UK Employment Law Coffee Break: ERA next steps, non-competes, and two new consultations

Employment Rights Act update: preparing for further developments

Join us on 2 November: New union rights every employer must understand

What will the new trade union rights mean for your organisation? In the next session of our Employment Rights Act 2025 (ERA) webinar series, Phillip Chivers, Emma Wills-Davies and Phillipa Meikle will look at the new statutory right for trade unions to request workplace access and the obligation on employers to give workers information on joining a union.

The webinar takes place on Monday 2 November. You can register for this and other sessions, and also catch up on earlier recordings.

Keeping ERA implementation plans up to date

This week has seen another flurry of activity, with the government publishing a number of consultation updates and an updated roadmap for implementation. Employers should check that their preparations reflect the latest timetable.

October has already seen the extension of tribunal limitation periods, and the roadmap continues to identify 30 October for strengthened trade union rights and harassment protections. Looking ahead, the latest roadmap sets out implementation dates for measures including:

• 1 January 2027: the reduction of the ordinary unfair dismissal qualifying period from two years to six months, the duty to inform workers of their right to join a trade union and strengthened tipping law.
• March 2027: fire-and-rehire reforms.
• April 2027: action plans on gender equality and supporting employees through the menopause, collective redundancy reforms and bereavement leave reforms.
• September 2027: restrictions on the misuse of non-disclosure agreements (NDAs) relating to workplace harassment or discrimination.
• October 2027: enhanced dismissal protections for pregnant employees, new mothers and employees taking specified other forms of family leave, alongside flexible working reforms.

The detailed timetable for guaranteed hours, notice of shifts and payments where shifts are cancelled or changed at short notice remains subject to the consultation process.

Enhanced dismissal protections for pregnant employees and new parents: government confirms approach

The government has published its response to the consultation on enhanced dismissal protections for pregnant women and new mothers, confirming plans for a stricter test for dismissals during the protected period. The changes are intended to take effect in October 2027, through regulations.

What is changing?

The government will retain all five potentially fair reasons for dismissal, including conduct, capability and redundancy. However, during the protected period, the current “band of reasonable responses” test will be replaced by a requirement for employers to demonstrate that dismissal is a “proportionate means of achieving a legitimate business aim”. This is intended to impose a higher threshold than the current test.

This is not a blanket ban on dismissal. The government states that the protections “are not intended to prevent fair and lawful dismissal in appropriate circumstances”. However, employers will ordinarily need to show that reasonably viable, less severe alternatives to dismissal, such as additional support, temporary adjustments or redeployment, were not available in the circumstances.

The government intends the new test to take account of employers’ circumstances, stating that decisions can reflect “the specific context of the employer, supporting a fair and balanced approach in practice”.

The enhanced protection will be a day-one employment right, with no qualifying service requirement. It will start when an employee tells their employer, verbally or in writing, that they are pregnant, and continue throughout pregnancy, maternity leave and for six months after that leave ends. Where a pregnancy ends without entitlement to maternity leave, protection will continue for two weeks afterwards.

Protection will also apply from the first day of adoption, shared parental, neonatal care and bereaved partner’s paternity leave. It will continue for six months after leave ends, although for shared parental, neonatal care and bereaved partner’s paternity leave, this post-leave protection will require at least six continuous weeks of the relevant leave.

The existing enhanced redundancy protections will remain in place, including protection extending to 18 months after birth or placement for eligible employees.

What does this mean for employers?

Employers will need to explain why dismissal was justified in the employee’s particular circumstances, even where the reason is unrelated to pregnancy or family leave. 

A completed performance process or a finding of gross misconduct should not be treated as a substitute for assessing whether dismissal satisfies the new proportionality test. The response envisages employers considering “how the employee could be supported to remain in work”, including through workplace adjustments, temporary measures or suitable alternative roles.

Employers should review disciplinary, capability and probation procedures alongside family-leave policies, and ensure HR systems can track the different protection windows and distinguish them from the existing statutory enhanced redundancy protections around suitable alternative employment.

