Preparing for change

Turning the Employment Rights Bill into social ESG advantage

The Employment Rights Bill (ERB) represents one of the most significant overhauls of UK employment law in decades, and when passed, it will have profound implications for employers’ Environmental, Social and Governance (ESG) strategies

While much commentary has centred on the ERB's economic ramifications for employers, its impact on the social aspects presents an opportunity for employers to move beyond regulatory compliance and transform this into competitive advantage.

The “social” of ESG within employment

The social element of ESG encompasses how organisations manage relationships with employees, suppliers, customers, and communities. When considering employment specifically, social ESG strategies typically involve creating fair, inclusive workplaces that prioritise employee wellbeing, diversity and inclusion and work-life balance.

Strong social ESG performance in the employment context can increase tangible business benefits including improved talent attraction and retention, enhanced productivity, reduced absenteeism and a stronger corporate reputation.

The government reports that there are persistent workplace challenges including a noticeable national gender pay gap, the loss of experienced female workers due to inadequate family support and menopause-related workplace challenges, and the prevalence of workplace sexual harassment. These issues form the foundation for the government’s proposed employment law reform, which has resulted in the ERB.

Beyond compliance to competitive advantage

We consider some of the aspects of the ERB and how they could impact the social element of employers’ ESG strategies:

1. Enhanced family-friendly rights

The ERB seeks to introduce enhanced family-friendly reforms, including day-one entitlements to paternity and unpaid parental leave and expanded bereavement leave (including pregnancy loss) as a day-one right. The ERB would also enhance protection for pregnant women and new mothers by banning dismissals for six months after their return to work.

TLT’s thoughts: The government's proposals offer a strategic opportunity for organisations to advance their people strategy and corporate social responsibility objectives. Employers who embrace these changes could position themselves as employers of choice who recognise the interconnection between work and family life. In turn, this could reduce employers’ recruitment costs while enhancing their reputation with investors, clients, and stakeholders who increasingly prioritise organisations with robust social governance practices.

2. Workplace harassment and gender equality

The ERB proposes workplace harassment reforms, requiring employers to take "all reasonable steps" to prevent sexual harassment and third-party harassment of employees. The ERB would also require employers with 250+ employees publish Equality Action Plans addressing gender equality matters, including gender pay gaps and menopause support.

TLT’s thoughts: By developing comprehensive Equality Action Plans, employers can strategically position themselves to proactively address diversity challenges, potentially enhancing their competitive advantage in talent acquisition and retention while meeting the requirements for transparent governance practices.

3. Zero and guaranteed hours

The ERB seeks to introduce a duty on employers to offer guaranteed hours contracts that reflect the hours qualifying workers regularly work over a reference period. Workers retain autonomy to accept or decline these offers, which the government claims will give them both security and choice. Employers would also be required to provide reasonable notice of shifts.

TLT’s thoughts: While some workers value the flexibility of zero-hour arrangements, others require income predictability to meet financial obligations. Offering security through guaranteed hours may see an increase in job satisfaction and loyalty amongst workers; supporting the social ESG objective of work-life balance while addressing any employment insecurity concerns.

4. Flexible working rights

The ERB proposes a new test of reasonableness on employers considering flexible working requests.

TLT’s thoughts: The change in flexible working provisions create opportunities for employers to unlock the full potential of their workforce. By establishing clearer frameworks, employers may be able to attract and retain talent from previously untapped pools, including experienced professionals with caring responsibilities, skilled workers seeking better work-life integration and high-performers who prioritise flexibility.

The government has committed to ensuring that all stakeholders receive appropriate time to prepare for the changes which the ERB brings, with most measures not expected to take effect before 2026. Our recent client briefing sets out further information on when we can expect to see these reforms as well as details on the planned consultations.

Strategic opportunities

For many employers, the ERB's reforms will require substantial updates to policies and practices resulting in considerable investment.

For some, those changes could represent more than just regulatory changes — they could signify a fundamental shift in how employment practices contribute to long-term business sustainability.

How can you make the ERB work for your business?

Immediate strategic opportunities

Recognise that change is coming and position your organisation as an employer of choice by proactively embracing the reforms.
Enhance social ESG credentials to attract top talent and gain a competitive advantage.
Demonstrate leadership in social responsibility to investors, clients and stakeholders.

Key actions to consider:

Conduct comprehensive audits of current employment policies and procedures, recognising that the ERB is likely to bring substantial governance implications.
Implement robust training programmes for managers and HR teams.
Participate actively in upcoming government consultations.
Establish working groups to align employment law compliance with broader ESG strategies.

Early and proactive adoption of the ERB requirements may enable organisations to mitigate legal and reputational risks while establishing a foundation for future regulatory changes. An integrated approach has the possibility to deliver meaningful transformation as well as position organisations strategically for the evolving employment law landscape.

At TLT, we support clients across all sectors in addressing challenges in the ESG space. For further details on Employment Law Reform more generally, including our podcast series ERB Bitesize, please see our page Employment Law Reform in focus - TLT LLP.

If you would like to discuss any of the above, please get in touch with the TLT Employment Team.

Discover the other articles in our ESG in the boardroom series across a range of topics including corporate governance, reporting and regulation and more, on our hub.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.

No items found.

Written by