tl;dr
- A new Fair Work Agency (FWA) with the power to conduct proactive investigations and issue punitive financial penalties (up to 200% of the sum owed) for non-compliance (e.g., holiday pay, SSP).
- Employers face a new, proactive duty to take "all reasonable steps" to prevent sexual harassment, including liability for third-party harassment.
- Rules are tightening with potential day-one unfair dismissal rights for redundancy, a ban on the 'fire and rehire' practice (from Oct 2026), and a doubling of the maximum protective award for collective redundancy consultation failures.
- Businesses must immediately audit and update handbooks, contracts, disciplinary, and harassment policies, focusing on new SSP/parental leave rules and third-party relationships.
The UK's Employment Rights Bill (ERB) is set to fundamentally reshape employment, moving the focus squarely onto enhanced worker protection and significantly increased employer liability.
At Randstad, we believe this legislative shift is an opportunity for forward-thinking clients to solidify their status as a partner for talent. The Bill introduces a new environment where proactive compliance isn't just a best practice. It's a legal and financial mandate.
Now is the time to prepare, not react.
the power shift in state enforcement and financial risk
A new, centralised regulatory body and stricter penalties signal a more interventionist era for employers.
centralised and proactive enforcement
The new Fair Work Agency (FWA), expected to be established in April 2026, will consolidate existing enforcement functions and take on new areas like holiday pay and Statutory Sick Pay (SSP). Crucially, this agency is anticipated to be proactive, conducting investigations and inspections without needing an initial worker complaint.
punitive financial penalties
The financial risk of non-compliance is dramatically increasing. For failures in areas like holiday pay or SSP, the FWA can issue a Notice of Underpayment, backed by a significant 200% penalty of the sum owed.
extended claim timeframes
The time limit for most Employment Tribunal claims is set to increase from the current three months to six months from October 2026. This extension means that potential disputes will remain an open liability for your business for a longer period of time.
significant increase in harassment liability
One of the most immediate changes is the new, proactive duty on employers to prevent harassment.
"All Reasonable Steps" duty
From October 2026, the duty on employers to prevent sexual harassment will be strengthened, requiring them to take "all reasonable steps". This means your business must actively review and update its policies, conduct audits, and ensure comprehensive training is in place to create a truly safe workplace.
third-party liability
The new law will also make employers liable for harassment of their employees by third parties (such as clients or suppliers) if they fail to take "all reasonable steps" to prevent it. This liability applies immediately, removing the 'two strikes rule' from the old law.
actionable preparation
We recommend auditing your current policies—especially for events with a higher risk, like social gatherings—and integrating specific clauses into your contracts with vendors, requiring them to uphold your harassment prevention standards.
Looking for help to navigate the ERB?
request a call backcontractual rights, redundancy, and restructuring are tightening
The framework for managing your workforce's contracts and any restructuring activity will become more restrictive and costly.
day-one unfair dismissal
While a full day-one right to protection from unfair dismissal (removing the two-year qualifying period) isn't expected until 2027, an employee can be dismissed during a proposed statutory 'light touch' initial employment period for reasons like capability or conduct. However, dismissals for redundancy will grant full rights from day one.
restricted fire and rehire
Dismissal will become automatically unfair if the reason is a failure to agree to a change in certain contractual terms (like pay, hours, or pensions). This practice is set to be banned from October 2026, with only a very limited exception for severe financial distress.
doubled redundancy liability
From April 2026, the maximum protective award for failure to carry out collective redundancy consultation is expected to double to 180 days' uncapped pay (up from 90 days). Furthermore, new regulations are expected to broaden the collective consultation trigger to potentially include redundancies across the entire business.
parental leave protection
Enhanced dismissal protections for pregnant employees and those returning from maternity leave (extending for six months after return) are planned for 2027. These individuals will likely have first preference for suitable alternative employment in a redundancy situation.
trade union rights and employee voice strategy
The Bill aims to make it easier for trade unions to gain representation, requiring employers to proactively manage their internal 'employee voice' strategies.
lowered recognition threshold
Measures in April 2026 will simplify trade union recognition, with a possibility that the membership threshold to trigger statutory recognition could drop significantly.
right to access
From October 2026, trade unions will have an enhanced right of access to the workplace, which includes the potential for digital access (such as communicating with workers).
proactive engagement is key
To effectively manage this shift, businesses should focus on building employee voice strategies and engaging regularly with staff to address concerns and "win hearts and minds".
next steps: getting in shape now
We strongly encourage you to:
- Immediately review all staff handbooks, contracts, and disciplinary procedures to accommodate the new SSP rules (day one pay for all earners from April 2026) and parental leave rights (day-one paternity/unpaid parental leave from April 2026).
- Review your sexual harassment risk assessment and control measures, with particular focus on third-party relationships.
- Audit your zero-hours and casual worker contracts now, as the guaranteed hours provisions due in 2027 apply to both agency workers and internal casual workers.
- Review your recruitment and probation management processes, as the costs and risks associated with new hires will increase once day-one dismissal rights are implemented.
We are committed to being your trusted partner through these changes.
Request a call back with our team today if you need help navigating what the Employment Rights Bill means for your organisation.
