Employment Rights Bill update: amended Bill returns to House of Lords for approval

On 7 July 2025, the Government published a number of amendments to the Employment Rights Bill (“ERB”), ahead of the House of Lords Report Stage (during which the Bill would once again be reviewed by the Lords). These amendments included:

• Zero hours contracts: further provisions, governing how the exception to the duty to offer guaranteed hours will work (including in respect of agency workers), were inserted. Matters which will need to be taken into consideration when assessing these provisions will include weighing up the benefit to workers of having a guaranteed hours offer against any significant adverse effect for employers who are dealing with “exceptional circumstances” (yet to be defined).
• Bereavement leave: a new right of at least 1 week’s leave (likely unpaid), for those experiencing pregnancy loss prior to 24 weeks’ gestation (including unsuccessful IVF embryo transfers and abortions), was proposed. This will likely be a day 1 right.
• Non-disclosure agreements: new provisions were inserted, which will mean that confidentiality clauses in NDAs and Settlement Agreements will be void to the extent that they try to prohibit disclosure of allegations of harassment and/or discrimination, or disclosure of information relating to the employer’s response to such allegations. The restrictions will not apply to an “excepted agreement” (yet to be defined). The restrictions will also likely only apply to workers (so, not self-employed contractors). There will be particular provisions for higher education settings; and a ban on NDAs which prevent disclosure of sexual abuse, harassment or misconduct, and other types of bullying or harassment, has already come into force (on 1 August 2025).
• Fire and rehire restrictions: changes were made to the proposed rules governing when a dismissal will be automatically unfair / contracts of employment can be varied (narrowing their scope). A dismissal will be automatically unfair where (a) the employer sought to vary the contract to make a “restricted variation” and the employee did not agree to it, or (b) the employer sought to make more than one variation and the employee did not agree to several variations that included a restricted variation. A “restricted variation” will include changes regarding pay / benefits, pension provisions, working hours and holiday. Employers will not be allowed to insert clauses into contracts entitling unilateral variation of any of these restricted matters. Dismissals will also be automatically unfair where employees are replaced with non-employees (e.g. agency workers or self-employed contractors); unless that replacement is necessary to mitigate financial difficulties which are likely to affect the employer’s ability to carry on the business as a going concern / it could not be reasonably avoided.

Over the course of July 2025, the ERB was debated by the House of Lords at the Report Stage, and further amendments were suggested by them.

However, on 15 September, the House of Commons rejected all of the Lords’ proposed amendments. In particular, the Lords’ proposals for:

• Retaining a six-month qualifying period for unfair dismissal. The Government plans to stick with its plans to make protection from unfair dismissal a day 1 right.
• Replacing the proposed duty for employers to offer a guaranteed hours contract to workers, with a right for workers to request one (in relation to zero hours contracts). The Government intends for workers who meet the qualifying criteria to be entitled to receive a guaranteed hours offer rather than having to request one.
• Defining “short notice” (for the purpose of compensation for cancelled shifts in zero hours contracts) as 48 hours. This was rejected because the Government argued that it would pre-empt the outcome of ongoing consultation and limit its discretion.
• Permitting employees to be accompanied at disciplinary and grievance hearings by a “certified professional companion”. This was rejected on the basis that it would likely lead to an increase in the cost, complexity and length of such hearings.
• Retaining the 50% turnout threshold in industrial action ballots. The Government intends to stick with its original proposal to amend the threshold.
• Requiring the Government to legislate to extend unfair dismissal protection for whistleblowers and require employers to investigate protected disclosures. This was rejected on the basis that it would be “inappropriate”.

At the conclusion of the debate in the House of Commons, Peter Kyle MP indicated that the government would “be moving as fast as possible” to commence the agreed provisions on NDAs and to consult on related secondary legislation (which will govern, by way of example, the types of individuals to whom measures will apply, and the conditions for excepted NDAs).

Separately, the Government has confirmed that it will carry out consultations on AI in the workplace, and the use of restrictive covenants in contracts, “in due course”. It has also committed to publishing a consultation on employment status by the end of the year.

The ERB will now return to the House of Lords, for it to either accept or reject the latest draft, via a vote which is due to take place on 28 October 2025. It is likely that the Lords will accept the House of Commons’ decision on amendments and, if so, the Bill will be approved and receive Royal Assent. The latter could take place as early as November 2025, with the first provisions in the ERB coming into force at the start of 2026.

We will, of course, continue to provide updates on this (and any other developments) as and when they are announced.

The material in this article is provided for guidance and general information only and is not intended to constitute legal or other professional advice upon which you should rely. In particular, the information should not be used as a substitute for a full and proper consultation with a suitably qualified professional. Please do contact the Bates Wells team if you require further information.