The UK employment rights bill marks the biggest shake-up of British labour law in a generation. Day-one unfair dismissal protection, zero-hours reform, and a stronger statutory sick pay regime are coming. Royal Assent is expected in 2026. Foreign employers running UK teams must act early. This guide breaks down the practical changes, the new compliance risks, and the steps to prepare. Use it to brief your HR partners, update contracts, and protect your UK workforce from costly tribunal claims.
What is the UK employment rights bill?
The UK employment rights bill is a major reform package that strengthens protections for workers from their first day of employment. It removes the two-year qualifying period for unfair dismissal claims. Moreover, it overhauls zero-hours contracts and improves statutory sick pay. The Labour government introduced the bill in October 2024. Royal Assent is expected during 2026, with most provisions phasing in afterwards through secondary legislation.
The bill affects every employer with UK staff. This includes foreign companies operating through a UK entity, an employer of record, or a payrolling partner.
Day-one unfair dismissal: the biggest shift in the employment rights bill
Day-one unfair dismissal is the headline change in the employment rights bill. Today, workers must complete two years of service before they can claim unfair dismissal. Under the new rules, that protection starts immediately. However, the bill introduces a statutory probation period, expected to last around nine months. During probation, employers can use a lighter, fairer dismissal process. Even so, you must still document performance, follow proper procedures, and avoid discriminatory grounds.
This shift changes hiring economics. Therefore, foreign employers need tighter onboarding, clearer probation terms, and stronger evidence trails. Sloppy paperwork now creates immediate tribunal risk from week one.
How will zero-hours contracts change?
Zero-hours contracts will not vanish, but they will look very different. The employment rights bill bans exploitative zero-hours arrangements. Workers gain new rights to reasonable shift notice, compensation for cancelled shifts, and protection against last-minute changes. Additionally, agency workers receive similar safeguards.
Foreign employers using flexible UK staffing models must review every casual contract. Furthermore, you should audit any reliance on agency labour. Otherwise, you risk claims for unpaid notice and shift-cancellation pay.
Guaranteed hours: a new contractual right in the employment rights bill
Guaranteed hours is a new statutory right in the employment rights bill. Workers on zero-hours or low-hours contracts can request a contract reflecting the hours they regularly work. The reference period is expected to be twelve weeks. Consequently, employers must offer guaranteed hours when a worker’s pattern is stable.
Workers can refuse the offer and stay flexible. Still, employers cannot ignore the request. As a result, you need workforce data, clear records of actual hours, and a process to issue these new contracts on time.
What does the bill mean for statutory sick pay?
The employment rights bill strengthens statutory sick pay (SSP) significantly. The three day waiting period disappears, so SSP starts from day one of sickness. Additionally, the lower earnings limit is removed. Therefore, low-paid workers who currently miss out will qualify.
Foreign employers must update payroll systems, sick leave policies, and budget forecasts. Moreover, sick-pay costs will rise for businesses with low-wage UK staff.
Key changes of the employment rights bill at a glance
The table below summarises the headline reforms in the UK employment rights bill.
| Area | Current rule | New rule under the bill |
| Unfair dismissal | After 2 years of service | Day one, with statutory probation |
| Zero-hours contracts | Largely unregulated | Guaranteed hours, shift compensation |
| Statutory sick pay | After 3 waiting days | From day one, no earnings floor |
| Flexible working | Right to request | Stronger right, narrower refusal grounds |
| Fire and rehire | Permitted in practice | Sharply restricted |
How should foreign employers prepare?
Foreign employers should prepare by auditing UK contracts, refreshing dismissal procedures, and updating payroll. Start now, because tribunal exposure begins on day one once the rules take effect. First, map every UK worker by contract type. Second, review probation clauses and performance documentation. Third, audit zero-hours and casual arrangements.
Additionally, train UK line managers on the new dismissal standard. They will be your first line of defence. Furthermore, partner with a local employer of record or HR consultancy to interpret the secondary legislation. Finally, build a shift-data system so you can issue guaranteed-hours offers correctly and on time.
Compliance risks and penalties
The employment rights bill increases tribunal exposure sharply. Day-one dismissal claims will multiply, especially during probation. Tribunals can also award uplifted compensation when employers ignore the new codes of practice. Moreover, fines for unpaid statutory sick pay and zero-hours breaches will rise.
For foreign employers, the reputational and financial risk is real. Therefore, treat the bill as a board-level compliance project, not a routine HR update.
Need help preparing your UK workforce for the employment rights bill? Octagon Professionals helps foreign employers stay compliant through payrolling, employer of record, and HR consultancy services. Talk to our team and protect your UK operation before the rules take effect.
Frequently asked questions
When will the UK employment rights bill take effect?
Royal Assent is expected during 2026, but most provisions will phase in afterwards through secondary legislation. Day-one dismissal rights and zero-hours reforms are likely to start later in 2026 or in 2027. Employers should monitor government announcements. Meanwhile, prepare contracts and policies now.
Does the employment rights bill apply to foreign employers?
Yes. The bill applies to every worker employed in the UK, regardless of where the parent company is based. Therefore, foreign employers using a UK subsidiary, employer of record, or payrolling provider must comply. Your UK staff gain the same day-one rights as employees of UK-headquartered firms.
Can I still use a probation period under the new rules?
Yes. The employment rights bill introduces a statutory probation period, expected to last around nine months. During probation, you can use a lighter dismissal process. However, you must still act fairly, document performance, and avoid discrimination. Probation will not be a free-pass period.
Will zero-hours contracts be banned?
No, zero-hours contracts will not be banned outright. The bill bans exploitative use of them. Workers gain rights to guaranteed hours, reasonable shift notice, and shift-cancellation pay. Therefore, you can still offer flexible arrangements, but only with proper safeguards and clear contractual terms.
What is the cost impact of the new statutory sick pay rules?
Statutory sick pay costs will rise because waiting days disappear and low-paid workers become eligible. Employers with high sickness rates or large low-wage workforces feel the biggest impact. Therefore, update your payroll budget, review absence management, and consider occupational health support to control costs.
