Employment Rights Bill

Further and significant amendments to the Employment Rights Bill have been published.

In brief, these amendments:

• provide that certain confidentiality agreements (e.g. NDAs) will be void if they relate to harassment and discrimination
• seek to clarify (and arguably slightly ease) the scope of the ‘fire and rehire’ automatic unfair dismissal protections
• make further changes to zero/low hour workers’ rights, particularly as regards agency workers

Confidentiality agreements (NDAs)

Any provision in an agreement between an employer and a worker will be void where it attempts to prevent the worker from making an allegation or disclosure relating to work-related harassment or discrimination. There will be exceptions for an ‘excepted agreement’ which meets conditions to be specified in regulations. The DBT’s impact assessment offers some insight into what might count as an ‘excepted agreement’ falling outside the scope of the ban - it suggests that where the NDA is requested by a worker it may be permissible.

This will mean that any confidentiality clauses in employment contracts, settlement agreements or other agreements that seek to prevent a worker speaking about an allegation of harassment or discrimination will be null and void.

It remains to be seen what the conditions for an ‘excepted agreement’ will be and how these will differ from the existing conditions for a valid settlement agreement.

Fire and rehire

Under the original proposals an employer wanting to make any change to an employee's contract would be liable for automatic unfair dismissal if it dismissed the individual and rehired them (or hired another person to fill their role) unless they could show that they needed to make the change to avert the imminent financial failure of the business.

The amendments seek to limit the scope of the fire and rehire provisions to particular types of ‘restricted’ contractual variations. These include:

• a reduction in pay
• adjustments to the method used to calculate pay (e.g. commission structures)
• changes to pension entitlements
• reductions in contractual hours or time off
• changes to shift patterns (as defined in future regulations)

Also included is any variation clause that would allow an employer unilaterally to impose one of these changes. The amendment contains a provision allowing the Secretary of State to expand the list through regulations.

There is a narrow exception to this rule. Dismissal where there is a restricted variation will not be automatically unfair if an employer can demonstrate that:

• the proposed variation was needed to eliminate, prevent, significantly reduce or mitigate the effects of financial difficulties that were affecting, or were likely in the immediate future to affect, its ability to continue operating as a going concern or otherwise to carry on its activities, or
• dismissal could not reasonably have been avoided

Not all contractual changes will trigger the new rules. If an employee is dismissed for refusing to accept a non-restricted variation - such as changes to duties, reporting lines, or place of work - the dismissal will not be automatically unfair. However, these may still be challenged under the usual unfair dismissal principles.

As originally drafted the fire and rehire provisions would not apply in a situation where the employer seeks to make changes by dismissing its employees and replacing them with people who are not employees e.g. agency workers. This will also be changed, so that a dismissal will be automatically unfair where an employer dismisses employees for the principal reason of replacing them with people who are not employees, provided the new individual is carrying out substantially the same activities as the employee and the dismissal is not wholly or mainly attributable to the fact that the employer’s need for those activities has ceased or diminished.

The government will be consulting on these provisions in autumn 2025 with a view to them coming into force in October 2026.

Zero hours contracts – guaranteed hours

The provisions relating to guaranteed hours for zero and low hours workers have been made even more complicated, particularly regarding how they apply to agency workers.

The latest amendments would require end hirers to make a guaranteed hours offer to an agency worker on terms which are no less favourable than those the worker had previously been working under.

In particular, pay offered must be no less favourable than either the agency terms they’d been working on or those of comparable workers (who do broadly similar work).

The amendments also clarify that when an agency worker accepts a guaranteed hours offer from an end hirer, they will become a worker (rather than an employee).

Consultation on these proposals will begin in the autumn of 2025, with a view to them coming into force sometime in 2027.