Global Workplace Insider

On 7 July the UK government published significant amendments to the Employment Rights Bill (ERB) to be considered in the final stages of the ERBs parliamentary process.  It is not clear which amendments will make their way into the final version of the Bill, but some have been proposed by Labour peers and are therefore more likely to be included.  The government has also set out its road map for implementing the ERB, including when it will commence consultation on some of the more complex proposals.   For details of the dates for implementation please see our blog post Implementation of the Employment Rights Bill | Global Workplace Insider.

Banning NDA’s and Confidentiality agreements.

One new proposal, not included in previous drafts of the ERB, and of significance, is in relation to confidentiality and non-disclosure agreements. This is supported by the government who also issued a press release on 8 July.

The new clause will insert a provision into the Employment Rights Act 1996 (ERA 1996) which will provide that any clause in an agreement between an employer and a worker is void in so far as it purports to prevent the worker making an allegation or disclosure of information relating to certain work-related harassment and discrimination. This includes allegations or disclosures on how the employer responded to the relevant harassment or discrimination or the making of any allegation.

The harassment or discrimination is relevant if the alleged discrimination is by the employer or by another worker and includes where the victim is the worker or another worker of the employer.  In the press release the government indicated that this provision would mean that witnesses to the behaviour will be able to call it out and publicly support victims.

The proposed amendment sets out that the clause will not apply to any provision in an “excepted agreement” which satisfies conditions set out in regulations by the Secretary of State.  It is not clear what will amount to an “excepted agreement” and whether this would be similar to employment settlement agreements where an employee is required to take independent legal advice in order for it to be binding.

Currently any clause which seeks to prevent an individual from making a protected disclosure under the whistleblowing legislation is void.  This proposal will extend the protection beyond this to mean that a clause preventing any disclosure of information, regardless of whether it is a qualifying disclosure or not will be void.

As set out, this proposal makes it clear that using standard NDAs will lead to any such agreement being void. However, this may lead to unintended consequences as employers may be less willing to settle discrimination, and harassment claims if they can no longer insist on confidentiality to discourage allegations being aired more widely.  Further consultation is needed in this area to review the different issues that arise from all parties involved.

Fire and Rehire

Further amendments which are proposed by Labour peers are in relation to Clause 26 of the ERB which introduces a new s1041(1) into the ERA 1996.  This provides that where employees are dismissed for failing to agree to a change in their contract of employment, or if the employer dismisses the employee to replace, or to re-engage them on varied contractual terms, those dismissals will be treated as automatically unfair unless the change was essential to avert financial distress and the employer had complied with certain requirements relating to consultation. 

Concerns had been raised that this limited the ability of businesses to introduce legitimate changes to contracts.  There have now been a number of proposed amendments to seek to soften this section. 

The most important proposed amendment means that the ban on fire and rehire will only apply where the change to the employment contract is to make a “restricted variation” and the employee did not agree to the restricted variation or did not agree to a number of variations that included the restricted variation. The list of ‘restricted variations” includes a reduction of or removal of entitlement to sums payable to an employee, changes to sums payable where it is determined by reference to the hours of work done by the employee; change to pension entitlement; variation of any hours of work, shifts or time off, and other variations specified by the Secretary of State in Regulations.   Restricted variations also includes employers seeking to include variation or flexibility clauses in the contract which would enable the employer to make variations without the employee’s consent.  However, it is not clear whether existing variation clauses in contracts would continue to be valid.

A further amendment to exclude dismissals amounting to a place of work redundancy from being treated as automatically unfair is unlikely to be included.  However, as a change in place of work does not fall within the “restricted variations” listed it would not be covered, unless there was a change in the terms relating to salary associated with the relocation.

A further proposed amendment makes it clear that replacement of employees with people who are not employees (for example with agency workers or self-employed contractors who are not employed by the employer) will be automatically unfair where the replacements are carrying out the same, or substantially the same, activities and the dismissals are not due to a reduced requirement for those activities.  The dismissal will not be automatically unfair if the employer can establish that the reason for the replacement is to address serious financial difficulties and the employer could not reasonably have avoided the need to replace the employee.

Where an employee is dismissed for failing to agree to a variation of their contract of employment that is not a “restricted variation,” then the dismissal will no longer be automatically unfair.  However, there are certain matters set out in the ERB that must be taken into account in determining whether the dismissal is fair.  These include the usual tests such as the reason for the variation, any consultation with the employee, any collective consultation, and anything offered by the employer in return for agreeing to the variation.

There are proposed changes to the exclusion which sets out that the dismissal is not automatically unfair if the employer can show that the reason for the variation was to eliminate, prevent or significantly reduce or mitigate the effect of any financial difficulties.  The amendment specifies that a public sector employer may relay on the financial difficulties provision but that a local authority can only rely on when at the time of the dismissal a relevant intervention direction is in effect in relation to the authority.

The government has indicated that it will consult on the fire and rehire proposals in Autumn 2025 with the new laws coming into effect in October 2026.  It is therefore important that employers consider how they approach such changes to contracts as a result of these proposals.

