Labour’s flagship Employment Rights Bill has cleared its final parliamentary hurdle and is set to become law before Christmas, marking the most significant expansion of workers’ rights in a generation.
The legislation passed its final stage in the House of Lords after Conservative peer Lord Sharpe, the shadow business and trade minister, withdrew a last-minute amendment during parliamentary “ping pong”. The move removed the final obstacle to the bill’s passage.
Prime Minister Sir Keir Starmer hailed the moment as a major milestone for employees across the country.
“This is a major victory for working people in every part of the country,” he said. “We have just introduced the biggest upgrade to workers’ rights in a generation. Today our plans passed through parliament, and will soon become law.”
The bill applies to England, Scotland and Wales, but not Northern Ireland, and is expected to receive royal assent later this week. Most of its measures will require secondary legislation before they come into force.
Under the new law, workers will gain access to statutory sick pay and paternity leave from their first day in a job. The legislation also introduces strengthened protections for pregnant women and new mothers.
Labour had originally pledged to give employees the right to claim unfair dismissal from day one, but backed down in November following concerns from business groups. Instead, enhanced unfair dismissal protections will apply after six months of employment — now the bill’s most significant reform.
Trade unions welcomed the bill’s passage but warned against further dilution. Unite general secretary Sharon Graham said it must now be implemented “without any further dilution or delay”.
“The bill has already been watered down far too much, not least the failure to ban fire and rehire and zero-hours contracts,” she said.
TUC general secretary Paul Nowak described the vote as a “historic day and an early Christmas present for working people across the country”.
“Finally, working people will enjoy more security, better pay and dignity at work thanks to this bill,” he said, urging the government to implement the reforms “at speed”.
The Conservatives, however, criticised the timing of the legislation, arguing it risks damaging employment.
“It is ironic that Labour’s job-destroying unemployment bill passed on the same day official figures confirmed unemployment has risen every month this government has been in office,” a party spokesperson said, referring to data showing unemployment rose to 5.1 per cent in the three months to October.
Shadow business secretary Andrew Griffith warned the bill would “pile costs onto small businesses, freeze hiring, and ultimately leave young people and jobseekers paying the price”.
Business groups including the British Chambers of Commerce and the Federation of Small Businesses said earlier this week that they remained concerned about aspects of the reforms, but accepted that with the six-month qualifying period retained, the bill should now be passed to provide certainty.
Employment lawyers said employers should now shift focus from speculation to implementation.
Florence Brocklesby, founder of Bellevue Law, said: “Regardless of views on the pros and cons of the reforms, employers will welcome certainty and the ability to plan. Implementation should be treated as a major project, with sufficient senior management and HR resource.”
She warned that the new six-month unfair dismissal threshold would require stronger hiring processes and early performance management, while the lifting of the compensation cap would be most significant for employers with large numbers of highly paid staff.
Jo Mackie, employment partner at Michelmores, raised concerns about uncapped unfair dismissal damages, saying they could “encourage claims and strike fear into employers”, potentially discouraging recruitment.
Dave Chaplin, chief executive of ContractorCalculator, said the reforms risked reducing permanent hiring among small businesses.
“For SMEs, a six-month cliff edge dramatically increases the risk of hiring,” he said. “The irony is that while the bill strengthens protections for those already in work, it raises the hurdles for people trying to get a job.”
With royal assent imminent, employers and employees alike are now bracing for one of the biggest shifts in workplace regulation in decades — with the real impact set to unfold as the reforms are phased in.
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Employment Rights Bill clears final parliamentary hurdle and set to become law