Because the enhanced protection will be a day-one right, employers should not assume that probationary employees fall outside it. Managers will need practical training to recognise when protection begins, respond appropriately to pregnancy disclosures, support employees returning from leave and consider alternatives to dismissal. As pregnancy notification can be verbal, managers should not wait for formal paperwork before involving HR.

The response acknowledges concerns about employers becoming more hesitant to recruit women of childbearing age or postponing dismissal decisions until protection expires. However, the government’s stated intention is to strengthen safeguards “while retaining flexibility for employers to manage genuine issues”.

The practical focus should be on equipping managers to address concerns promptly, fairly and supportively, involving HR early and recording the business rationale and alternatives considered, rather than simply waiting for protection to end.

Supporting guidance, including from Acas, is promised to help employers prepare.

Fire and rehire: government confirms protections for expenses and shifts and consults on a revised code

The government has published its response to the consultation on how the new fire and rehire protections will apply to expenses, benefits and shift patterns. It has also launched a consultation on a revised statutory code of practice on dismissal and re-engagement, which closes on 17 December 2026.

The legislative reforms are intended to take effect in March 2027, with the new code following in summer 2027.

What is changing?

The ERA will make it automatically unfair to dismiss an employee to impose changes to certain core contractual terms, known as “restricted variations”, unless a narrow financial difficulties exemption applies. These include reductions in pay, changes to total hours, reductions in leave entitlement and changes to pensions. Separately, the reforms will make it automatically unfair to dismiss employees to replace them with non-employees, such as agency workers, doing substantially the same work.

The government has now confirmed that restricted variations will also cover certain contractual travel expenses, including mileage, accommodation expenses and long-term accommodation provided as a benefit in kind. Share schemes will not be included in the restricted-variation category for sums payable.

For contractual shift patterns, protection will cover changes requiring an employee to work nights where they were not previously required to, or days where they were not previously required to, and equivalent changes between weekday and weekend working. For this purpose, nighttime will mean 11pm to 6am. Changes to contractual “availability windows”, within which employees may be scheduled to work, will not fall within the restricted-variation category for shift patterns, although other protections may apply.

Dismissals to impose contractual changes outside the restricted-variation categories will not be automatically unfair merely because they involve those changes. However, the enhanced unfair dismissal framework will still apply, including a requirement for tribunals to consider whether employees and trade unions have been consulted about the proposed contractual change.

New consultation on a revised code of practice

The consultation paper describes a revised code intended to explain the new framework, including restricted variations and the financial difficulties exemption. Its focus is on “reasonable information-sharing and meaningful consultation”, aimed at reaching agreement and avoiding damage to industrial relations. The consultation emphasises that the exemption is narrow, includes a requirement that there is no reasonable alternative and is not a general means of managing financial pressures or improving competitiveness.

Under the published timetable, the existing code would be revoked in March 2027, with the replacement taking effect in summer 2027, subject to parliamentary approval. Under the new code, as is the case now, tribunals will be able to increase compensation by up to 25% where an employer unreasonably fails to comply with it and the code applies.

What does this mean for employers?

Employers should review how expenses, benefits and shift arrangements are documented, distinguishing fixed contractual entitlements from non-contractual policies and arrangements. The response recognises that changes permitted by an existing contractual variation clause may still be possible, but the precise wording and status of the provision and other applicable protections will matter.

Managers planning contractual changes will need to understand that a general business case and consultation will not, by themselves, satisfy the narrow financial difficulties exemption. Early HR and legal involvement will be important, particularly before dismissal is raised as a possible outcome.

The government’s message is that employers should “always consult with their employees when making any changes to terms and conditions”. Preparation should therefore focus on meaningful engagement, exploring alternatives and seeking agreement, rather than treating dismissal and re-engagement as a routine fallback.

Employers should take steps now to prepare for the reforms intended to come into force in March 2027 rather than wait for the replacement code in summer. The later introduction of the code will not delay the new statutory protections. Alongside the revised code, the government has committed to updating guidance to support compliance with the new fire and rehire protections.

