In the wake of the Budget, attention has returned to the Employment Rights Bill (ERB), one of the government’s most significant employment law reforms in recent decades. While the ERB is expected to pass, it is facing scrutiny and resistance as it progresses through parliament.

Introduced in October 2024 under Labour’s Plan to Make Work Pay, the ERB is designed to expand employment protections, improve job security and strengthen enforcement mechanisms. However, its passage through the House of Lords has sparked debate on how these reforms should be implemented and at what pace.

Peers' concern over changes to ERB proposals

Debate in the House of Lords has focused on several key provisions, particularly three that would mark major changes from the current legal framework:

1. Unfair dismissal

The Lords have challenged the government’s plan to make protection from unfair dismissal a day-one right, reiterating proposals for a six-month qualifying period for unfair dismissal claims. This reflects concerns that removing qualifying periods entirely could expose employers to increased litigation risk and make recruitment more of an ordeal.

2. Guaranteed hours

Peers have sought to refine the guaranteed-hours provisions, suggesting an opt-out for workers who prefer to remain on zero- or low-hours arrangements. Peers have also proposed amendments to make sure guaranteed-hours schemes accommodate seasonal and fluctuating work patterns, recognising the working realities of sectors such as hospitality, retail and agriculture.

3. Industrial action

The Lords have pressed to keep the current 50% turnout threshold for union ballots, opposing proposals to relax those requirements. This suggests they want to avoid big changes to the existing rules around union-employer relations.

The challenges from the Lords reflects concern that the ERB’s more radical measures (especially removing qualifying periods for unfair dismissal) may have unintended consequences. These include a potential increased risk of litigation, destabilisation of employment practices and a greater burden on small and seasonal businesses. By insisting on a six-month minimum period, the Lords are effectively seeking a compromise between current law and the government’s preferred position.

How the Lords’ objections may affect the ERB timeline

Even though parts of the ERB remain contested, most of its key content is agreed in principle, and the government has begun consultations on peripheral measures such as trade union rights of access and bereavement leave.

That said, the objections from the Lords could slow progress. The more contentious amendments may need further negotiation or compromise between the Commons and Lords before the Bill gets Royal Assent. The implementation phases could change too, for instance delaying certain provisions, introducing transitional arrangements, or making exemptions for some sectors.

This is especially significant after the Budget: ministers may interpret the Budget’s fiscal constraints as a sign to tread carefully with reforms.

Employers should track ongoing consultations (for instance on union-access rights and bereavement leave) and consider feeding into those consultations via sector bodies or legal policy channels.

What employers should know about the ERB landscape

The House of Lords continues to scrutinise key elements of the Employment Rights Bill. In the context of the recent Budget, economic constraints, cost pressures on business, and political sensitivities are all likely to influence which measures go ahead unchanged and which are deferred or adjusted.

For employers and HR professionals, this means planning amid a degree of uncertainty. The overall direction remains clear, towards stronger worker protections, but the timing and detail may evolve. Organisations that prepare early, monitor legislative developments and engage with consultations will be best placed to adapt to the changes and compliance risks when they do take effect.

For more information please get in touch with Charlie Barnes or your usual RSM contact.

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