On 21 July 2025, the House of Lords held the third sitting of the Report Stage of the Employment Rights Bill (ERB), with further key amendments agreed and signals given about future areas of reform.
Negotiating Bodies Approved
The Lords agreed government amendments establishing a School Support Staff Negotiating Body (SSSNB) and an Adult Social Care Negotiating Body (ASCNB). A further non-government amendment was accepted to ensure that SSSNB cannot restrict employers from offering more favourable terms and conditions than those set by the national framework.
Regulation of AI and New Technologies
The government confirmed it will consult later this year on how artificial intelligence is transforming work. This will include proposals to ensure workplace consultation when employers adopt new technologies, as well as measures to safeguard against discriminatory AI and surveillance tools.
The government also reaffirmed its commitment to update the “AI management essentials tool”, designed to support responsible AI use by businesses.
Reform of Non-Compete Clauses
Responding to questions from peers, the government stated it would launch a consultation on the use of non-compete clauses in employment contracts. These clauses, which affect millions of UK workers, have been criticised for limiting mobility and innovation. Further details are expected later in 2025.
Trade Union Recognition Thresholds
The government reiterated its intention to consult on lowering the 10% membership threshold required for trade union recognition applications to the Central Arbitration Committee (CAC). While an amendment to fix the threshold at 10% was rejected, the government confirmed its aim to set the threshold between 2% and 10%, in line with existing thresholds for information and consultation requests.
Next Steps
The final sitting of the Lords Report Stage took place on 23 July 2025, after which Parliament rose for summer recess. The Bill is likely to enter a period of back-and-forth between the Lords and Commons as the two Houses negotiate final wording. The Bill is expected to gain Royal Assent in autumn 2025, with implementation of key measures due in 2026 and 2027.
