Employment Rights Bill: Government response to Business and Trade Committee report

As the Employment Rights Bill (ERB) continues its passage through Parliament, the government has published its formal response to the Business and Trade Committee’s (BTC) recent report, Make Work Pay. The response gives employers a crucial insight into how the government intends to shape and implement this landmark piece of legislation and what that means for business.

Our employment law solicitors outline the key developments that HR professionals and employers need to be aware of:

1. Employment status: Reform on the horizon

The government acknowledges the urgent need to address employment status, particularly concerns around false self-employment, but has stopped short of immediate reform. While implementation of the ERB is a priority, a wider review of employment status is now earmarked as a longer-term goal.

For employers, this means ongoing uncertainty around the legal definitions of employee, worker and self-employed status – all of which affect rights and obligations.

2. Guaranteed hours contracts and the low hours threshold

In response to concerns about potential loopholes in the new right to guaranteed hours, the government will consult on introducing a ‘low hours’ threshold. The aim is to avoid inadvertently capturing workers who already have predictable hours.

Employers relying on casual or part-time arrangements will want to keep a close eye on the outcome of this consultation, which may shape how future contracts must be structured. Our article on how the Employment Rights Bill will change zero-hour contracts and its effect on agency workers explains the changes in more detail.

3. Equality law enforcement and the role of the Fair Work Agency

While the newly proposed Fair Work Agency (FWA) won’t enforce equality legislation, the government has confirmed it will work alongside the Equality and Human Rights Commission (EHRC) to develop new guidance. This is intended to support employers in meeting enhanced equality obligations under the ERBl. We await further updates on this, but it is advisable to review internal policies, so they are aligned with evolving standards.

4. Fair Work Agency: Resources and reach

The government has committed to resourcing the FWA sufficiently to tackle labour exploitation and support the enforcement of new rights. This is a signal that compliance will be monitored more rigorously, and employers could face consequences for breaching employment protections once the ERB takes effect.

5. Support for employers

Recognising the scale of the changes ahead, the government has pledged to collaborate with ACAS and other partners to help businesses navigate the ERB’s implementation. Campaigns, training resources, and formal guidance are expected. We will stay engaged in consultations and help you to prepare for change, particularly in relation to contract updates and workforce communications.

6. Trade Union recognition process

The Committee raised concerns about the fairness and transparency of union recognition ballots. In response, the government will review the process once the ERB is in force, with a revised Code of Practice promised.

7. Modern Slavery: Stronger reporting on the way

A reform of the statutory regime around modern slavery statements is on the table, with the government planning to set out clearer reporting obligations and introduce penalties for non-compliance.

Employers already required to publish modern slavery statements (typically larger businesses) should anticipate tighter rules, but SMEs in supply chains may also be affected by heightened scrutiny.

We can help

The government’s response to the Business and Trade Committee’s report gives employers a clear signal: significant reforms are coming, and compliance will be under the spotlight. Whether you're an HR leader or a business owner, now is the time to get ahead.

Speak to our employment law solicitors today for tailored advice on what the Employment Rights Bill means for your workforce, from reviewing contracts to strengthening your policies and preparing for new obligations.