'What if the CEO asks me about… the Employment Rights Bill?'
The Employment Rights Bill is set to transform the UK employment landscape, introducing sweeping reforms to individual and collective employment law rights.
The Bill's remodelling of our employment laws is far-reaching and complex. This article highlights four key areas of importance for retail and hospitality CEOs, which will have profound implications for risk, compliance and workforce management.
We also explain what remains unclear and flag the relevant implementation and consultation dates.
What is the Bill's progress so far?
The Bill concluded the Report stage in the House of Lords on 23 July 2025. A range of further amendments to the Bill have also been made, a number of which were tabled earlier on 7 and 14 July.
Depending on how much back and forth there is between the House of Lords and the House of Commons, in terms of amendments, the Bill may receive Royal Assent in Autumn 2025 (latest estimations are mid- to late October).
The government is also planning to launch a flurry of consultations on many of the reforms, with the consultation period running from Summer 2025 through to early 2026. As the outcome of these consultations will help to shape the final version of the legislation, they will provide a critical opportunity for retail and hospitality businesses to share their views on and seek to shape the proposals.
1. Harassment reforms and ban on NDAs
Since 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 imposes a positive obligation on employers to take reasonable steps to prevent sexual harassment by their employees in the course of their employment from occurring in the first place.
The Bill amends the wording of 'reasonable steps' to ‘all reasonable steps’, which proposes a significantly more onerous duty on employers. Regulations, which are expected in 2027, are required to specify what those 'reasonable steps' may be to help determine whether an employer has taken all reasonable steps to prevent sexual harassment.
The Bill also proposes to extend the duty to prevent harassment, including sexual harassment, of employees by third parties, i.e. customers, clients, suppliers, and members of the public. This proposal has sparked significant concern across the retail and hospitality sector, for example regarding the practicalities of effectively investigating verbal or physical harassment by customers. In addition to these major reforms to the law on preventing sexual harassment, on 8 July, the government announced a proposed ban on non-disclosure agreements (NDAs) in cases involving workplace harassment—including sexual harassment—and discrimination.
NDAs are agreements that contain confidentiality or non-disparagement clauses. These clauses are often referred to as "gagging clauses". Essentially, they restrict what a signatory can say, or who they can tell, about something. They may be part of a settlement agreement where the employer and employee agree terms to settle an employment dispute in a legally binding agreement or they can be found in contracts of employment.
According to the government, while the original purpose of NDAs was to protect intellectual property or other commercial or sensitive information, “NDAs have become commonly used to prevent people speaking out about their experiences of harassment and abuse in the workplace”.
The proposed ban means, if adopted, that NDAs will be void in so far as they purport to prevent the worker making an allegation or disclosure of information relating to certain work-related harassment - which includes sexual harassment - and discrimination.
Watch outs
In light of recent high-profile scandals where NDAs were used to silence victims, the ban is welcomed by many as a step towards greater transparency and accountability. However, there are concerns that such a ban may discourage parties to settle, particularly (but not exclusively) employers if there is no way for them to ensure confidentiality.
The implementation date for the proposed ban is yet to be set, and many details require clarification in secondary legislation. Notably, the current draft does not extend to third-party harassment (eg by customers or suppliers), the duty to make reasonable adjustments in cases of disability discrimination, or victimisation.
There is also potential for exceptions to the ban, including where the NDA is requested by the employee having received independent legal advice at the employer’s expense, as seen in Ireland. It will therefore be essential to monitor the progress of this reform to fully understand the implications for retail and hospitality businesses.
Key dates
Implementation date TBC (expected before end of 2027). Consultation date also TBC.
2. Fire and re-hire: restricted variations and new unfair dismissal risks
In a bid to clamp down on the so-called practice of "fire and re-hire", which has been deployed by an increasing number of retail and hospitality businesses since the Covid-19 pandemic and essentially means using the threat of dismissal with neither proper discussion nor engagement to impose detrimental changes on employees, the Bill originally proposed a near-total ban.
However, the latest amendments introduce a slightly softened, but arguably more complex, approach by introducing the concept of “restricted variations”, meaning that it will be automatically unfair to dismiss an employee for refusing changes to their contract which relate to:
- a reduction in the employee’s pay;
- a variation to measures relating to performance-based pay;
- a variation of any term/condition relating to pensions;
- a variation to the employee’s hours;
- a variation to the timing/duration of a shift (which meets certain conditions to be specified by Regulations);
- a reduction in the amount of time off which an employee is entitled to take; or
- the inclusion of a term in the employee’s contract of employment enabling the employer to make any of the aforementioned variations without the employee’s agreement (ie variation clauses) – although it appears that existing clauses will remain capable of being enforceable.
The list of restricted variations could be expanded by regulations in future. Changes to place of work, duties, or restrictive covenants are not currently included in the restricted list, and the amendment also confirms that dismissals amounting to a place of work redundancy are not to be treated as automatically unfair.
Additionally, it will also be automatically unfair to dismiss an employee if the reason for the dismissal was to enable the employer to replace the employee, on a broadly like-for-like basis, with someone who is not an employee, e.g. an agency worker/self-employed contractor.
There is an exception to this rule where the reason for the replacement is to address the employer’s financial difficulties, and the employer could not reasonably have avoided the need to replace the employee. Importantly, this reform does not require the employer to have proposed a variation to the employee’s contract of employment. Provided that the principal reason for the dismissal is to enable the employer to replace the employee with an individual who:
- is not an employee of the employer;
- is to carry out the same/substantially the same activities as the employee carried out before being dismissed; and
- the dismissal is not wholly or mainly attributable to the fact that the requirements of the employer’s business for those activities to be carried out have ceased or diminished or are expected to cease or diminish,
then, under the latest amendments to the Bill, the dismissal will be automatically unfair. For example, if a retail or hospitality employer replaces all its employees with less costly agency workers, and the activities required have not ceased or diminished - then the dismissals would be automatically unfair.
