Employment Rights Bill is passed: What's next for UK recruitment?

The Lords have passed the Employment Rights Bill after the Commons rejected a Lords amendment on 15 December calling for consultation before removing the 52-week cap on unfair dismissal damages.

This follows letters between business groups and the secretary of state for DBT Peter Kyle MP, in which business groups urged Parliament to pass the Act rather than risk losing the agreement to a 6-month qualifying period for unfair dismissal. Peter Kyle MP in his response reiterated that the passing of the Act will lead to consultations asking for public input and feedback on the many details left to be defined in secondary legislation (Regulations) and pledged to build on the “spirit of consensus” between business and unions. 

However, given the sheer scale of the provisions left to be set out in Regulations following consultation, we foresee many ongoing points of disagreement between business and unions. APSCo UK will be looking to ensure that the provisions are workable, not burdensome and go towards achieving the original objectives of the legislation, across multiple sectors and different types of assignment.

Our concerns continue to be based on the guaranteed hour provisions:

• Key words in the Act have been left to be defined in Regulations – including “low hours contract”, “irregular hours” “inherently temporary”. They need to be defined appropriately to prevent exploitation of “at risk” workers, rather than a blanket approach, leading to the curtailment of flexible contracting.
• The “reference period” prior to an offer of guaranteed hours should be set at 12 months for Agency Workers, as they already have the protection of regulation and worker status.
• The regulations filling in the gaps on cancellation periods and compensation need to be pragmatic and alive to the day-to-day challenges of sourcing workers in hospitality, logistics, healthcare and education.

We understand the rationale behind the agreement for a 6-month qualifying period for unfair dismissal but given that 12 month overall probationary periods are the norm in our sector then we will be urging the Government to keep this under review, alongside reviewing the impact of lifting the damages cap for unfair dismissal claims. The impact of day one statutory sick pay for all workers, in terms of managing temporary workforces, also needs to be kept under careful review by members.

Broadly our members remain concerned about the rigidity and universal application of the soon to be Employment Rights Act and its likely adverse impact on the flexible labour market, economic growth and the UK’s competitiveness. When the Bill receives Royal Assent, it will trigger the next batch of consultations which is expected to include the key questions relating to the right to Guaranteed Hours. When these consultations launch, we will share the details and our plans for how you can shape our responses and submit your own views.  

2025 has seen a successful robust rebuttal by the Conservatives and Liberal Democrats of some key provisions - fire and rehire and day one rights in particular. However, the ERA is still largely as initially drafted and a huge amount of detail is outstanding, to be dealt with in statutory secondary Regulations.  From the staffing sector’s perspective, the eventual impact of the legislation is still to be determined - so 2026 ultimately could be even more important than 2025. 

Royal Assent, signature of the Bill by King Charles, is a constitutional necessity for it to become law. We imagine the Government will be keen to achieve this over the next few days. 

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