Non-compete reform: government signals legislation to support innovation and job mob

The government has signalled that reform of non-compete clauses is moving back up the agenda, with the prime minister committing in a speech on innovation to “legislate to make sure that non-compete clauses will no longer be a barrier to hiring for our most promising startups and scaling firms”.

Describing non-competes as “a drag on innovation”, the prime minister highlighted their potential to prevent individuals from joining competitors or establishing their own businesses. The announcement was not confined to the innovation sector: he also committed to ensuring that workers in the “foundational economy, the everyday economy” are not prevented from moving jobs, and to bringing forward options to address the wider use of restrictive practices.

What form could the reforms take?

Reform has been considered before. The previous government proposed a three-month statutory limit on non-competes, which was not implemented. More recently, the current government’s working paper explored a range of approaches, including statutory limits on duration, potentially linked to employer size, an outright ban, restrictions linked to earnings and a combination of these measures.

While the prime minister’s speech confirms an intention to legislate, it does not specify whether the government will pursue a complete ban, a cap on duration, targeted restrictions or another approach. Further detail may emerge at next week’s Budget on 28 October, although the scope of the reforms and the timetable for implementation remain unclear.

What does this mean for employers?

The announcement signals a potentially significant change for businesses that rely on non-competes to protect against competitive activity when employees leave. It may also create opportunities for employers seeking to recruit experienced staff or build new ventures.

With uncertainty over the form the reforms will take, employers should review where they rely on non-competes and the particular risks those clauses are intended to address. The government is also promising options on wider restrictive practices, so employers should not assume that simply replacing non-competes with other restrictions will necessarily fall outside the scope of future reforms.

A review of non-competes should be undertaken in the context of the wider package of business protections in place, such as non-solicitation and non-poaching provisions, and what other measures could be introduced, such as retention incentives, to offer a more effective way of keeping key talent.

Whistleblowing and employment status: two new consultations published

The government has launched what it describes as “the most comprehensive assessment of whistleblowing by the government since the introduction of PIDA [the Public Interest Disclosure Act 1998]”. The consultation closes on 8 January 2027, with a government response setting out next steps expected in 2027. No implementation date has yet been set.

What is proposed?

The government wants a framework that “effectively supports the reporting of serious wrongdoing, while being simple for workers and employers to understand and use”. The consultation explores a range of possible reforms rather than presenting a settled package of changes.

Of particular interest to employers are proposals for more detailed non-statutory guidance and a new statutory duty to maintain effective whistleblowing procedures, explain them in a policy and follow up disclosures. A duty could apply to private-sector employers with 50 or more employees, including charities and not-for-profit organisations, and all public-sector employers, with possible exemptions for organisations already subject to equivalent requirements. Phased implementation is also being considered.

The government makes clear that a duty to follow up “would not require employers to formally investigate every disclosure”. Instead, employers would take reasonable and proportionate steps to assess its merits and decide what action is appropriate. Civil, rather than criminal, penalties are proposed for non-compliance with any new duty.

Other issues under consideration include extending protection to additional groups; clarifying whether existing wrongdoing categories adequately cover AI risks and corruption; removing the additional requirement that workers reasonably believe information disclosed to a prescribed person, such as a regulator, is “substantially true”; creating an express standalone protected disclosure route to trade unions; and extending the interim relief application deadline from seven to 14 days for employees alleging dismissal for whistleblowing.

The government is not proposing to remove the public interest test, but is considering clearer guidance on its application.

Financial rewards for reporting economic crime

The government also supports introducing a scheme under which the Serious Fraud Office (SFO) could pay financial rewards to people who provide information about serious fraud, bribery or corruption, and is consulting on its design. To qualify, the information would need to be both significant and original and lead to successful enforcement action against a company, such as a criminal conviction or a deferred prosecution agreement. Under the latter, a company agrees with a prosecutor to meet conditions such as paying a financial penalty, compensating victims and improving its compliance arrangements.

The proposed reward would be a share of the financial penalty or fine paid by the company. The government has not yet decided what percentage should be available or whether there should be a maximum payment. Eligibility would be separate from employment-law whistleblowing protection: individuals would not need to be workers to qualify for a reward.

The aim is to encourage people to come forward with information that helps the SFO uncover and tackle economic crime.

