Employment Rights Bill – Headline of changes following House of Lords Report Stage

Some significant government-backed changes have been made to key provisions

Over recent months, Wrigleys has been following the development of the Employment Rights Bill as it makes its journey towards Royal Assent. The House of Lords have made some significant amends to key proposals set out in the Bill, as outlined below.

Non-Disclosure Agreements

The proposed ban on non-disclosure agreements (NDAs) in cases of harassment and discrimination may be the most headline-grabbing change proposed. The Lords have amended the Bill to include a new clause which would void any contractual provision (i.e. it would apply to employment contracts and settlement agreements) with current or former workers that seeks to prevent a worker from disclosing allegations of, or information relating to, relevant harassment or discrimination. This includes alleged discrimination and harassment by the employer or by another worker (but not by or against third parties) and the disclosure of an employer’s response to allegations of discrimination and harassment.

The amend also allows regulations to be written that would extend the provision to contractors, trainees and those on work experience.

These changes extend beyond sexual harassment to include all forms of harassment and discrimination under the Equality Act 2010, though it excludes failure to make reasonable adjustments.

The Bill carves out ‘excepted agreements’ from the voiding provisions, though what these are will be defined in separate regulations. There is some suggestion that this will include NDAs requested by a worker, as the point was raised in an impact assessment published by the Department for Business and Trade in July 2025, but it isn’t clear what the scope or thinking behind the excepted regulations is.

If this proposed change came into effect, employers would need to quickly review their confidentiality clause wording in contracts and pending settlement agreements to see whether it would fall foul of the new voiding provision. It will also raise significant questions for employers when they deal with allegations from staff, knowing that their conduct in this situation may itself become disclosable.

This may have another practical effect in terms of how employers approach settlement and exit packages. Whilst the proposed changes would likely bring an end to the misuse of NDAs to cover up abuse, the unintended consequence may be significantly more claims. As Courts and Tribunals struggle with the current demand levels, the government will have to consider whether more claims resulting from changes like this will be for the overall benefit of the workers they are seeking to protect.

Fire and Rehire

The government has walked back from its earlier proposals on dismissal and re-engagement. The Bill contains a ban on dismissing any employee for refusing to agree a variation of their contract. Revisions to the Bill now mean that the ban on dismissing employees for refusing to agree a variation of their contract will only cover ‘restricted variations’: i.e. those relating to pay, hours, holidays, and pension terms. Dismissals for refusing such changes will be automatically unfair unless the employer can i) demonstrate the change was to avert financial difficulties that threaten the future of the employer; and ii) the employer can show they acted fairly and reasonably (judged against the c.98(4) Employment Rights Act 1996 reasonableness test for unfair dismissal).

If an employer makes changes to terms that are outside the ‘restricted variations’ and dismisses an employee for refusing to accept the changes, the dismissal is not automatically unfair. However, if the dismissal were challenged, the employer would have to show they met a procedural checklist to show the dismissal was fair.

If these changes came into effect, employers would need clear evidence of their financial situation, potentially to a higher degree than currently, before making changes to restricted terms. This may mark a change in approach for judges, who generally avoid close inspection of the business decisions of employers as an underlying basis for claims.

If these changes came in, then employers would also need to adhere to a stricter procedural requirement for any changes that fell outside of the restricted variations regime before dismissing anyone for failing to accept changes to terms and conditions. However, employers will be able to follow a specified checklist and related guidance to help ensure they get this right.

This is a more nuanced approach to the previous position set out in the Bill. It preserves flexibility for employers to make non-restricted changes (e.g. job titles, reporting lines) under the ordinary unfair dismissal framework, while drawing a clear red line around core contractual entitlements that risk automatic unfair dismissal claims.

The amended Bill also seeks to make automatically unfair the practice of outsourcing as a redundancy substitute unless the employer can establish serious financial distress. This will likely lead to increased scrutiny of an employers’ use of agency workers and contractors.

Bereavement Leave for Pregnancy Loss

The extension of statutory bereavement leave to cover pregnancy loss before 24 weeks is a humane and arguably overdue reform. It reflects the recommendations on this issue of the Women and Equalities Committee, and acknowledges the profound impact of early pregnancy loss.

However, the right is limited to unpaid leave with details on eligibility and duration deferred to secondary legislation which may not arrive for some time. While the Bill allows employers to choose to enhance the entitlement, the lack of statutory pay may limit uptake, particularly among lower-paid workers. The government’s commitment to consult further on this issue in autumn 2025 is welcome, but the delay until 2027 for implementation may be seen by some as overly protracted.

Final Thoughts

The Lords also made changes to the proposed whistleblowing and guaranteed hours and agency workers provisions. However, it is understood that neither of these changes has government backing and are therefore considered unlikely to pass. For this reason these proposals have not been covered in this headline update.

The changes to the Bill demonstrate more targeted reforms that are arguably more attuned to the realities of modern employment relationships. However, they are not without risk.

The NDA provisions may have a chilling effect on the advancement of settlement discussions which may prolong disputes unnecessarily and add cost, while the complexity of the agency worker rules could stifle uptake.

As ever, the success of these reforms will depend not just on their drafting, but on their implementation. Employers, practitioners, and policymakers alike will need to engage closely with the forthcoming consultations and secondary legislation to ensure that the ERB delivers on its promise of a fairer, more transparent workplace.

If you would like to discuss any aspect of this article further, please contact our employment team on 0113 244 6100. 

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The information in this article is necessarily of a general nature. The law stated is correct at the date (stated above) this article was first posted to our website.

Specific advice should be sought for specific situations. If you have any queries or need any legal advice please feel free to contact Wrigleys Solicitors.