Legal News | 23.09.25
Autumn Employment Law Update – 2025
Employment Rights Bill (ERB) Update
Following our articles in October 2024 and May 2025, we thought it prudent to update you on the progress of the ERB.
The majority of the reforms are not due to take effect until 2026 at the earliest. The removal of the two-year service requirement for unfair dismissal claims, will not take effect until 2027.
Sickness and Holiday – April 2026
Statutory sick pay (SSP) will be a day one right. The earnings threshold will also be removed. SSP will be 80% of average earnings for workers who earn below the statutory rate of SSP.
Employers will be required to keep records showing compliance with the rules on statutory holiday entitlement and pay for at least six years. Failure to do so will be a criminal offence.
Fair Work Agency – April 2026
New agency established to enforce workers’ rights.
Protective Award – April 2026
Increase in the maximum penalty for breaching the collective redundancy consultation requirements to 180 days’ pay per affected employee.
Extension of Tribunal time limits – October 2026
Time limit to bring an Employment Tribunal claim will increase to six months.
Fire and Rehire – October 2026
A new ground of automatic unfair dismissal, where the sole or principal reason for the dismissal is that the employer sought to vary the terms of employment, and the employee refused to agree to a variation of their employment terms. This will also extend to cases where the main reason is to replace the employee with someone else, or re-engage them on new terms relating to pay, pension, hours of work, holiday entitlement, or anything else set out in regulations and where the intention is to replace the employee with a self-employed contractor or agency worker.
Harassment at Work – October 2026
The duty of an employer will be to take “all” reasonable steps to prevent sexual harassment. A complaint of sexual harassment at work will be a protected disclosure under whistleblowing legislation. NDAs cannot prevent employees from discussing allegations of discrimination or harassment. Employers will be liable where third parties harass their employees, unless they take reasonable steps to prevent it.
Trade unions – October 2026
Simplification of the processes for trade union recognition, the implementation of the rights of trade unions to access workplaces, the repeal of minimum service level requirements, and the necessity for employers to issue each of their workers with a statement confirming their right to trade union membership.
Family Rights
Paternity – April 2026
This will be a day one right for the leave. Employees can take paternity leave following shared parental leave.
Dismissal Protection – 2027
It will be unlawful (except in specific circumstances to be determined) to dismiss an employee during or within six months of their return to work from pregnancy, maternity, adoption or shared parental leave.
Parental Bereavement Leave – 2027
Extended to cover family bereavements, the details of the family members included have yet to be decided.
New collective redundancy threshold – 2027
The introduction of a new additional threshold based on the number of redundancies across the employing entity as a whole, which has yet to be determined.
Unfair Dismissal – 2027
The intention is that unfair dismissal protection is a day-one right for all workers. There will be a statutory probation period (yet to be decided) or an ability for the employer to terminate, providing up to three months’ notice for performance or conduct. This will follow a light-touch dismissal process (yet to be decided).
The Government will also consult on whether reduced compensation should apply to unfair dismissal claims during probation.
Zero hours – 2027
There is a requirement for employers to offer workers guaranteed hours, with reference to the average hours worked over a particular period. Where a worker’s hours exceed zero or a minimum over a 12-week reference period, a new contract with those regular hours must be offered.
Workers are to receive reasonable notice of a shift, changes to a shift, or its cancellation. The worker is then to be compensated for any curtailed, cancelled or moved shifts.
The thresholds for minimum hours and notice periods, and the amount of the cancellation payment, are yet to be determined.
Flexible working – 2027
Employers must consult with employees before refusing a request. Employers refusing a flexible working request on specified business grounds must be reasonable. Employers will need to state the grounds for refusing the request and explain why the grounds are reasonable. The Government will consult on whether regulations are required to set out the steps employers must follow as part of the consultation requirement.
We still await the results of the ongoing consultations regarding the proposed regulations that affect many of the proposals within the ERB.
A Substitution Clause Cannot be a Sham
BCA Logistics Ltd v Parker [2025] EAT 94, highlights the importance of understanding whether the individuals engaged are employees, workers, or self-employed and seeking to contract out of obligations as a “sham” will not be upheld by the Employment Tribunal.
This case considers section 230(3) of the Employment Rights Act 1996, regulation 2(1) of the Working Time Regulations 1998, and section 54(3) of the National Minimum Wage Act 1998, where a “worker” is defined as someone who performs work under:
- a contract of employment, or
- any other contract, whether express or implied and whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.
An established principle of employment law is that a person cannot be a “worker” unless they have an obligation to provide a personal service. An unfettered contractual right to provide a substitute to perform their services means they cannot be a worker, regardless of other indications of worker status.
In this case, the Employment Tribunal held “Not only was a substitute never used, but nobody seriously expected a substitute to be used. The substitution clause was an unrealistic possibility that was not intended to be operated in practice, and it therefore did not form part of the true agreement. It did not reflect what the parties realistically expected to occur.”
The key deciding factors included that BCAL had no plan or process to deal with practical issues that would arise from the use of substitute drivers; provided no training or guidance on how to engage and use substitutes; there were no training requirements for substitutes; it was unrealistic to think substitutes could perform the expected role to the necessary standard to meet the customer expectations; it was unrealistic to think BCAL would risk entrusting customers’ high value vehicles to unknown individuals with whom BCAL has no contact or relationship; and no driver had ever used a substitute in the 25 years of operation.
The significance of substitution clauses in engagement contracts has come under increased scrutiny by the courts and tribunals in recent years. In the Independent Workers Union of Great Britain v Central Arbitration Committee [2023], the Supreme Court confirmed that a substitution clause will negate the “personal service” obligation essential for worker status, even if it has been put into the contract specifically for that purpose, provided the right to appoint a substitute is “genuine”.
If you require assistance with drafting employment contracts or consultancy agreements, then please get in touch.
The Importance of Considering Suitable Alternative Employment When Making Redundancies
The recent case of Hendy Group Limited v Kennedy [2024] emphasises the importance of an employer taking proactive steps to support a staff member at risk of redundancy in finding suitable alternative employment.
This case highlights the importance of following a correct and fair procedure when making employees redundant. Failure to follow a correct and fair process can result in an employee succeeding in an unfair dismissal claim.
Where there are suitable alternative roles within the employer (or any group company), these should be offered to the employee, and assistance should be given to allow the employee to succeed in any application and any training or adjustments required for that role.
In the case of Hendy v Kennedy, the employee was informed that he could apply for internal roles, but procedures were not put in place to allow this to happen easily, and no assistance was offered to Mr Kennedy to help find alternative employment. Here, the size and resources of the employer were considered, and the Employment Tribunal and Employment Appeal Tribunal held that the employer should have acted proactively in assisting the employee to find employment by making more vacancies available and accessible to him and informing interviewers and hiring managers of the looming risk of redundancy. Ultimately, Hendy did not act reasonably in offering suitable alternative employment and physically assisting Kennedy to be successful in such a search.
If you require assistance with restructuring or redundancy consultation, then please get in touch.
This article should not be relied upon as legal advice. If you would like specific legal advice or require any assistance, then please get in touch: 020 4549 2460 or 01380 733300 | commercial@wansbroughs.com
