The Employment Rights Bill: where are we now?

The long-anticipated Employment Rights Bill (the “Bill”) has taken a significant step forward, passing its third reading in the House of Lords. It will now go back to the House of Commons, and it’s expected to pass into law in the coming weeks, although many of the key reforms will not take effect until 2026, or even 2027. We reported on the government’s roadmap for implementing the changes, including the timeframes for implementation, here.

The House of Lords has made several amendments to the Bill which will now be discussed and voted upon by the House of Commons. Given its significant majority, the Government has a wide discretion on whether to accept the amendments or not.

The amendments made by the House of Lords affect three key areas of the Bill.

Dismissal and re-engagement

The Bill, as originally drafted, significantly restricted the circumstances in which an employer could use the practice of dismissal and reengagement (otherwise known as “fire-and-rehire”) to implement contractual changes.

The House of Lords has proposed a watering down of this provision that would see the restrictions on fire-and-rehire apply only in the context of changes relating to, broadly: pay, pension, hours of work and holiday entitlement. Where the proposed change relates to something else, an associated dismissal may be fair if the employer has followed a six-point checklist, including extensive consultation and, where appropriate, offering inducements.

This amendment is expected to gain approval in the House of Commons and form part of the final version of the Bill. However, in practice, it’s unlikely to be of significant reassurance to schools where fire-and-rehire is only likely to be considered in the context of substantial changes to key terms of employment, such as those to which the restrictions on fire and rehire will continue to apply. Schools will still need to show that they are acting in response to financial difficulties, affecting their ability to carry on business as a going concern, to avoid an automatic unfair dismissal in the context of dismissals resulting from changes impacting pay, pension, hours of work and holiday entitlement.

Zero-hour workers

Under the original Bill, employers would be required to offer zero and low hour workers guaranteed hours based on their average hours worked over a 12 week period (anticipated to be 12-weeks). Even if a worker declines this offer, the employer must continue to re-offer the guaranteed hours at the end of every subsequent reference period.

The House of Lords have proposed an amendment that would instead require employers to offer guaranteed hours only to workers who request them.

This amendment provides a sensible middle ground in offering greater security for zero and low hours workers who seek guaranteed hours, while reducing unnecessary administrative burden for employers. It would offer some reassurance to schools who may be concerned about the prospect of having to offer guaranteed wording hours to zero-hours staff on a recurring basis. It is unclear, however, whether this amendment will be accepted by the House of Commons.

Unfair dismissal as a day one right

One of the key provisions of the original Bill was to make unfair dismissal a ‘day one right’ by removing the current qualifying period of two years and introducing an ‘initial period’ that allows for a ‘light-touch’ dismissal process, anticipated to apply during the first nine months of employment.

The House of Lords have reinstated a qualifying period of six months before an employee can claim unfair dismissal. Given that the ‘day one right’ to unfair dismissal was a manifesto pledge, it’s unlikely that this will be accepted by the House of Commons.

So, what happens now?

The Bill will return to the House of Commons, where members will vote to either accept or reject the amendments made by the House of Lords. If amendments are rejected, the Bill will be sent back to the House of Lords for further consideration and scrutiny. As noted above, given the Government’s sizeable majority, it’s likely that the House of Lords will, ultimately, back down in relation to any rejected amendment.

Impact on schools

We are set to see the most significant reform to employment rights over the next two years and, while the specifics remain unclear, it’s important that schools begin to review their current policies and procedures and keep a watchful eye on these amendments to ensure they are well prepared for the forthcoming changes.