Employee rights under scrutiny

Rena Magdani shares insights on employers’ concerns and changing responsibilities from Freeths’ latest employment survey. Freeths’ 2025 Employment Survey offers a comprehensive analysis of the evolving human resources priorities and challenges facing businesses in the UK, including those within the real estate sector. Adapting to the new Employment Rights Bill emerged as the top priority for businesses in 2025. The Bill introduces significant reforms that employers must navigate and many businesses expressed concerns about compliance challenges and increased costs. The survey showed an overall feeling of pessimism regarding the Bill, with day one unfair dismissal rights the biggest cause for concern. Businesses are taking the view that this puts more onus on getting recruitment right, with nearly half of respondents intending to provide more training to teams involved in recruitment and 46% of respondents expecting to change their recruitment procedures. The day one right to unfair dismissal could also have a significant effect on employment numbers: 11% of respondents, large companies in particular, intend to recruit fewer new employees and more than one in 10 businesses plan to use more agency workers. It’s worth noting that the amendments to the Bill that the government announced in March 2025 included extending to agency workers the same level of protections as the Bill provides to directly engaged zero hours or low hours workers. This means that agency workers engaged on regular hours will have the same right to be offered guaranteed hours, so businesses hoping to use agency workers to get around the restrictions in the Bill on zero-hour contracts will find that loophole has closed. Businesses need certainty to be able to prepare for the changes set out in the Bill, but the scope for consultation and change to the detail mean we do not have that. It’s important to keep up-to-date with developments as the impact may not be as great as first anticipated. Unfair dismissal rights For example, while the Bill includes unfair dismissal rights from day one, the government is consulting on how long the initial period of employment – a period during which the full day one protection against unfair dismissal will not apply – should be. This will be between three and nine months, but we do not yet know exactly where in that range. The government has expressed a preference for nine months, but our survey found that 45% of businesses think a six-month period would be appropriate, 25% support a nine-month period and 19% prefer a year. The government has not yet confirmed how unfair dismissal rights will be diluted during this initial employment period, but a strong possibility is that there will be a lower level of maximum compensation for employees who are unfairly dismissed during this period. Major concerns Nearly one in five respondents to the survey are concerned that the Bill will increase the number of Employment Tribunal claims. At the end of last year, the government clarified that the time limit for bringing any such claim would be extended from the current three months to six months. This will give people longer to bring claims and so make it more likely that employers will face Employment Tribunal action. The second biggest cause for concern arising from the Bill was the entitlement to statutory sick pay from day one. The removal of the three waiting days before employees are paid SSP was part of the Bill as introduced to parliament in October last year. The government made some amendments to the Bill at the beginning of March 2025, including extending SSP to low earners. At the moment, in order to benefit from SSP, an employee has to earn on average £123 a week. The government was concerned that as many as 1.3m people earn below that level and therefore receive no sick pay. It consulted about what an appropriate level of sick pay would be for people below the current earnings threshold and concluded that low earners should be entitled to the flat rate of SSP, or 80% of their normal weekly earnings, whichever is lower. Its view is that this amount would provide enough financial security for lower paid employees to be able to take sick leave when they need to without being so high as to be a disincentive to going in to work. To prepare for the reforms, as well as cost-modelling based on the removal of waiting days for all employees, businesses with employees below the current earnings threshold for SSP will also want to do cost modelling on paying those employees sick pay of 80% of their normal weekly earnings. Respondents to the survey were also concerned about the negative impact of flexible working as the default, employer liability for third-party harassment, trade union rights to seek access to workplaces, reforms to zero-hour contracts and restrictions on fire and re-hire practices. The only aspect of the Employment Rights Bill that employers felt positive about was bereavement leave for all. Overall, businesses are most concerned about compliance and costs associated with the Bill once it passes into law. Smaller businesses (employing 100 people or fewer) are most worried about compliance, while larger employers (with 500 staff or more) are more anxious about increased tribunal claims. We understand that businesses need some certainty to enable them to prepare for reforms. The lack of specific timeframes for implementation and the extensive scope for consultation and change to the detail mean we do not have clarity about the vast majority of the reforms or timescales. While precise implementation dates are still unclear, when the government introduced the Bill in October 2024 it said reforms were likely to happen in 2026. That still seems to be the case, but when in 2026 we don’t know. Staff protection, retention and wellbeing Since October 2024, all UK employers have been under a duty to take reasonable steps to prevent sexual harassment in the workplace. To meet this duty, training employees is essential. While 40% of employers have implemented training and 34% are developing it, a concerning 26% have no current training on sexual harassment at all. These businesses risk not only sexual harassment claims but also higher compensation costs due to their lack of training. We strongly recommend training programs for employees at all levels. Some employers are opting for in-person training, while others are embracing online training, including e-learning courses that we have developed to help employers comply with their legal obligations. Wellbeing remains a top priority for businesses and the real estate industry is no exception. With the Employment Rights Bill making flexible working the default, many employers are taking the initiative to protect their staff’s work-life balance and introducing wellbeing-friendly policies now. The skills gap remains a concern across the board, with few respondents to our survey expecting recruitment and retention to get easier. The government has recognised the challenge for construction with the announcement of a £600m package to tackle the skills shortage in the industry in March, but there may be more to be done in-house. For businesses turning to AI, only 46% of respondents to the survey said they had a good understanding of the legal risks of using AI in HR. It’s crucial for businesses to understand the risks of using AI, particularly regarding discrimination and data protection. Equality and data impact assessments are essential when considering implementing AI in the workplace. Rena Magdani is head of employment, pensions and immigration at Freeths Image © Adobe Stock