In October 2024 the Deputy Prime Minister, Angela Rayner set out her intention to reform the employment rights held by employees in the UK. In a press release issued at the time she is quoted as saying “this government is delivering the biggest upgrade to rights at work for a generation, boosting pay and productivity with employment laws fit for a modern economy”. The stated aim of the new bill is to get the labour market moving again [by] providing flexibility for workers and businesses alike. Time will tell whether that aim is on target, but regardless of whether you think the government’s aim is on point or if it will in fact shoot the UK’s economy in the metaphorical foot, with the bill due to be given royal assent this summer, and with some of the changes already in force from April of this year, transport operators both large and small should ensure that they are aware of what is ‘coming down the track’ and begin the process of reviewing their own policies or procedures to take into account the new laws that are soon to be imposed on the employers of the UK.
What Changes have already been implemented?
In April 2025 the changes implemented by the Labour government primarily affected wages, leave entitlements and compensation that employees could claim as an employment right. The key changes included:
- The National Minimum Wage and National Living Wage.
For workers who are over 21 the National Minimum Wage increased to £12.21 per hour. For workers between 18-21 it was moved to £10.00 per hour and for 16-17 year olds it is £7.55 per hour.
- Neonatal Care Leave and Pay.
A new right now exists that allows parents to take up to 12 weeks of paid leave if their child received neonatal care.
The weekly rate has increased to £118.75. The period of 3-days sick leave before the Statutory Sick Pay begins has been removed, with sick pay now due from the first day the employee rings in sick. This right also extends to any employer’s enhanced sick pay schemes which would also now have to pay out the stated level of pay, such as full pay, from day one of the sick leave being registered.
Rates for maternity pay, paternity pay, adoption pay, shared parental pay and parental bereavement pay are all increased to £187.18 per week.
- Unfair Dismissal Compensation.
The limit for a week’s pay used in calculating unfair dismissal compensation was increased to £719.00.
This limit for a week’s pay used in calculating redundancy pay was also increased to £719.00.
- Employer’s National Insurance Contributions.
The threshold for employers to begin to pay National Insurance on their employee earnings decreased from £9,100.00 per annum to £5,000.00 per annum, whilst the rate of Employer’s National Insurance Contributions was raised to 15% of each employee’s gross annual salary.
- Changes to Trade Union Rights.
All employers are now legally required to inform workers of their right to join a trade union from day one of their employment.
From 2026, the Employment Rights Bill (ERB) will also introduce a new right for trade unions to access workplaces, both physically and digitally as well as simplifying the process for trade unions to gain recognition as a union, which is expected to reduce the membership thresholds unions need and “address anti-recognition” tactics, presumably by employers, both of which will make it easier for unions to build up the level of support needed in a workforce to meet the thresholds to trigger a ‘statutory recognition’ request.
The need to have ‘statutory recognition’ as a union was introduced in 2000 by the Tony Blair Labour government. It enabled independent trade unions with sufficient support in a proposed “bargaining unit” (i.e. a defined entity within the workplace such as non-managerial workforce or smaller subsections of a work force such as ‘engineers’) to compel an employer to recognise the union for collective bargaining on core topics including pay, hours worked and holiday rights. The ERB will reduce the number of workers needed within a bargaining unit that must be union members from the current 10% of workers needed to qualify to apply for statutory recognition to as little as 2% of workers being union members within the defined bargaining unit.
It is also proposed that the amount of information unions need to provide in ballot notices for industrial action will be reduced and the requirement to detail employee categories and explanations of how totals have been calculated will be removed.
The ERB is expected to lead to increased union recognition and membership in the UK to address what some describe as the decades of decline in union membership since the late 1970’s. According to the Trades Union Congress, in 1979 around 80% of the UK workforce were covered by collective bargaining; by 2018 this had dropped to just 26%. In 2023 data from the Department for Business and Trade showed that only 12.3% of private sector employees were members of a trade union.
Businesses and employers who have never had to deal with trade unions will now be compelled to promote them as well as recognise them in their businesses under the proposed changes in the ERB.
Some of the changes proposed by the ERB will be put forward for further consultation after it has received royal assent in the summer (2025). Currently it is believed that the Government intend all of the proposed changes to be rolled out before the Autumn of 2026.
The most significant changes, and therefore possibly the most controversial ones included in the Employments Rights Bill include:
- A Day One right against unfair dismissal.
Currently employees must complete two years of service with their employer before they are eligible to bring a claim against their employer for an unfair dismissal claim. Under the new bill this right will be given to employees from day one of their employment. The government has said that this right will not be implemented until Autumn of 2026 to “allow time for detailed rules to be established” and for employers to “prepare”.
There will be a new duty for employers to take ‘reasonable steps’ to prevent workplace harassment, extending the October 2024 Final EHRC guidance on preventing sexual harassment at work to include a liability for third party harassment on employers in respect of all types of harassment.
This part of the bill has received a lot of press attention with headlines about “banter bouncers” being needed in pubs to prevent their customers from offending a member of staff not through speaking directly towards them but from the member of staff overhearing a conversation that a particular member of staff might find “upsetting”. How this is going to be policed by the authorities and managed by employers has not yet been made clear.
As well as the need to stop staff hearing things they do not want to hear, the ERB also reclassifies disclosures about sexual harassment as ‘protected disclosures’, thereby granting those who report such behaviour protection under the whistleblowing regime.
- Restrictions on “Fire and Rehire”
Under the ERB, the practice commonly known as ‘fire and rehire’ sometimes used to handle variations in employees’ contracts will be deemed by the law as giving employees the automatic right to bring an unfair dismissal claim. The new law will aim to ensure that employers will not be able to vary an employment contract without the employee’s consent. It will also not allow employers to ‘re-engage’ an employee or hire someone else under a new contract if the same duties under the new contract are substantially similar to those under the old one.
- Zero Hour Contracts to be banned
The new bill will enshrine the concept of ‘guaranteed hours’ in employment law, thereby ‘banning’ the concept of Zero Hour contracts that have become popular in recent years. Employers will be required to offer guaranteed hours to zero-hours workers and workers on ‘low’ guaranteed hours but who often work more hours than specified. The new law also proposes that workers should be compensated for any shifts their employers schedule them to work that are cancelled or that end earlier than planned.
- Changes to Flexible Working
The new bill will take a further step on the right for flexible working requiring employers to justify their refusal for flexible working and to specifically state the reason(s) for the refusal, which the bill states must be ‘reasonable’.
Next Steps?
There are a multitude of changes and new rules for employers to get their heads around with the introduction of this new employment bill. Some of the proposed changes may not get through the parliamentary process and some may be altered considerably from the ones proposed above. Certainly, the new rules for trade union membership may well be subject to some friction from the House of Lords. If those changes are passed, then it is likely that small to medium businesses that for a while now have avoided the gaze of Trade Unions will be drawn into their remit. For now, transport operators who employ staff should ensure that the ‘nailed on’ changes are noted and that any policy or procedures that relate to them are updated and put in place in a timely manner. As for the proposals that are currently being tabled for 2026 introduction, then all one can do is keep a weather eye on what is enshrined in law and look to make changes that might be needed prior to the bill becoming law.
If your business or transport operation would like some further help on the subject of employment law then call us on 01279 818280 or click here to send us an email. Our solicitors have years of experience in this area and are happy to help.
© Richard Pelly, July 2025
by Emma Pelly
