Understanding the New Employment Rights Act (2025): Key Changes You Need to Know (an update)
Posted on March 13, 2025
Employment law rights in the UK are set to undergo significant change with the introduction of the Employment Rights Act (2025). This new legislation aims to enhance protections for workers, particularly those in what is often described as temporary employment situations, such as agency workers and those on zero-hour contracts. Here’s a breakdown of the key proposed changes and what they mean for both workers and employers.
We described in previous blogs the wider changes being consulted upon and this blog is essentially an update to help you understand what is changing through consultation with Trade Unions and employers’ representatives.
It goes without saying, that the uncertainty of the proposed changes is causing consternation across businesses in the UK. When coupled with the additional employment costs that the Employers NI change will bring and uplift to minimum wage is leading to a significant downturn to hiring of new employees. It’s also impacting people looking to change employer as they stay where they are as the economic uncertainty reduces their appetite to take the risk of changing role.
Enhanced Protections for Agency Workers
One of the most notable changes in the Employment Rights Act (2025) is the introduction of new rights for agency workers, particularly those on zero-hour contracts. Under the new provisions:
- Compensation for Cancellations: Agency workers who choose to be on zero-hour contracts will now be eligible for compensation if their shifts are cancelled or changed at short notice. This change aims to provide a safety net for workers who often face uncertainty and financial instability due to last-minute alterations to their work schedules.
- Guaranteed Minimum Hours: Employers will be required to offer agency workers a contract that guarantees a minimum number of hours each week. This is a significant shift from the current practice, where many agency workers face unpredictable hours and income. The minimum hours will be calculated based on the average number of hours the worker typically works, ensuring that they have a more stable income.
If these proposed changes are a concern, you should maybe consider offering fixed hour contracts, simply guarantee a minimum number of hours per week and then utilise additional hours as a supplement when they are required?
Doubling Penalties for “Fire and Rehire” Practices
The new legislation also addresses the controversial practice of “fire and rehire,” where employers terminate employees and then rehire them on less favourable terms. To deter this practice, the penalty for companies engaging in such actions will be doubled from 90 days’ pay to 180 days’ pay. This change sends a clear message that unfair treatment of employees will not be tolerated and aims to protect workers from being exploited during negotiations.
Extended Sick Pay Provisions
Another significant change under the Employment Rights Act (2025) is the extension of sick pay to workers earning under £123 a week. Key points include:
- Immediate Sick Pay: Workers will be entitled to sick pay from the first day of their illness, rather than having to wait for a certain period. This is particularly important for low-income workers who may not have the financial cushion to support themselves during a period of illness.
- Sick Pay Calculation: Eligible workers will receive 80% of their average weekly earnings or statutory sick pay (currently £116.75 per week), whichever is lower. This change aims to provide a more equitable support system for workers who fall ill, ensuring that they are not left without income during challenging times.
Conclusion
The Employment Rights Act (2025) represents a significant step forward in protecting the rights of workers in the UK, particularly those in vulnerable positions such as agency workers and those on zero-hour contracts. By introducing measures that provide compensation for cancelled shifts, guarantee minimum hours, impose stricter penalties for unfair dismissal practices, and extend sick pay provisions, the Act aims to create a fairer and more equitable working environment.
As these changes come into effect, both employers and employees will need to familiarise themselves with the new regulations to ensure compliance and to understand their rights and responsibilities.
If you need support understanding or preparing for the proposed legislative changes please feel free to reach out to us:
+44 (0) 2382 518 004
info@smehrconsultancy.com
www.smehrconsultancy.com
