An eleventh-hour shake-up to the Employment Rights Bill: what employers need to know

Blog

09.07.2025

At a time when we expected the Employment Rights Bill to be nearing completion, the Government has taken the unusual step of introducing a number of significant amendments.

In this blog, we outline the key proposed changes likely to affect employers, including reforms to fire and rehire, new rules on non-disclosure agreements and an extension of bereavement leave entitlement. As these amendments have been introduced by the Government, it is expected they will pass into law, although Royal Assent is not now anticipated until the autumn.

For more information, see our blogs:

Fire and rehire

One of the Government’s flagship proposals in the Employment Rights Bill was to bring an end to the practice of fire and rehire (and fire and replace). However, concerns were raised that the original proposals could severely restrict employers from making even reasonable contractual changes. In response, the Government has revised – and in places softened – its approach, although the changes still represent a significant shift from current employment practice.

Here is what has changed:

Variations which are “restricted”

Originally, the Employment Rights Bill made it automatically unfair to dismiss an employee for refusing any variation to their contract of employment, or to enable an employer to re-engage them (or another) under a varied contract for substantially the same role.

Now, this will only apply if an employer seeks to make a “restricted variation”. This is defined as any change to an employee’s contract that reduces pay, alters performance-based pay measures, affects pensions, changes working hours or shifts, or reduces time off. It will also cover the inclusion of variation clauses that allow such changes without the employee’s consent (although it appears existing clauses are unlikely to be affected).

The Government’s revised approach appears to concentrate the strictest safeguards on contractual changes that are most susceptible to misuse, and therefore most likely to impact vulnerable workers. This shift is expected to have a considerable impact on employers wishing to implement such changes.

Variations which are not restricted

A dismissal will not be automatically unfair if the proposed contractual variation is not “restricted”. As currently drafted, this includes changes such as to an employee’s place of work or duties.

However, if an employee is dismissed for refusing to accept a non-restricted variation, the Employment Rights Bill sets out certain factors which the Employment Tribunal must consider when determining if the dismissal is fair. These include the employer’s reason for the variation, whether meaningful consultation took place, and whether any incentives were offered to the employee in return for agreeing to the variation. While in practice this is likely to be similar to the current unfair dismissal test on reasonableness, employers should take care to evaluate all relevant factors before proceeding with dismissals linked to non-restricted variations.

Public sector and local authority employers

One of the criticisms of the original fire and rehire provisions was that public sector employers would struggle to meet the exception to automatic unfair dismissal, namely, that they were facing “financial difficulties affecting their ability to carry on their business as a going concern” (since they do not operate as going concerns in the same way as commercial entities).

The Government has now amended the legislation to address this concern:

Public sector employers: the exception will apply where financial difficulties “affect the financial sustainability of carrying out the employer’s statutory functions”.
Local authorities: the exception will apply where “a relevant intervention direction has effect in relation to the authority”. This refers to a formal instruction by the Secretary of State requiring a local authority to take specific measures to improve performance.

Fire and replace

The Employment Rights Bill already prevents employers from dismissing an employee in order to employ another person to carry out substantially the same duties. The new amendments extend this protection to prevent employers from replacing dismissed employees with non- employees, such as agency staff or contractors.

Non-disclosure agreements (NDA)

An NDA or confidentiality clause is a legal agreement in which one or more parties agree to keep certain information confidential. NDAs have faced growing criticism in recent years, leading to speculation that the Employment Rights Bill might introduce a ban on NDAs. However, no provision was included in the original draft.

Now, a significant new amendment to the Employment Rights Bill will render NDAs void if they attempt to prevent a worker from making an allegation or disclosure about harassment or discrimination.

Key features of the amendment include:

Scope of protection: the restriction relates to allegations about direct discrimination, indirect discrimination and discrimination arising from disability (as defined by the Equality Act 2010). At present, it does not cover a failure to make reasonable adjustments or victimisation, although future regulations may broaden this scope.
Employer response: the amendment also covers disclosures about an employer’s response to allegations of harassment or discrimination.
Types of agreement affected: the provisions apply to confidentiality clauses in all types of agreement, including contracts of employment and settlement agreements. There is scope for certain agreements to be "excepted" in future regulations, though we have no details yet about what this might include.

This marks a significant shift in employment practice, moving away from the routine use of NDAs, particularly in settlement agreements, as a means of securing confidentiality. Although this change is aimed at protecting victims of workplace discrimination or harassment, there is a risk it may make employers more reluctant to settle discrimination claims if they cannot prevent public disclosure. As a result, both employers and employees may need to navigate a more open and potentially contentious resolution process, with employers in particular needing to give greater consideration to the management of reputational risk.

Extension of bereavement leave

The Employment Rights Bill introduces a general entitlement to bereavement leave, expanding it beyond existing protections which are limited to parents. The new amendments go further by granting the right to bereavement leave to employees who suffer pregnancy loss before 24 weeks. This includes losses resulting from miscarriage, ectopic pregnancy, and unsuccessful embryo transfer during IVF treatment.

This change marks an important step forward in recognising the emotional impact of early pregnancy loss and ensures affected families are legally entitled to time off work to grieve, regardless of the stage of pregnancy.

What next?

With Parliament’s summer recess scheduled to begin on 23 July 2025, the legislative process will pause over the summer, delaying Royal Assent for the Employment Rights Bill until the autumn. Once passed, the Government has confirmed that implementation will follow a phased approach, with the majority of changes expected to take effect from April 2026 and into 2027 – for detail on the proposed timetable see here.

In the meantime, a series of consultations on key reforms is expected to begin in summer/autumn 2025, starting with proposals to make unfair dismissal a “day 1” right. It is anticipated that the consultation documents will contain long-awaited detail on how the proposals might operate in practice and we will provide further updates once they are published.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.