Significant Last-Minute Amendments to the Employment Rights Bill: What Employers Need to Know

Speedread

On the evening of 7 July 2025, a new set of last-minute amendments to the Employment Rights Bill (‘ERB’) were published, including some significant Government amendments. These amendments include new restrictions on non-disclosure agreements, an extension of the ERB’s new bereavement leave entitlements to pregnancy loss and changes to proposed fire and rehire and zero hours contract reforms.

Amendments put forward by the Government are more likely to become law due to Labour’s majority in the House of Commons. Given the number of stages still left to complete in the Parliamentary process before Summer recess on 22 July (24 July in the House of Lords), the ERB is now expected to pass in the Autumn. Please also see our recent update on implementation timings for the ERB’s reforms. 

In this article we set out the Government’s tabled amendments and the potential impacts for employers.

Government amendments proposed

Limits on use of non-disclosure agreements (‘NDAs’)

We have recently written about new restrictions coming into effect in Autumn 2025 in respect of confidentiality provisions and NDAs more generally following increased scrutiny as a result of the #MeToo movement. Increased campaigning surrounding the use of NDAs and pressure during Parliamentary debates has led to the Government adding significant new provisions to the ERB at a late stage, which, if passed, will make any provision in an agreement between an employer and a worker void in so far as it prevents the worker from making an allegation or a disclosure of information relating to relevant harassment or discrimination.

The key points are:

• The new restriction will apply in respect of confidentiality clauses which purport to prevent an employee making an allegation or disclosure of information relating to (i) relevant harassment or discrimination by a worker; or (ii) an employer’s response either to the relevant harassment/ discrimination itself or to the making of an allegation/disclosure of information relating to the relevant harassment or discrimination.  
• ‘Harassment or discrimination’ for these purposes is limited to harassment and most types of discrimination under the Equality Act 2010, but it does not currently extend to a failure to make reasonable adjustments or victimisation.  
• It will be ‘relevant harassment or discrimination’ if: (i) it consists (or is alleged to consist) of conduct by either the worker’s employer or another worker of that employer; or (ii) the person alleged to be the victim of the harassment or discrimination is a worker of the employer.  
• The prohibition applies to any agreement between an employer and a worker of the employer and so would, as currently drafted, include both employment contracts and settlement agreements. The Government announcement confirms that if passed, “these rules will mean that any confidentiality clauses in settlement agreements or other agreements that seek to prevent a worker speaking about an allegation of harassment or discrimination will be null and void.”   
• However, certain powers are reserved to the Government to make regulations to:
  • except certain agreements so that the ban does not apply – we need to wait and see what this might include but this could perhaps include scenarios where a worker has entered into a non-disclosure agreement following specified procedural safeguards whereby they are deemed to enter into the non-disclosure provisions with full knowledge and understanding or where such NDA is requested by the worker; and
  • extend the remit of the prohibition to cover other categories of individual, such as those in work-experience or training or contractors.

Impact for employers:

This is a significant new addition. Campaigners who have been pressing for change in this space will be pleased with these proposed changes. However, an unintended consequence could be that employers are less willing to settle discrimination and harassment claims without such protection against disclosures and may be more willing to proceed to litigation to defend allegations. Regardless, employers should watch for developments in this space and, if the changes are agreed, consider reviewing their terms and practices around non-disclosure provisions, including in settlements. Given that this is a late stage amendment, this was not referenced in the Government’s implementation roadmap, so clarity on timing is needed if the amendment is agreed.

Extension of bereavement leave entitlements to pregnancy loss

In earlier debates on the ERB, Justin Madders MP committed to making amendments to extend the right to bereavement leave being introduced via the ERB to pregnancy loss that occurs before 24 weeks. It is therefore no surprise that the Government announced an amendment to the ERB to extend the new statutory bereavement leave right of at least one week’s bereavement leave to families who experience pregnancy loss before 24 weeks. Both an employee who has suffered pregnancy loss and those who satisfy certain relationship conditions will be entitled to leave. The Government has committed to consulting on bereavement leave in Autumn, so we wait for further details.

Impact for employers:

Many employers already offer their own discretionary compassionate leave to cover such circumstances and often individuals may be entitled to take other types of paid leave such as sick leave. This new right will be welcomed by many, however, given this, as currently drafted, is currently a right to unpaid leave, it is likely to be of only limited assistance to those individuals who need it. Whether or not the Government decides to make this a paid right or whether employers decide to enhance this statutory leave will be determinative of future take up. 

Fire and rehire

As we have written about here and on our Reform Hub, the ERB includes new rules, which, although not quite an outright ban, would significantly reduce the ability of employers to impose changes to contracts through fire and rehire or fire and replace. Under the previous drafting, a dismissal (including a constructive dismissal) would be considered automatically unfair where either:

• the employer tried to vary an employee’s contract of employment and the employee refused; or
• where the dismissal was to enable the employer to employ another person, or to re-engage the employee, under a varied contract of employment to carry out the same duties.

This is unless the limited significant financial difficulty exception applies (which appears to be a very high hurdle).

Concerns had been raised that these provisions could have unintended consequences and could bite on employers who may not consider themselves engaging in ‘traditional’ fire and rehire exercises or even apply to variations that may involve positive changes for the employee.

