How the Employment Rights Bill Will Impact UK Businesses – What Employers Need to Know

The UK government introduced the Employment Rights Bill on October 10, 2024, marking substantial changes to worker protections and employer obligations. 

These modifications will reshape how businesses operate and manage their workforces. This article examines the key provisions and their implications for employers.

Key Provisions of the Employment Rights Bill

The bill introduces several major changes to employment law. 

Most notably, workers will receive immediate protection against unfair dismissal from their first day of employment. This removes the previous two-year qualifying period for bringing claims, substantially changing the employer-employee relationship from the start of employment.

The legislation also strengthens family leave and bereavement provisions. 

Workers will have immediate access to paternity, parental, and bereavement leave from day one. This represents a shift from current regulations, which often require minimum service periods before such benefits become available.

Statutory Sick Pay (SSP) sees significant reform under the bill. Workers will receive SSP from their first day of illness, eliminating the waiting period. 

The bill also removes the lower earnings limit for SSP eligibility, extending coverage to more workers.

For workers on variable hours, the bill introduces new job security measures. 

Employers must provide guaranteed hours to workers who maintain regular patterns of work. The legislation also stops 'fire and rehire' practices, where employers dismiss staff and re-employ them on reduced terms.

Implications for Employers

The Employment Rights Bill creates substantial operational changes for businesses across the UK. 

These changes touch every aspect of human resources management and require careful consideration by employers.

Immediate Policy Updates

HR departments face significant work in policy revision. Removing service requirements for unfair dismissal claims means organisations must strengthen their documentation practices from day one of employment. 

Performance management processes will need clear, objective criteria with consistent application across all departments. 

Companies must establish thorough disciplinary procedures with comprehensive documentation from the moment an employee starts work.

Recruitment processes will require stronger reference checking and verification methods, while onboarding programmes need careful revision to include detailed performance expectations. 

This all means that organisations using automated systems, like RefNow, for HR tasks can maintain consistent documentation while reducing administrative burden. These systems help create reliable audit trails for employment decisions and maintain compliance records.

Financial Planning Requirements

The financial implications of the bill extend far beyond direct costs. 

Companies must account for increased SSP expenditure due to day-one eligibility and the removal of earnings limits. 

Insurance premiums for employment practices liability coverage will likely rise, and HR departments will require additional staff time to manage expanded leave rights.

Organisations should also budget for updating HR software and systems, along with legal consultation fees for policy updates and compliance reviews. 

Small and medium-sized businesses may find these costs particularly challenging. 

Operational Adaptations

Day-to-day operations will need significant adjustments under the new legislation. 

Scheduling systems must accommodate new leave rights, while payroll systems require modifications for revised SSP calculations. 

HR teams will need extra resources to manage increased leave requests, and managers will require new approaches to handling disciplinary matters. Companies must enhance their documentation systems to track leave entitlements accurately.

Risk Management Considerations

The new legislation brings fresh risk management challenges for organisations. 

With higher exposure to unfair dismissal claims, companies need stronger decision-making processes. Extended leave rights will create scheduling and coverage challenges for many departments. 

The restrictions on zero-hours contracts will affect workforce flexibility, while new SSP rules will change how companies approach absence management.

Training and Development Needs

Staff training requirements will increase significantly under the new rules. 

Line managers need thorough education on new dismissal risks, while HR teams require detailed knowledge of revised procedures. Payroll staff must understand modified SSP calculations, and senior leaders need comprehensive briefings on strategic implications. 

Every employee should receive training on their new rights and responsibilities.

Communication Strategy Requirements

Clear communication will become more critical than ever. 

Companies must completely revise their staff handbooks and update employment contracts to reflect the new requirements. New policies need careful explanation to all employees, with regular updates during implementation to maintain compliance. 

Management teams need clear guidelines to ensure consistent application of the new rules across all departments.

Technology and Systems Impact

The technological infrastructure of most businesses will require updates to accommodate these changes. HR software must reflect new rules, while time and attendance systems will also need modification. 

Leave management systems will require reconfiguration, and documentation processes will need to be enhanced. 

Reference-checking systems must become more robust to meet the increased demands for verification and compliance.

RefNow's automated reference-checking system provides particular value in this area, offering consistent, compliant processes for verifying employment history while reducing administrative time. 

This type of automation will become increasingly valuable as companies work to implement and maintain compliance with the new requirements.

Preparing for Changes

The government plans to implement these reforms gradually through 2026, with a consultation phase throughout 2025. 

This timeline allows businesses the time to prepare, but action should start now.

Organisations can take several practical steps:

First, review all employment contracts and handbooks. Update these documents to reflect the new rights and protections. Pay special attention to probationary periods and dismissal procedures.

Second, assess current HR systems and processes. 

Consider automated solutions for managing reference checks and employee documentation. For example, RefNow's automated reference-checking software can reduce checking time while maintaining high standards of verification.

Third, consult with HR advisors or legal counsel to understand specific implications for your business. Different sectors may face varying challenges under the new legislation.

Looking Forward

The Employment Rights Bill represents a substantial change in UK employment law. 

While these changes may initially create challenges, they also offer opportunities to build stronger, more secure workplaces.

Businesses that start preparing now will be better positioned when the changes occur. 

This includes reviewing current practices, updating systems, and considering technological solutions to streamline HR processes.

By taking a systematic approach to implementation, organisations can create fair, efficient workplaces that benefit both employers and employees. 

The key lies in understanding the requirements and making appropriate adjustments before the legislative deadlines arrive.

As you prepare for these significant employment law changes, ensuring your reference-checking processes are compliant and efficient will be crucial. 

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RefNow's automated reference-checking platform can help you reduce administrative burden while maintaining robust verification standards. 

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Our system provides a complete audit trail, GDPR compliance, and fraud protection—exactly what you'll need in this changing regulatory landscape. 

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