfair dismissal from their first day of employment. 

But on October 28th, the Lords voted to amend these proposals, and insisted on a six-month qualifying period for unfair dismissal protections instead.

The Lords also voted to introduce amendments to the move to automatically sign up trade union members to pay a political levy, and voted to maintain the current 50% turnout requirement for an industrial action ballot among trade union members.

As the Commons rejected all of the Lords amendments, the entire bill has now entered a game of ‘parliamentary ping pong’, which, funnily enough, is the technical term. 

Why does it matter for small employers?

The Employment Rights Bill had been lauded as a ‘once in a generation’ opportunity to overhaul working policies in the UK. In September, analysis by a leading thinktank revealed that the Bill would lead to greater protections for more than a million workers.

But, while it offered a host of measures to make work fairer, safer, and better paid for workers, employers have been watching closely due to the impact it would have on HR.

SMEs in particular have been anticipating making changes to contracts, policies, and onboarding processes to remain compliant with the expected changes to employment law as they are introduced in the upcoming years. 

Charlie O’Brien, Head of People at Breathe HR, said the delays made it difficult for employers seeking clarity on the future of hiring. “While the Bill has the potential to strengthen workplace protections, this ongoing limbo creates real challenges for small businesses and HR teams already grappling with myriad pressures”, said O’Brien.

“Until the political wrangling ends and the final shape of the law is confirmed, employers and HRs are left in the dark – unable to plan, invest, or prepare with confidence.”

If the Bill were successfully passed, employers would need to make accommodations for flexible working requests, offer zero-hour contract workers predictable hours, and also be prepared for employees to take paternity and unpaid parental leave from day one of the job.

Of course, these are major changes to how we work. Most employers would have already begun working towards these changes, and are now left in the lurch. 

Will the Employment Rights Bill go ahead?

In a bid to protect employers, the Lords turned down the measures they felt were too burdensome on SMEs. Yet in doing so, there is now a lack of clarity on where bosses stand. 

The Bill will return to the Lords this Friday for further deliberation, where peers will reconsider. If they can agree, then Royal Assent could still be achieved this month. But if they struggle to reach an agreement, bosses might face confusion into and after Christmas.

The Bill will not become law until the final wording by both Houses has been agreed. In this period of uncertainty, we’d recommend employers monitor any updates closely until the Government can call time on its game of ping-pong.