The new amendments, if passed, represent a shift in approach, and include:

• Restricted variations and non-restricted variations
  • The automatic unfair dismissal protection will now be limited to circumstances where an employer has tried to make a ‘restricted variation’. Restricted variations include variations:
    • that reduce or remove pay entitlements or that vary the measures that determine pay based on the work done or performance
    • to terms relating to pensions or pension schemes
    • to hours of work or the timing or duration of shifts
    • that reduce an employee’s entitlements to time off
  • The Government has powers to (i) add to this list of restricted variations or (ii) clarify what payments, expenses or other contractual benefits are not considered to be restricted variations.
  • In addition, there is now an anti-avoidance provision, which makes variation clauses (or so-called flexibility clauses) that would enable the employer to make changes to any of the above restricted matters without the employee’s agreement to a restricted variation. As such, trying to impose such a flexibility clause without agreement would be caught by these rules and employers would face the risk of any dismissal being automatically unfair. On current drafting, this does not appear to prohibit such flexibility clauses where they are in contracts before the fire and rehire changes come into force, or where such a clause is included in the contract at the outset of employment after the EBR has become law.  
  • Variations that are not caught by the new definition of ‘restricted variation’ will now not be automatically unfair. At the moment, non-restricted variations would include changes to the place of work and an employee’s duties, though this could change as the amendments are considered by Parliament or in Regulations after the ERB passes.   
  • However, employers will still need to satisfy a tribunal that the dismissal was fair in the usual way. Amendments to the ERB set out factors that a tribunal must consider in assessing if the fairness of a dismissal, including the reason for the variation, any consultation carried out by the employer, anything offered in return for the variation and any other matters in future regulations. In practice, these are all things a tribunal would look at in assessing fairness under the current law, so this is unlikely to have a significant impact on how tribunals approach this analysis.  
  • Impact for employers: Overall, the ERB’s fire and rehire reforms are still significant, but these last-minute changes will be welcomed by employers as giving much-needed clarity; the downside is that they will make the law on fire and rehire more complicated for employers to navigate. This clarity on restricted and non-restricted variations will give employers some reassurance that certain changes, such as office moves or changes to job duties (on current drafting) will not trigger the automatically unfair dismissal protections in the ERB. However, employers will be keen to see what is added to the list of restricted variations by regulations in the future to see if this changes.  
• Fire and replace with someone other than an employee
  • As noted above, the ERB already provided that a dismissal would be automatically unfair if the reason for dismissal was to enable the employer to employ another person or to re-engage the same employee under a varied contract of employment to carry out the same or substantially the same duties as beforehand.  
  • A proposed amendment closes a drafting gap so that it will also be automatically unfair to dismiss an employee in order to replace them with an individual who is not an employee, such as an agency worker, to carry out the same or substantially the same activities. This is unless the employee’s dismissal is wholly or mainly attributable to the fact that the requirements of the employer’s business for those activities have ceased or diminished or are expected to do so. 
  • As with the existing provisions of the ERB, there is also an exception to this if the employer is in significant financial difficulties (again, subject to a stringent test) and could not reasonably have avoided the need to replace the employee with a non-employee. Where this exception applies, an employer will still need to show that the dismissal was fair and a tribunal must consider certain matters when determining fairness  
  • Impact for employers: This amendment achieves the Government’s original policy intention, based on high profile cases in the press. However, this is an important extension and means that where employers are considering replacing an employee with a non-employee to carry out the same or substantially the same activities as the employee, any such dismissal will be automatically unfair except in limited circumstances.

There are other changes that will affect public sector and local authority employers, providing for new separate tests for the financial difficulties exception so that they are more applicable to those types of employers.

We note that the Government is planning to consult on fire and rehire measures in Autumn 2025, so we wait to see what is included in this, particularly if there are proposed additions to what is considered a ‘restricted variation’.

Zero-hour contracts

We have written about the proposed reforms to zero-hours contracts in our Reform Hub. These are already complex, and these amendments add to their complexity whilst also adding some clarifications.

Key changes include:

• The Government has the power to make certain exceptions to the requirements to make a guaranteed hours offer (‘GHO’) to a qualifying worker. The amendments clarify that, in making such regulations, the Government must consider both the benefit to workers of receiving a GHO and desirability of preventing significant adverse effects by requiring employers to make a GHO if that employer is dealing with exceptional circumstances. While a perhaps welcome recognition of the inherent tension at the core of these new provisions, it remains to be seen how much impact this amendment might have on future regulations.
• Otherwise, the key changes are largely to clarify how the requirements to make a GHO will apply to qualifying agency workers (by way of reminder, the end hirer will be the party required to make a GHO to a qualifying agency worker). Changes include:
  • A GHO to a qualifying agency worker must be on terms and conditions relating to pay that comply with one of four new conditions A to D, making sure that terms and conditions are, in addition to other additional matters, no less favourable.
  • The qualifying agency worker will become a worker of the end-hirer and the end-hirer will be the employer from the date the qualifying agency worker accepts a GHO made by the end-hirer.  

Impact for employers

These amendments do not address many of the questions still left open, such as what number of working hours will determine if a contract is a low hours contract, what working hours and patterns will make an agency worker qualify for the new rights and the length of any of the reference periods over which calculations are made. The Government has said that it will consult on the zero hours contracts reforms in Autumn 2025, so answers may be forthcoming. Regardless, the main challenges posed by opposition parties to these reforms is their complexity and practical workability. 

Next Steps

These amendments include some significant last minute policy changes. As noted above, given these are Government amendments, it is likely that they will ultimately pass into the final bill. However, this is not necessarily the end of the story.

The ERB is due to be debated at Report Stage in the House of Lords in four sittings between 14 and 23 July and the amendments still need to be agreed. If the new provisions are agreed, they will become part of the ERB, but if the House of Lords does not agree to their insertion, it can defeat or modify the amendments.   

In any event, it is likely that the ERB will now pass in Autumn 2025, and implementation is anticipated to be staggered as we set out in this update.