The Bill still needs to make its way through Parliament, and most reforms (including those to unfair dismissal) will not actually take effect until 2026.  

Regardless, the Bill makes sweeping changes that will reshape the employment law landscape. Here are the key highlights. 

Employees will have a new right not to be unfairly dismissed from day one. However, there will be a light touch procedure for dismissals during an ‘initial period’ which are shown to be for poor performance, misconduct, capability or some other substantial reason relating to the employee. The light touch process appears not to apply to redundancy dismissals.  

The exact nature of the ‘light touch’ procedure is still to be defined, but the Next Steps document says it could consist of simply holding a meeting.  

The length of the ‘initial period’ is also to be decided after further consultation but the government’s current preference is nine months. The termination date could then be up to three months after the initial period, as long as notice is given during the initial period, meaning that the light touch procedure can effectively apply to the employee’s first year. 

The document also makes clear that these changes won’t take effect until Autumn 2026 and, until then, the current two-year qualifying period remains in place. Substantial further consultation is expected between now and then, and major questions remain about the compensation regime for dismissals during the initial period, the procedure that will need to be followed, and the extent to which employees can challenge the reasons they are given for dismissal.  

The Bill strengthens the new duty to take ‘reasonable steps’ to prevent sexual workplace harassment, stretching it to a duty to take ‘all’ reasonable steps. What amounts to ‘all reasonable steps’ will be set out in regulations.  

Separately, the Bill would make employers explicitly liable for permitting a third party to harass an employee, if harassment happens in the course of employment and the employer did not take all reasonable steps to prevent this. The Bill would give workers the right to claim compensation for third party sexual harassment. Importantly, the Bill also makes employers liable for harassment by third parties on any ground – not just sexual harassment.   

The Bill includes a raft of changes designed to make it easier for trade unions to gain access to workplaces, secure statutory recognition and take industrial action in the event of a dispute. The Bill simplifies the recognition process by lowering membership thresholds and removing certain support requirements. Additionally, it requires employers to inform workers of their right to join a trade union, repeals restrictive legislation on strikes, and paves the way for electronic balloting. 

Under the current law, employers proposing 20 or more redundancies ‘at one establishment’ within a period of 90 days must go through a process of collective consultation before making any redundancies. The Bill removes references to ‘at one establishment’, meaning that employers would need to count redundancies across all sites/workplaces. 

The Bill makes it automatically unfair to dismiss an employee for refusing to agree to a change in terms, or to replace them with another employee on varied terms to carry out substantially the same role. There will be a very limited exception where the business is in financial distress (the details will be consulted on) but it’s clear that the Bill will severely restrict an employer’s ability to change contractual terms without employee buy-in. 

The Bill does not seek to ban ‘exploitative’ zero-hours contracts, as had been expected. This is, however, presumably the intended net effect of a range of provisions, including the introduction of a new requirement to offer guaranteed hours to a worker on a zero-hours or ‘low hours’ contract. 

These new rules are complex, but employers mustoffer guaranteed hours. The offer will need to be repeated after the end of every reference period – which is not defined, but a period of 12 weeks has been mentioned previously. Employees can, of course, decline the offer (or not respond) but the offer must be made regardless. It’s currently unclear how seasonal variations will be accommodated. The operational details will need to be fleshed out in further regulations which will be subject to consultation. 

The Bill also introduces a right to reasonable notice of a shift an employee is required to work, including the time, day and how many hours are to be worked. This duty will apply to workers employed on a zero-hours or minimum hours basis, as well as workers who do not have a set working pattern. There is also a right to reasonable notice of any change or cancelled shift. What is ‘reasonable’ notice will depend on the circumstances, but regulations will set out a specific minimum time. 

The Bill requires any refusal of a flexible working request to be reasonable, but the eight permitted business reasons for refusing a flexible working request will remain the same. There is no change to the penalty, which remains 8 weeks’ pay, capped at (currently) GBP 5,600. The introduction of a reasonableness test is a material change. The relatively low penalty means that it is not ground-breaking, but the change will make it easier for employees to challenge any refusal to allow flexible working. 

The Bill requires employers to publish action plans for closing their gender pay gaps (many already do). It also introduces a new requirement on employers to identify the providers/employers of contract workers when publishing their gender pay reports, though they won’t need to go as far as to include contract workers in their pay gap calculations. 

The Bill does not introduce compulsory ethnicity and disability pay gap reporting. The government still intends to extend the regime to cover disability and ethnicity – but that is happening later down the line as part of new legislation expected later in the parliamentary session (probably next year). 

As expected, the Bill removes the existing service requirements for paternity and parental leave, making these into day one rights. There will be a new right to at least one week’s bereavement leave (details to follow in regulations) and consideration given to whether paid carer’s leave should be introduced. 

The Bill also contains a power for the government to introduce stronger protections against dismissal for pregnant employees and family returners, but the details are left for further regulations. 

The government’s Next Steps document confirms that the government still plans to extend the equal pay regime to cover race and disability, and intriguingly says that it will set up a ‘regulatory and enforcement unit’ for equal pay. This may be a public body with powers to pursue claims which are notoriously difficult, costly and time consuming for individuals. 

Currently, statutory sick pay is payable from day four of sickness, and employees need to be earning above GBP 123 per week to qualify. The Bill scraps the waiting period so that SSP will become payable from day one of sickness and removes the lower earnings limit. These reforms are likely to happen relatively fast. 

The Bill creates a new state enforcement agency, likely to be called the Fair Work Agency. Initially, this new agency will not take over enforcement of discrimination law, family rights, the new rules about guaranteed hours or any other area of employment law. However, the Bill gives the government broad powers to extend the Fair Work Agency’s remit to cover other employment rights. 

The Bill sets out a range of enforcement powers, including powers to appoint enforcement officers, require individuals to provide information and enter business premises to get documents. This could be a big change towards more state enforcement of employment rights.  

The government does not expect to begin detailed consultations until 2025, seeking significant input from all stakeholders. This means that most reforms will not happen until 2026. The Next Steps document makes clear that unfair dismissal reform will definitely not take effect sooner than Autumn 2026.  

The most notable exceptions relate to sick pay and the trade union reforms that return the law to its position when Labour was last in power, such as repealing minimum service levels and certain strike requirements, which are expected to come in much sooner. 

The right to disconnect has not made it into the Bill at all. Instead, the government plans to create a new Code of Practice after further consultation, expected to start sometime next year. 

The Labour Party has been committed to abolishing the three-tier framework for employment rights for years but, despite this consistent position, this has proved to be another thorny issue which is so difficult to address that it has been left out of the Bill altogether. Instead, the Next Steps document makes clear that the government will start consulting with a view to eventually moving towards a single worker status, abolishing the distinction between workers and employees. 

The Bill represents a balance between employer and employee interests. Many of the most-publicised measures aim to improve the position for people on casual and low paid contracts, and others will be important for people looking to change jobs while starting a family. The bigger changes for most employers, however, are around unfair dismissal, sexual harassment, collective redundancies, flexible working, fire and re-hire and collective rights.  

In terms of practical steps to prepare, however, there is little employers can currently do. The Bill will now start its journey through Parliament and may be subject to various amendments. When the Bill is passed and the consultation documents are published, things may become clearer but – at least for now – it’s still mostly a case of wait and see.