What does this mean for employers?

Although the proposals are not yet new obligations, employers should use the consultation to assess whether their arrangements work in practice. Clear reporting channels, confidentiality safeguards, prompt assessment and appropriate communication with those raising concerns should be central to that review. Workers should “feel able to speak up, so that wrongdoing can be identified early and investigated and addressed effectively”.

Managers should be equipped to recognise and escalate concerns and avoid retaliatory treatment. The possible SFO reward scheme also reinforces the importance of coordinating HR, legal and compliance responses: the consultation recognises that financial incentives may encourage businesses to identify and self-report wrongdoing earlier.

Employment status: government consults on worker protections and rights for the self-employed

The government has launched a consultation on targeted reforms around employment status and additional protections for the genuinely self-employed. The proposals concern employment status for employment law and not the separate test for tax purposes. 

What is proposed?

While the government has confirmed that it will consider “creating a single status of worker as a longer-term goal”, at this stage, it is proposing targeted reforms. 

One proposal under consideration is to place less emphasis on personal service by "elevating control" in the limb (b) worker test; the government's starting point is that where significant control is being exercised over a person carrying out that work, the person should not be denied access to core employment rights on the basis of failing to meet the test for personal service alone. The test proposed in the consultation would be to ask "does the individual personally provide services and/or are they under a significant level of direction or control by the employer/engager?" This would make it harder to rely on a contractual right to send a substitute to argue against worker status where other features of the relationship point towards it.

The consultation also proposes a presumption of worker status in tribunal proceedings: rather than the individual having to establish that they are a worker, the business would have to demonstrate that they are not. There would not, however, be a presumption of employee status. The proposal would not change the existing burden or standard of proof on whether the right under consideration itself had been breached, for example whether the correct holiday pay had been paid.

Other proposals include amending the existing tribunal penalty regime to establish that repeated failures by an employer to recognise employment status constitute an aggravating factor in any breach. This would make explicit that a tribunal can order an additional penalty where an employer argues that someone does not have limb (b) worker or employee status despite a previous tribunal ruling that their colleagues have that status and where the facts of their employment are broadly similar. 

The government is also seeking views on how the Fair Work Agency’s civil proceedings and legal assistance powers could best be used to determine employment status, and whether an interactive online assessment, providing a non-binding indication of employment status, would make it easier for individuals and employers/engagers to assess status.

What is not changing

The consultation concerns employment rights, not tax or social security status: becoming a worker would not, by itself, change an individual’s tax treatment. 

Worker and employee status would remain distinct, so worker status alone would not confer full employee rights, such as unfair dismissal protection or statutory redundancy pay. Individuals genuinely running their own business, with the engager acting as their client or customer, could remain self-employed.

Protections for the genuinely self-employed

The government is also considering a right for certain self-employed individuals to receive a written statement setting out key engagement terms, including the work, expected duration, payment and termination arrangements. It is also exploring wider blacklisting protections, protection against detrimental treatment for taking appropriate action in response to serious and imminent workplace danger, and broader access to trade union health and safety representative roles.

What does this mean for employers?

If the proposals are adopted, all but the genuinely self-employed (independent service providers who can show that they are in business on their own account) will be "workers" for employment rights purposes. The consultation on employment status sits alongside other reforms, including guaranteed hours and short shift cancellation fees for workers, meaning the implications extend beyond potential holiday pay and minimum wage liability. 

Businesses using contractors, freelancers or gig-economy labour should review both their contractual arrangements and how those arrangements operate in practice. The government recognises that self-employed labour plays an essential role in the economy, but states that “gaining a competitive advantage through bogus self-employment is unacceptable”.

Businesses should examine whether substitution rights genuinely reflect their working arrangements. If the proposed reforms are implemented, even a valid substitution right would no longer necessarily prevent worker status where other features, including significant control, point towards it.

The proposed reversal of the burden of proof would make evidence supporting status decisions particularly important. Businesses should also consider the wider workforce implications of an adverse status ruling, rather than treating it as an issue confined to the individual claimant.

The consultation closes on 8 January 2027.