Employment Rights Bill 2024: what UK employers must change

The Employment Rights Act 2024, delivered from the Bill of the same name introduced in October 2024, is the most substantial rewrite of UK employment law since the Employment Rights Act 1996. It sits on top of the UK government's Make Work Pay programme and touches almost every area of day-to-day HR practice: unfair dismissal qualifying periods, zero-hours contracts, statutory sick pay, flexible working, dismissal and re-engagement, and collective consultation. Most of the operative commencement dates land in 2026 and 2027 as regulations come through. UK employers, and international employers with UK headcount, should start the contract and policy groundwork now rather than wait. This article is a practical read of what is changing, when, and what to do about it.

Overview and commencement timeline

The Bill received Royal Assent in 2025 as the Employment Rights Act 2024. The Act creates the statutory framework; most operational detail sits in regulations the Department for Business and Trade is consulting on and publishing in waves. Headline changes are expected to commence across three broad phases:

• Phase 1 (already in force or in force 2025): trade union access and ballot simplifications, repeal of most of the Strikes (Minimum Service Levels) Act 2023, creation of the Fair Work Agency as a single enforcement body.
• Phase 2 (expected 2026): day-one unfair dismissal rights with a statutory probation period, day-one statutory sick pay, day-one paternity and bereavement leave, reform of fire-and-rehire.
• Phase 3 (expected 2027): the operative parts of the zero-hours contract regime including the right to a guaranteed-hours contract, and the bulk of the Fair Work Agency's enforcement powers.

Timings are indicative. Several parts have been paced deliberately to allow consultation, and the UK government's October 2024 Next Steps paper signalled that the majority of reforms would not take effect earlier than 2026. Check the latest Acas guidance before making contract changes.

This is general guidance; for tailored advice on your UK contract suite, contact info@octagon.nl.

Day-one unfair dismissal rights and the statutory probation period

Today, an employee needs two years of continuous service to bring an ordinary unfair dismissal claim. Under the Act, that qualifying period goes. Unfair dismissal becomes a day-one right, subject to a statutory "initial period of employment" (the new probation period) during which a lighter-touch dismissal standard applies.

What we know from the Act and the Government's consultation response:

• The initial period will be set in regulations. The Government's stated preference is nine months.
• During the initial period, the employer can still dismiss for conduct, capability or other legitimate reasons without the full procedural weight of an ordinary unfair dismissal.
• Dismissal for an automatically unfair reason (whistleblowing, trade union activity, pregnancy, asserting a statutory right) remains day-one, full-weight, during the initial period and afterwards.
• Compensation for dismissal in the initial period is expected to be capped below the standard unfair dismissal ceiling, mirroring the approach used in discrimination-linked awards.

What to do now:

• Audit every UK employment contract. Replace "probationary period" clauses with a clause that refers to the "initial period of employment" and flexes to whatever the final regulations say.
• Rewrite the performance-management and probationary-review policy so there is a documented, repeatable process for decisions inside the initial period.
• Train line managers. Under the new regime, the difference between a defensible dismissal in month seven and an indefensible one often comes down to whether the manager recorded the concerns, the feedback and the improvement opportunity.

Zero-hours contracts and the right to guaranteed hours

The Act does not ban zero-hours contracts. It does require employers to offer a guaranteed-hours contract to qualifying workers after a reference period, reflecting the hours actually worked during that period. It also introduces a right to reasonable notice of shifts and compensation for short-notice cancellations.

The key operational details are in the regulations:

• The reference period is expected to be 12 weeks.
• The right to be offered guaranteed hours will apply to low-hours contracts as well as zero-hours, preventing employers from evading the regime by using a one-hour contract.
• The worker can accept or refuse the offer. A refused offer does not collapse the arrangement; it simply means the status quo continues until the next reference period.
• Agency workers are within scope under the consultation response, with responsibility split between the end-hirer and the agency.
• Short-notice cancellation compensation is expected to apply below a specified notice threshold, with levels set in regulations.

For retail, hospitality, facilities management and logistics employers using variable-hours models at scale, this is a significant change. The compliance load is the administrative work of tracking hours worked, identifying qualifying workers, issuing offers, and logging refusals. It is a systems problem before it is an HR problem.

Statutory sick pay from day one

Statutory sick pay (SSP) changes in two ways. First, the three-day waiting period is removed, so SSP is payable from the first qualifying day of sickness. Second, the lower earnings limit is removed, extending SSP to lower-paid workers currently excluded.

The employer cost impact is material for workforces with high-frequency short absences. Practical steps:

• Model the cost of day-one SSP against your current absence pattern.
• Review whether existing enhanced sick pay policies still fit. Many contractual sick-pay schemes are drafted on top of the statutory baseline; changing the baseline changes the cost curve.
• Update the absence-reporting process so day-one absences capture the information SSP requires.

Flexible working

Flexible working was already a day-one right in 2024. The Act makes the regime stricter for employers. The existing duty to "deal with a request in a reasonable manner" is supplemented with a new requirement to explain, in writing, why the statutory business grounds apply. Acas is expected to publish a new Code of Practice.

The practical change is smaller than the headline suggests, but the documentation burden goes up. Template refusal letters that survived scrutiny under the 2024 rules will not survive under the new Code without work.

Fire-and-rehire and the end of P&O-style dismissal

The Act significantly restricts "fire and rehire" (dismissal and re-engagement on changed terms) and "fire and replace" (dismissal and replacement with a new worker on different terms). Dismissal for refusing a variation of contract becomes automatically unfair unless the employer can show genuine financial distress that cannot reasonably be avoided by other means.