Changes to the Zero-hour and low hours worker rules

There are a number of changes made to the provisions relating to zero-hour contracts. Some the amendments (such as changes to make the law a right to request guaranteed hours rather than a requirement for an employer to offer the guaranteed hours and setting out a low threshold for the number of hours) are proposed by the opposition parties and and so are unlikely to find their way into the final version of the Bill.

However, one provision which is a labour peer proposal, is in relation to guaranteed hours and agency workers.  These provisions require that where an offer of guaranteed hours is made by an end hirer to a qualifying agency worker, the hirer must meet one of the four new conditions (A to D).  These include that the terms and conditions of guaranteed hours offered to agency workers must be no less favourable than the terms and conditions that the qualifying agency worker had when under during the relevant reference period. In addition, there are conditions setting out that pay offered must be no less favourable than the agency terms or those of comparable workers.  There are other conditions that may apply making it more complex than previously drafted.

The amendments also clarify that where a qualifying agency worker accepts a guaranteed hours offer from a hirer then they will become a worker and employer and, for the purposes of the guaranteed hours provision there will not be a new initial reference period in relation to the former agency worker.

Again, there will be consultation on this complex area of law, and the government does not consider that these changes will take effect until 2027.

Bereavement leave

A further proposal which will be included into the amended Bill is the extension of bereavement leave.  This will be extended to cases involving pregnancy loss which means the ending of a pregnancy before 24 weeks of pregnancy in any way other than by a live birth, or, the failure of an embryo to become implanted following a transfer carried out in the course of providing treatment services within the meaning of the Human Fertilisation and Embryology Act 1990.

Sectoral collective agreements

Another amendment by a Labour peer is that the Bill allows for the creation of a Statutory Joint Industrial Council.  This would enable workers in certain sectors of the economy to enter into sectoral collective bargaining.

Other proposals

There are a number of other amendments put forward by non-Labour peers to change the original drafting in the ERB.  While it is unlikely that these will be introduced in the Bill, it will be interesting to see if they are taken into account further in consultation.  These include:

• Changes to whistleblowing laws. The first amendment amends the matters which would fall within the definition of a qualifying disclosure, extending the list of relevant failures to include mismanagement of public funds, misuse or abuse of authority, or anything else set out in Regulations.  It also sets out that a protected disclosure is a disclosure of information which is made in the public interest rather than simply being a reasonable belief of the worker that the matter is in the public interest.   A further amendment is the creation of a new Office of the Whistleblower which would be established within one year of the ERB being given Royal Assent.  This sets out the principal duty of the office is to protect whistleblowers and also sets out the functions of the office.   There would also be an ‘offence’ to intentionally or recklessly subject any whistleblower to a detriment.  Any claim would be subject to a fine and the maximum amount of the fine would be, in the case of an individual 10% of their gross annual income, not exceeding £50,000 and, in any other case, an amount up to 10% of annual global turnover.
• Changes to the trade-union proposals:  These include amendments to provide that a trade union cannot be granted an access request if the employer is a small or medium-sized business; provision to require that any changes to the threshold provisions in the trade union recognition cannot be modified through secondary legislation; amendments to remove the provision that renders unlawful all forms of ‘secondary’ industrial action.  In addition, an amendment to disapply the right of a worker not to be subjected to a detriment in certain circumstances where the employee is involved in certain activities.
• SSP:  There are various proposed amendments relating to the new SSP provisions including amendments which preserve a minimum one-day waiting period for statutory sick pay; an amendment which exempts employers from the statutory sick pay requirement if they already provide a contractual scheme that pays at least 80% of normal weekly earnings; and an amendment which requires the Secretary of State to establish a rebate scheme for small and medium sized enterprises for the costs incurred by SSP.
• Kinship care leave:  There are provisions included which set out an entitlement to kinship care leave which would apply where a child is raised by a friend, relative or extended family member other than a parent.
• New right of special constables to have time off for public duties.
• Unfair dismissal:  Proposed amendment to reduce the length of the qualifying period during which an employee may not claim unfair dismissal other than for certain specific reasons from two years to six months.
• Time off for serious childhood illness:  A right for parents to be absent from work for a prescribed period, and to be paid during that period at a prescribed rate, to care for a child who is receiving, or has received, specified types of medical or palliative care.
• Right to be accompanied:  This right would expand the right to be accompanied to being accompanied by a certified companion at disciplinary and grievance hearings.
• Parental leave and pay:  Various further proposals relating to parental leave and pay.  The government has already issued a call for evidence to inform the work of the review on all forms of parental leave which is mandated in the Bill.
• Statutory code of practice:  Amendment requiring the Secretary of State to publish a statutory code of practice for small businesses in adhering to the employment and legal requirements of the ERB.
• Right to opt out of collective agreements:  The amendment provides non-union workers with the right to opt out of collective agreements, reinforcing individual freedom of contract and protecting access to statutory entitlements.

Next steps

The amendments will return to the House of Lords on 14 July before returning to the House of Commons.  The final vote will therefore take place after the summer recess and the implementation of the new laws will be given effect in accordance with the proposed timeframe.