Statutory Sick Pay
The Employment Rights Bill (ERB) proposes that for workers whose earnings are below the Lower Earnings Limit (currently £123 per week, rising to £125 per week from 5 April 2026), their rate of Statutory Sick Pay (SSP) will be calculated as a percentage of their earnings instead of the flat weekly rate. In its consultation response to this proposal, the government has confirmed that the percentage rate will be set at 80% of normal weekly earnings, where 80% of an employee's normal weekly earnings is less than the flat weekly rate. This means that all employees will be entitled to the flat weekly rate or 80% of their normal weekly earnings, whichever is lower. Additionally, the ERB will scrap the current three waiting days that apply before workers are entitled to receive SSP. This change, once it becomes law, will apply in Northern Ireland, as well as in England, Scotland and Wales.
While there is no timetable for this change, this change to SSP might come into effect in April 2026; or possibly in October 2025.
Zero hour and low hour contracts
The government has also confirmed an extension of the provisions set out in the ERB on zero and low hour contracts to agency workers. Under these proposals, responsibility for providing an agency worker on a zero hour or ‘low hour’ contract with reasonable notice of shifts, shift cancellations and changes to shifts will sit with both the end hirer and the agency, but responsibility for making payments to workers where shifts are cancelled, moved or curtailed at short notice will rest with the agency. Again, there is no current timetable for this change in legislation, which will apply in England, Scotland and Wales.
The Fair Work Agency
Under the ERB, the government intends to create a new employment legislation enforcement agency in England, Scotland and Wales called the ‘Fair work agency’. This agency will bring together existing enforcement functions under one roof, such as SSP and NMW enforcement, labour exploitation and modern slavery; as well as holiday pay enforcement. These changes under the ERB would give the Fair Work Agency (FWA) the power to impose notices of underpayment on employers who have failed to pay certain statutory payments (such as the NMW, or SSP) to their workers. Very significantly, the FWA will also have the power to apply for court orders to enforce compliance with notices of underpayment and to bring employment tribunal proceedings on workers' behalf. It will also be able to provide, or arrange for provision of, legal advice and representation for any person who is or may become party to proceedings relating to employment law.
The government has also responded to its consultations on collective redundancies and fire and rehire; as well us consultations on trade unions and industrial relations.
FSB research has revealed that 92% of small employers fear the legislation proposed under the ERB will lead to job losses, with 67% planning to hire fewer staff. FSB is concerned that the Bill's provisions, including changes to unfair dismissal laws, could deter hiring and exacerbate the UK’s benefits bill, ultimately impacting living standards across the UK. FSB is continuing to lobby the government on these changes.
See the fact sheet on the hub on the Employment Rights Bill for a summary of the key aspects of the ERB which are likely to have the greatest impact on small business employers once they become law.
See also the summary of the April changes for employers on the FSB Legal and Business Hub, for a summary of the changes that will impact employers this month.