The Government has also signalled that breaches of the new collective consultation regime in mass redundancies may trigger increased protective awards, shifting the maximum from 90 days' pay per employee to potentially higher. Check the final regulations when they land.

For any UK group contemplating a restructure, a contract harmonisation or a site closure in 2026 and beyond, the playbook changes. Build in longer consultation windows, document the alternatives considered, and get legal sign-off earlier than you would have in 2024.

Other material changes

Worth noting, even if they get less coverage:

• Day-one paternity leave and bereavement leave rights.
• Stronger rights against harassment at work, including new employer duties on third-party harassment.
• Broader pregnancy and return-from-leave dismissal protections.
• Expansion of trade union access rights, including rights to enter workplaces for organising purposes under regulated conditions.
• Creation of the Fair Work Agency, consolidating HMRC national minimum wage enforcement, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority into a single body with expanded powers.
• Tighter regulation of the umbrella company sector, with statutory definitions and direct enforcement by HMRC.

How the UK reforms interact with Dutch employment law for cross-border employers

For international groups running payroll in both the Netherlands and the UK, the Act brings UK practice closer to the Dutch baseline on several points, but not all. The direction of travel is familiar:

• Day-one protection against dismissal moves the UK towards the Dutch model of preventive protection, though the UK remains employer-friendlier on probationary-period flexibility.
• Zero-hours reform narrows the gap with the Dutch oproepovereenkomst rules and the Dutch minimum three-hour call-out protection.
• Stronger collective consultation expectations pull UK practice a little towards the Dutch OR (works council) dynamic, though without creating a statutory works council right.

What this means operationally: a group that has one employment policy template for NL and another for UK will find the UK template more complex to maintain in 2026 than it was in 2024. A policy suite designed once at group level and localised carefully in each country is the route that scales.

FAQ

When exactly do day-one unfair dismissal rights take effect?

The Act provides the framework, but commencement is by regulation. The UK Government's Next Steps paper indicated that day-one unfair dismissal would not take effect before 2026, and Acas has pointed to a 2026 commencement with a statutory initial period of employment running alongside. Check the latest regulations on gov.uk before making contract changes.

Do existing probation clauses still work?

For now, yes. They cover the probationary period under current law. Once the initial period of employment regulations come into force, existing clauses will not map cleanly to the statutory regime and will need to be updated. The risk is not immediate invalidity; it is confusion, inconsistency with the statutory scheme, and friction in any tribunal defence.

Does the zero-hours regime apply to agency workers?

The Government's consultation response confirmed that the zero-hours measures will apply to agency workers, with shared responsibility between the end-hirer and the agency. The detail is in the regulations published in waves during 2026. Agencies and end-hirers should agree in writing who issues the guaranteed-hours offer, who tracks reference-period hours, and who pays any short-notice cancellation compensation.

Are small employers exempt?

No general small-employer exemption applies under the Act. The Government's stated policy is that all employers, regardless of size, sit within the core rights regime. Some specific measures may be phased for smaller employers during implementation, but that will be set out in regulations, not in the primary Act.

How does the Fair Work Agency change enforcement?

The Fair Work Agency consolidates three existing enforcement bodies and has powers over national minimum wage, employment agency conduct, umbrella companies, modern slavery and labour abuse. It can inspect, investigate, issue notices and, in due course, bring civil actions for arrears of wages and holiday pay. For employers, it centralises the risk picture: a single regulator with a broader remit and published performance targets.

Will UK employment law keep diverging from EU law?

In direction, yes; in substance, the Act actually narrows some of the 2017-2023 divergence (for example on harassment protections and collective consultation). Employers should not assume the UK will keep moving further from EU norms. It is more realistic to plan for targeted divergence on discrete topics, with a broadly familiar protection baseline.

Do the changes apply to workers as well as employees?

Some do, some do not. Unfair dismissal remains an employee-only right. SSP changes apply to the broader "worker" category subject to the removed lower earnings limit. Zero-hours reforms apply to workers. Read each measure against the statutory definition in the final regulations.

What this means for UK employers

The work that pays off in 2026 is not the headline-grabbing tribunal prep. It is the contract and policy hygiene now.

Four practical priorities. First, run a contract clause audit across every UK employment template: probation, dismissal, flexible working, pay deductions, shift-change. Build a variation list mapped to each Act-triggered change. Second, rewrite the line-manager handbook. Day-one unfair dismissal rights shift the centre of gravity of risk from HR to the line manager making calls inside the initial period. If that manager has not been trained on the new standard, the tribunal pleading writes itself. Third, instrument variable-hours operations for the zero-hours regime. This is a data problem as much as an HR problem. Track hours worked by worker, at week-level granularity, with a reference-period rolling window. Fourth, plan restructures under the new fire-and-rehire regime. If a contract harmonisation or redundancy programme is in the 2026-2027 pipeline, get the legal and consultation strategy in place now.

There is time, but not as much as the commencement dates suggest. The contract, policy and systems work is 6 to 9 months, done well.

How Octagon helps

Octagon is an international HR specialist for regulated sectors, running payroll, EOR and HR advisory in nine European entity markets. For UK employers and for international groups with UK headcount, we review UK employment contract templates against the Act, update probation, flexible working and dismissal policies, redraft the variable-hours operating model for the zero-hours regime, and train line managers on day-one dismissal risk. Where the UK operation is small and the administrative load of standing up a local HR function does not justify itself, our UK EOR service carries the employment relationship directly. Contact info@octagon.nl for a UK employment policy review.