VOICE OF BUSINESS

UK Employment Rights Bill:

Key changes and how businesses should prepare

Labour’s Employment Rights Bill, introduced in October 2024, is nearing the final stages of the UK parliamentary process and is set to bring some of the most significant changes to UK employment law in decades. With reforms due to be phased in between 2025 and 2027, businesses need to understand what’s coming and act early to stay compliant.

What Amendments Have Been Proposed?

Several changes to the legislation were proposed during the Report Stage in the House of Lords and have the backing of the British Chambers of Commerce (BCC) Research by the BCC shows 79% of firms don’t feel the impact of new government policies is being properly assessed and 77% think policy change is not moving at the right pace.

The Lords’ amendments, which could make a real difference for business, are:

• Reducing the qualifying period for unfair dismissal from two years to six months, rather than to day one, with a statutory probation period brought in after that. This will help ensure the employment relationship is right for everyone.

• Additional consultation being carried out before introducing some elements of the bill. These include zero-hours contracts, flexible working, Statutory Sick Pay and unfair dismissal.

• Retaining the turnout threshold of 50% of union members voting in a ballot for it to be valid.

• Employees getting a right to request a guaranteed hours contract after 26 weeks. This is instead of employers having to continuously offer them to people, even if they prefer the flexibility of their current arrangements.

What Does The Bill Mean for Business?

The changes will require a major review of policies, contracts and HR practices. Employers should prepare now by updating variation clauses, leave policies and sick pay terms, as well as training managers on new obligations.

Commenting on the changes, Maria Davison Skills and Policy Director at the Chamber of Commerce, said: “The Employment Rights Bill represents a fundamental shift in the employeremployee relationship. While it aims to deliver greater fairness and security for workers, it also brings significant compliance challenges for businesses. Planning ahead is essential. We’re committed to supporting members through these changes with clear guidance and practical advice.”

To help businesses navigate this evolving landscape, the Chamber recently hosted a webinar outlining the key reforms and their implications. Further events and resources are planned to ensure members remain informed as new requirements come into force.

Mandatory ID verification for company directors And PSCs

From November

From 18 November 2025, Companies House will introduce new legal requirements for directors and people with significant control (PSCs) of companies to verify their identities.

• New directors will need to complete verification to incorporate a company or take up a new appointment.

• Existing directors must verify at the point of filing their next annual confirmation statement, within a 12-month transition period.

• PSCs will also be required to verify within 12 months of commencement. Verification can be completed quickly and free of charge via GOV.UK One Login, or through an Authorised Corporate Service Provider (ACSP).

More than 300,000 individuals have already verified their identity during the voluntary period.

Companies House will contact businesses with guidance and support ahead of the rollout.

Backing your business: A step forward for SMEs

The UK Government has launched its Backing Your Business plan, placing small and medium-sized enterprises (SMEs), which make up 99.8% of UK businesses, support 60% of private sector jobs and generate over £2.8 trillion, at the heart of economic growth. The strategy aims to remove barriers, foster innovation, and create the best G7 environment to start and grow a business.

Key measures include:

• Fixing Fundamentals:

New legislation to tackle late payments, cut regulatory costs by 25%, simplify compliance, and accelerate planning processes.

• Finance Access: Expanded Start-Up Loans for 69,000 firms, £5bn ENABLE guarantees, regional investment, and digital finance tools.

• Backing Everyday Economy: High street regeneration, permanent business rate cuts for small retail and hospitality, and tougher crime prevention.

• Skills and Technology: £1.2bn annual investment in skills, apprenticeships, and digital adoption, plus leadership and AI training.

• Opening Opportunities: A new Business Growth Service, increased export finance (£80bn), and enhanced SME procurement access.

Responding to the announcement, Alex Veitch, Director of Policy at the British Chambers of Commerce, called it “a much-needed step forward in recognition and support for SMEs.” He welcomed action on late payments, “a well-established barrier to growth”, and the new online Business Growth Service as a valuable link to local Chambers of Commerce.

Veitch praised the focus on exports and technology adoption but warned more must be done:

“Businesses are still struggling with a mounting wall of costs. We need longerterm reform of business rates and no further tax increases. Strategic plans set the direction, now we need funding and real-world support to deliver growth and reduce the cost of doing business.”