Watch outs
Given the huge impact of these changes on the law of unfair dismissal, the consultation (which the government has said will launch this Autumn 2025) will be critical in ensuring that employers’ views and concerns are taken into account when shaping the final legislation.
Key dates
The 'fire and re-hire' reforms are due to be consulted on later this year, with an expected implementation date of 1 October 2026.
3. Guaranteed hours for zero hours and agency workers
One of the most significant reforms proposed by the Bill seeks to address the 'one-sided flexibility' of zero or low hours contracts, which are frequently used in the retail and hospitality sector
Under the Bill's proposals, workers who meet certain criteria will be offered guaranteed hours in line with the number of hours regularly worked after the end of each reference period - if this is what they want. Workers will also have the right to reasonable notice of shift changes, with employers required to pay them compensation for any shifts cancelled at short notice.
These new measures will also extend to agency workers. Under the latest amendments, if an agency worker accepts a guaranteed hours offer (GGO) from a hirer, they become a worker (not an employee) and the hirer becomes their employer. No new reference period applies for former agency workers accepting a GHO.
Watch outs
Currently, there is no definition of "low hours" for the purposes of the GHO requirement, which is problematic for those retail and hospitality businesses that are considering how they can comply with the new rules in practice Opposition parties are calling for an hours threshold of eight hours per week over a 26-week reference period. In response, the government has reiterated its intention to consult on the hours threshold and repeated its expectation that the reference period for GHOs will be 12 weeks, adding that "the length of the initial and subsequent reference period and the frequency of subsequent reference periods will be set out in regulations, providing the appropriate flexibility for changes to be made in response to emerging evidence or changing work practices".
Given seasonal working is frequently relied on in the retail and hospitality sector, the reference period and hours threshold are crucial points of contention. Retail and hospitality CEOs may therefore look to engage with the government consultation and share their views on these reforms, to balance the interests of business and workers.
Key dates: The GHO reforms are due to be consulted on later this year. Implementation is expected in 2027 (exact date TBC).
4. Unfair dismissal as a "day one" right
Currently, employees are protected from ordinary unfair dismissal if they have at least two years' qualifying continuous service. One of the key reforms within the ERB, is the proposal to scrap the two-year qualifying period.
The government initially proposed implementing a new statutory probation period (rumoured to be nine months), referred to as an 'initial period of employment (IPE)', which would essentially allow employers a period of flexibility during which they could safely dismiss employees.
During the IPE, the standard of reasonableness for dismissals is modified where the reason, or principal reason, for the dismissal is related to the employee's conduct or capability, a statutory restriction, or some other substantial reason.
Watch outs
In the recent Report Stage, the House of Lords voted to remove the IPE entirely, and to instead reduce the qualifying period of employment for unfair dismissal claims from two years to six months. The House of Lords commended the government's intention to protect workers' rights. However, it recognised the inherent risk to hiring, and how the wholesale removal of the two-year qualifying period, would increase this risk so as to discourage employers from hiring altogether.
The amendment will now go back to the House of Commons, who will have the opportunity to either accept or reject the amendment. If the House of Commons decides to reject the amendment, it is likely that the House of Lords will not seek to block the government's manifesto pledge and that the initial proposal (removal of two years' service) with an IPE will stand.
The government will be consulting on the length of the IPE (the government has previously indicated nine months as a suitable duration), as well as the details of the dismissal process during the IPE (the government has previously stated that this is likely to involve "a lighter-touch process" to enable employers to dismiss an employee who is not right for the job).
Key dates: The unfair dismissal reforms are due to be consulted on this Summer/Autumn, with implementation expected in 2027 (exact date TBC).
Practical takeaways
- Consultation engagement
Engage with upcoming government consultations, especially on the IPE for unfair dismissal claims, restrictions on fire and re-hire, and GHOs for low-hours workers, to ensure that the retail and hospitality sector’s voice is heard. - Monitor developments
Assign responsibility for tracking legislative updates and secondary legislation, ensuring your organisation is ready to adapt as details are clarified. - Scenario planning
Assess the impact of the reforms, for example reduced flexibility in workforce management, particularly for seasonal and variable-hours staff, and plan for potential increases in employment tribunal claims. - Prepare for audit
Depending on the final detail of the legislation, prepare to review all employment contracts, settlement agreements, and HR policies for compliance gaps - especially regarding NDAs, variation clauses, and zero-hours arrangements - as well as redundancy and workforce planning policies. - Educate HR teams and line managers
Prepare to update documentation and train HR teams and managers on the new legal landscape, particularly around harassment, contract variations, and dismissal processes.
Conclusion
The Employment Rights Bill heralds a new era for UK employment law, with profound implications for the retail and hospitality sector’s people strategy, risk management, and operational agility. While many details remain to be finalised, retail and hospitality CEOs must act now to understand the reforms, prepare their organisations, and engage with the legislative process. Early action will be critical to ensure compliance, maintain workforce flexibility, and protect both commercial and reputational interests in a rapidly evolving legal landscape.
Save The Date – 30 September 2025: The Work Couch Live! Employment Rights Bill - What do employers need to know?
Join us for a breakfast panel discussion with John Bowers KC, Professor Catherine Barnard, Shantha David of Unison and other industry leaders to discuss the implications of the Bill and answer your questions.
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Disclaimer: The information in this article is for guidance purposes only and does not constitute legal advice. We attempt to ensure that the content is current as at the date of publication, but we do not guarantee that it remains up to date. You should seek legal or other professional advice before acting or relying on any of the content.
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