Here are the new employment rules planned for the UK – and why businesses are worried
Research by the British Chambers of Commerce has found that businesses are worried about the speed with which the Employment Rights Bill is being put through Parliament and have serious concerns about it.
Many firms do not think its impact has been properly assessed and fear that, combined with the increased tax burden, it will be a barrier to growth. Businesses are also sceptical about the benefits of the bill, with just one in 50 firms saying they think the trade union proposals will be positive.
The research comes ahead of the Report Stage of the Employment Rights Bill beginning in the House of Lords on Monday, 14 July.
“The opportunity to make any significant changes to the Employment Rights Bill to ease the cost and disruption to business is fast disappearing over the horizon. While the government has consulted on several aspects and listened to some concerns, the legislation still does not strike the right balance,” said Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce.
“A number of the proposals are deeply worrying for employers. They will increase employment costs, complexity and risk for firms, particularly SMEs, who will be disproportionately affected. We are likely to see unintended consequences that could limit people’s employment opportunities and the UK’s economic growth,” she said.
To grow the economy, firms must have the flexibility and agility to deal with challenges and opportunities, Gratton said.
She added that the government needs to help, not hinder businesses, to innovate, adopt new technologies and be more productive and competitive.
“By adding more restrictions and building in further delays before change can happen, the Bill jeopardises all of this. It is creating a lose-lose scenario for everyone in the workplace.
“While there are many things in the legislation that reflect what good businesses are already doing, there are some specific proposals that need amending. Planned changes to dismissal rules, trade union ballot thresholds and zero hours contracts, for example, are some of the critical areas that need to be revisited.”
Gratton said that the government must continue its positive approach to engagement with business and remain open to changes.
Only then can it ensure this legislation is proportionate, affordable and right for both firms and their employees, she said.
What to expect from the Employment Rights Bill
The Employment Rights Bill will be rolled out in phases from 2026 to 2027, with key reforms covering workplace protections, trade union rights, and fair treatment.
In an analysis of the planned changes, legal firm LegalVision noted that some reforms will take effect shortly after the Bill is passed into law, anticipated in October 2025. These include:
- Repealing the Strikes (Minimum Services Levels) Act 2023 and most of the Trade Union Act 2016; and
- New protections against dismissal for taking industrial action.
The next round of changes, coming into force in April 2026, focuses on day-one entitlements and broader workplace protections, such as:
- Collective redundancy protective award – doubling the maximum period of the protective award;
- Making paternity leave and unpaid parental leave a “day 1” right;
- New whistleblowing protections;
- Establishing a Fair Work Agency;
- Statutory sick pay – removing the lower earnings limit and waiting period;
- Simplifying the trade union recognition process; and
- Introducing electronic and workplace balloting.
Further reforms in October 2026 aim to improve workplace fairness and safety, and increase trade union rights, such as:
- Fire and rehire;
- Bringing forward regulations to establish an Adult Social Care Negotiating Body to establish Fair Pay Agreements in England;
a two-tier code to improve fairness in the procurement process;
improvements to the tipping laws; - Duty to inform workers of their right to join a trade union;
strengthen trade unions’ right of access; - Requiring employers to take “all reasonable steps” to prevent sexual harassment of their employees;
- Introducing an obligation on employers not to permit the harassment of their employees by third parties;
- New rights and protections for trade union representatives;
employment tribunal time limits; and - Increased legal safeguards for employees who engage in industrial action, such as strikes or work stoppages.
In 2027, the focus shifts to equal pay, fair treatment, and addressing exploitative work arrangements, such as:
- Gender pay gap and menopause action plans (introduced on a voluntary basis in April 2026);
- Enhanced rights for pregnant workers;
- Introducing a power to allow regulations to define what steps are considered “reasonable” in determining whether an employer has taken adequate action to prevent sexual harassment;
- Improved rights against blacklisting;
- A new, comprehensive industrial relations framework;
- The regulation of umbrella companies;
- Changes to the collective redundancy consultation process;
- Flexible working options;
- Bereavement leave reforms;
- Ending the exploitative use of zero-hour contracts, including for agency workers; and
- ‘Day 1’ right – protection from unfair dismissal.
