Posted on: 17/04/2025

News

The Employment Rights Bill signals major UK workplace reform, expanding day one rights and protections for vulnerable workers. While businesses fear recruitment challenges and rising costs, opportunities emerge for fairer hiring, workforce resilience, and inclusive growth. Local Government must adapt positively to harness talent and support long-term workforce strategy.

By Lorna Wells LLM FCIPD is principal HR consultant at West Midlands Employers

The most significant reforms in UK Employment Law for decades are progressing quickly towards Royal Assent and continuing to gather complexity, content and much debate along the way.

What started in October 2024 as a 151 page document is now at Committee stage in the House of Lords, with a current total of 310 pages.

The Employment Rights Bill aims at rebalancing the employment relationship, frequent headlines about exploitative practices carried out by unscrupulous employers show just how easy it can be for the employer’s more significant power to be at the detriment of workers.

Often those suffering detriment and afforded the least protection are the most vulnerable, agency workers, those on zero hours contracts and workers in the ever growing gig economy. Much of the Bill focuses on protections here.

Another key aim of these substantial changes to the employment landscape is not only the focus on protection but also economic growth. By supporting more people into meaningful work, where the practices are regulated to ensure fairness, the Government hopes to grow a more stable and productive workforce, leading to a reduction on the welfare state and a wider benefit to the economy as a whole.

Central to this aim are the extension of day one rights for employees, and arguably the most significant of these is the removal of a qualification period for unfair dismissal. As a HR Practitioner with a keen interest in Employment Law, I would always advocate for fair treatment and without question any dismissal must follow principles of fairness, equity and a legally compliant procedure. Will these changes now force employers to take less risks when hiring new people, restricting opportunities for those who might be have been out of work for a long time for example?

Obviously existing equality legislation already prohibits discrimination at all stages of the employment lifecycle, but those opposed to the changes argue that the cumulative effect of day one unfair dismissal protection, the removal of waiting days for SSP, increases in NI contributions and increases in flexible working rights and leave will make it more difficult for employers, leading to tighter decisions at the recruitment stage. If this is the case it could force a review of recruitment practices and narrow not widen the view of who might be a potential ideal candidate, the exact opposite aim of the changes.

Widespread publicity of a survey by the recruitment company Reed, indicates that over half of employers surveyed are concerned by the rise in NI and almost one third (27%) had postponed new hires due to the increase. A pulse survey by Towers Watson in February of this year also indicated that the NI rise has made 33% of employers reduce planned salary increases, all of which can impact recruitment. So some concerns are already being translated into thought if not practice.

In an already tough recruitment market, with many professions in our sector struggling what is the flip side? The changes do have the potential to positively impact, by allowing those re-entering the labour market or wishing to change careers to have more protection with a new employer. This is certainly the time then to ensure that Local Government is marketing all the benefits of a career or careers in the sector and to harness new initiatives for retraining. Here at WME for example our Workforce Strategy for the region focused on supporting employers in the sector to balance the immediate and critical need for talent with the approach to supporting, growing and rewarding the existing workforce through a period of unprecedented change. 

Ignoring rather than embracing challenges could also adversely impact organisations. Last week saw the release of some fascinating analysis on the growth of companies who had successfully reduced their gender pay gap. The Chartered Management Institute and FTSE Womens Leaders Review looked at data between 2019 and 2024 and found that where organisations had made the biggest reductions in their gender pay gap, they also saw significant growth in nearly every case. Whilst our effectiveness in the public sector is rarely, if ever, measured in revenue growth, some key elements leading to growth, such as a stable workforce, increased productivity and effective service delivery is surely something that should be harnessed to add value in public services. With consultation now launched on extending pay gap monitoring to disability and ethnicity, and in the light of a worrying international challenge as to the purpose and definition of diversity, equality and inclusion using research like this to adapt positively to changes is a must.

The changes are not about to go away and with more complex areas of the Bill being subject to secondary legislation there is time to plan and use the changes to the best advantage we can.

So, what now? With so much still to unfold, there’s no doubt that the Employment Rights Bill marks a turning point – one that brings both challenge and opportunity. Rather than viewing these changes as a checklist of compliance, we can use them as a chance to reflect, adapt and strengthen our approach to recruitment and workforce planning.

By staying informed and open to change, we give ourselves the best chance to build fairer, more resilient organisations – ready not just to keep up, but to thrive.

Sources:

FTSE 350 firms that cut gender pay gaps saw double-digit revenue growth - CMI

Employment Rights Bill

2025 salary increases cut due to employer NI increases - WTW – study on reduding gender pay cap and growth