A round-up of at-a-glance developments to be aware of, in Employment, Immigration and Tax.
Employment Rights Bill (ERB): latest progress
The House of Commons has just rejected various amendments to the ERB, proposed by the House of Lords, which would have seen the Bill watered down in many areas. Of particular note, the House of Commons rejected a proposal to introduce a six-month qualifying period for unfair dismissal, as well as rejecting a watering down of the right to be offered a regular contract. The Bill will now return to the House of Lords for further consideration, then back to the House of Commons before becoming law. The main provisions under scrutiny, which are unlikely to be modified further when sent back to the House of Lords, are a ban on dismissal and re-engagement, the obligation to offer guaranteed hours to zero-hour workers and changes to 'day one' unfair dismissal rights.
EHRC updated Code of practice for services, public functions and associations now submitted to Government
The Equality and Human Rights Commission EHRC has now finalised and submitted its updated statutory Code of Practice for services, public functions and associations (Code) to the Minister for Women and Equalities for approval. The guidance will be considered by the UK government, which is now responsible for the document progressing through Parliamentary approval. Following ministerial approval, the UK Government must lay the draft code before Parliament for 40 days before it can be brought into force.
The updated Code is the culmination of a project by the EHRC over the last two years, review and update the entire statutory code of practice, which was published in 2011, to reflect over ten years of new legislation. Following a consultation process in autumn 2024, when views were sought on the whole code of practice, covering all nine protected characteristics, it carried out an additional six-week consultation on proposed updates to sections impacted by the Supreme Court ruling in April 2025 in the For Women Scotland Ltd v The Scottish Ministers case on the meaning of sex in the Equality Act 2010 (EqA 2010). This clarified that the terms ‘man’, ‘woman’ and ‘sex’ in the EqA 2010 refer to biological sex, while reaffirming that trans individuals remain protected under the characteristic of gender reassignment.
In November of this year, the High Court will hear a judicial review brought by the Good Law Project together with two trans persons and one person who is intersex, against the content of the interim update on trans people’s use of toilets at work and in services provided by EHRC following the Supreme Court's decision. Those bringing the claim will argue that the parts of the EHRC interim guidance misstate the law and should be quashed. Alternatively, they are seeking a declaration that certain legislative and regulatory provisions referenced in the guidance are incompatible with trans people’s rights under the European Convention on Human Rights.
Separately, on 27 August the EHRC also published a statement, that, having reviewed evidence from the UK Government's 2024 call for input exercise on single-sex spaces it had identified policies that misrepresented the EqA 2010, including from organisations across the policing, education and health sectors. The EHRC is now writing to 19 organisations asking them to review policies that contain language implying an automatic legal right to access single-sex spaces based on self-identification. It will monitor their compliance and consider further regulatory action if necessary.
Modern Slavery international
The UK's Home Office, in collaboration with the Australian and Canadian governments, has published an optional international reporting template on modern slavery. The template is designed as a guide to reduce the administrative burden for multinational organisations subject to supply chain transparency requirements under modern slavery legislation in the UK, Australia, and Canada. It supports the preparation of a single report across all three jurisdictions.
Online version of HR1
Where an employer plans to make 20 or more employees redundant at a single establishment within a 90-day period it must submit an HR1 form to the Government. The Insolvency Service has now launched an online HR1 form which can now be completed instead of a downloadable paper form. After 30 November 2025, the online form will be the only way to submit the HR1 form.
Immigration update
Autumn 2025 is already proving to be a busy time for immigration specialists. Some key things to keep on your radar:
- The 22 July 2025 visa rule changes are starting to bite. Employers looking to hire overseas nationals are finding their options in restricted many cases. See our article 'UK publishes new rules on sponsored jobs and salaries - 1 July 2025' for a reminder of the changes.
- The European Union's long awaited roll out of the Entry/Exit System (EES) will begin on 12 October 2025. This new digital border system will change the requirements for many citizens (including Brits, Americans, Canadians, travelling to the Schengen area. See information at EU Entry/Exit System - GOV.UK. We expect long delays at border whilst biometric data is first captured and more careful monitoring of those entering (and exiting) the Schengen area. More information is in our article 'The expansion of Electronic Travel Authorisations'.
- The Home Office continues to ramp up right to work checks, audits and issuing civil penalties (of up to £60,000 for repeat offences) for businesses employing people without the right to work lawfully in the UK. Autumn will see the expansion of these checks to the gig economy. Ensuring compliance with right to work checks and the sponsor licence regime will continue to be key.
- Consultation on the key May 2025 proposal to increase residence requirements for indefinite leave to remain from 5 to 10 years is anticipated to start shortly. See our May e-alert covering the White Paper proposals. UK announces radical changes to its immigration rules.
For further information, please speak to Vikki and Charlie if you need advice.
Tax update
Government has published draft legislation tackling non-compliance in umbrella companies
Following the announcement in the Autumn Budget 2024 on umbrella companies, draft legislation was published on 21 July 2025. This legislation will make employment agencies accountable for PAYE on payments made to workers supplied through umbrella companies from 6 April 2026. On 17 September 2025, HMRC published guidance based on the draft legislation, including examples of how the changes may apply in practice.
The aims of the changes are to:
- Close the tax gap by protecting taxpayers from losses caused by fraudulent umbrella companies
- Protect workers from unexpected tax bills when non-compliant umbrella companies fail to pay taxes.
- Level the playing field by preventing fraudulent operators from undercutting compliant businesses.
- Support economic growth by tackling low standards in labour supply chains.
The changes will affect employment agencies and end-client organisations, as well as the umbrella companies themselves, making them joint and severally liable for any PAYE the umbrella company fails to remit. Equivalent provisions will be introduced in respect of National Insurance Contributions. HMRC will be able to pursue the companies or agencies directly for any unpaid taxes.
If the labour supply chain has:
- more than one agency, then the rules will apply to the agency that has the direct contract with the end client to supply the worker
- no agency, then the rules will apply to the end client.
Companies that engage workers through umbrella companies and agencies should undertake appropriate due diligence to ensure only legitimate umbrella companies are used and that PAYE is being properly accounted for.
As a result of this new legislation, there will be increased compliance costs and potential risks of non-compliance by umbrella companies. Companies should start assessing now whether their continued use remains viable, or whether direct employment would be a more appropriate approach.
