Employment Rights Act 2025 – Key changes employers need to prepare for 

Overview of the Employment Rights Act 2025 reforms

The Employment Rights Act, which received royal assent on 18 December 2025, is a pivotal moment in UK employment law. Described by the government as “the biggest upgrade to workers’ rights in a generation”, it will have a significant impact on HR practices and governance for all employers.

The reforms will be delivered in phases throughout 2026 and 2027. In this article, we look at what the key changes are, when they will come into effect and what employers should be doing to prepare.

Short-term planning – changes from 6 April 2026

Statutory sick pay changes and day one entitlement

Statutory Sick Pay (SSP) will be payable from day one of sickness absence and the lower earnings limit will be removed, meaning employers may face higher absence costs.

Action – Employers should update their sickness absence policies. 

Simplified trade union recognition

The act strengthens the rights of trade unions, making it easier for the unions to take industrial action and more difficult for employers to manage.

In April, recognition procedures will be simplified. Some changes (e.g. changes to ballot and notice requirements) will already have taken effect in February, and others will be brought into force in August (electronic balloting), and in October (e.g. duty to inform employees of the right to join a union and strengthened rights of access).

Action – Employers should review and amend their industrial-relations frameworks. accordingly.

Establishing the new Fair Work Agency

A new Fair Work Agency will be established to enforce workers’ rights, bringing together the work of existing agencies and enforcing rights such as holiday pay, statutory sick pay, and the national minimum wage.

It will also have wide-ranging powers, including to require information, enter premises, issue penalties and to bring claims on behalf of workers.

Day-one rights to paternity and unpaid parental leave

Paternity leave and unpaid parental leave will become day-one rights.

Increased protective award for collective consultation failures

The maximum protective award for failure to collectively consult will be doubled from 90 days to 180 days pay per employee. In doing so, the government aims to stop it being financially beneficial for employers to “buy-out” employees’ rights.

Whistleblowing protection

Disclosures relating to sexual harassment will become protected disclosures, meaning that the employee will be eligible for protection as a ‘whistleblower’. This is expected to come into force in April 2026, and employers may expect an increase in reporting of sexual harassment via whistleblowing channels.

Action – Employers should consider how their whistleblowing policy fits with their sexual harassment policy. 

Medium-term planning – changes from 1 October 2026

Harassment

Employers will need to take “all reasonable steps” to prevent sexual harassment of their employees (rather than the current “reasonable steps”), therefore increasing the threshold for employers to meet.

The act will also impose new liability on employers to take all reasonable steps to prevent third-party harassment occurring in the course of employment, which will apply to all protected characteristics, not just sexual harassment.

Action – Employers should undertake a risk assessment, considering the particular level of risk that the organisation faces, identifying where employees might be exposed to third party harassment, and producing an action plan of steps to address the risks.  

Further trade union reform

There will be additional changes to trade union rules, including a duty to inform employees of the right to join a union; strengthened rights of access for trade unions; increased rights of trade union representatives; and increased protection against detriment for industrial action.

Trade Union Reforms Under the Employment Rights Act 2025 

Tribunal time limit extension

The time limit for workers to bring claims in the employment tribunal, such as unfair dismissal and discrimination, will increase from three to six months.

Unfair Changes to Unfair Dismissal Under the Employment Rights Act 2025

Long-term planning – changes from 2027

Unfair dismissal rights

From 1 January 2027, the qualifying period to claim ordinary unfair dismissal will be reduced from two years to six months. Initially, the bill proposed to remove this qualifying period entirely, but under increased pressure from the House of Lords, the government abandoned this proposal in favour of a six-month qualifying period.

The current cap on compensatory awards for unfair dismissal will also be removed, so there will be no limit on the amount that can be awarded (as is the case for discrimination and whistleblowing claims).

These changes mean it will be even more important for employers to recruit the right people from day one, and then effectively manage performance and probationary procedures early on in employment.

The government had originally intended to introduce the concept of an “initial period of employment” during which dismissals would not be subject to the usual requirements of fair procedure and substantive fairness.

In view of the changes to the qualifying period, this is no longer necessary and does not form part of the new act.

Unfair Changes to Unfair Dismissal Under the Employment Rights Act 2025

Fire and rehire restrictions

From January 2027, it will be automatically unfair to dismiss an employee for refusing to agree to a “restricted variation” to their contract. Restricted variations will cover pay, pension, hours of work and holiday entitlement, and any term that would permit an employer to vary these without the employee’s consent.

This is a significant change as employers will have much less flexibility when seeking to change terms and conditions of employment and a significantly higher burden of showing the need for the change.

An exception will be made in very limited circumstances where the employer can show that the reason for the variation was to significantly reduce or mitigate financial difficulties affecting the employer’s ability to carry on the business as a going concern, and the employer could not reasonably have avoided the need to make the variation. This is a high threshold.

Action – Employers should review employment contracts and consider whether the terms allow for implementation of future plans once the new protections are introduced.

Flexible working requests

Under the act, employers will still be able to refuse flexible working requests on specified business grounds, but there will be a new requirement for any refusal to be “reasonable”.

Action – Employers should check and update flexible working policies and ensure managers receive training on how to handle requests.

Pregnancy and maternity dismissals

It will be unlawful to dismiss a new mother for any reason, for an extended protected period of six months following her return to work, except in specific circumstances.

Expanded bereavement leave rights

Bereavement leave (currently available following the death of a child under 18, or a stillbirth) will be extended to a more general entitlement to unpaid bereavement leave following the loss of a family member, including bereavement leave for pregnancy loss (i.e. before 24 weeks).

Where the deceased is a child, leave remains at two weeks. In all other cases, the leave will be limited to one week.

Zero-hours and “low-hours” contracts

Zero/low-hours workers will have a right to be offered a contract reflecting their regular hours. If the worker’s hours regularly exceed the zero/minimum hours over the reference period (expected to be 12 weeks), then they will have to be offered a new contract reflecting regular hours.

Workers, including agency workers, who work under zero-hours or low-hours arrangements will also have a right to reasonable notice if they are required to work a shift or if a shift is cancelled or changed. Compensation will be payable for shifts that are cancelled or changed at short notice.

Much of the detail will be set out in secondary legislation, such as the:

• threshold number of hours
• length of the reference period
• terms of a guaranteed hours offer
• minimum periods below, which notice will be presumed to be unreasonable unless the employer proves otherwise
• amount of the cancellation payment
• definition of terms such as “short notice” and “qualifying shift”.

The outcome of the consultation on this and how it will work in practice will therefore be keenly anticipated, and employers reliant on flexible staffing models will be particularly affected.

Action – Employers should review and amend scheduling processes to prevent incurring liability for late-change compensation.

Zero-hours, low-hours and casual workers: what the Employment Rights Act 2025 changes

Collective redundancy consultation threshold

Collective consultation obligations will be triggered if either there are 20 or more redundancies at one establishment, or the number of redundancies across the employing entity meets a different “threshold number”, which will be set out in secondary legislation.

Mandatory equality reporting

Employers with 250 or more employees will be required to produce a gender pay gap action plan to accompany their gender pay gap reports and will also be required to produce action plans on how they support employees through the menopause.

What employers should be doing now to prepare

Employers would be wise to plan early for the changes to ensure a smooth transition when they come into effect.

Practical steps include:

• updating employment contracts (e.g. probation, dismissal, flexible working)
• reviewing and revising HR policies and processes (SSP, parental leave, harassment, zero-hours)
• training managers on unfair dismissal exposure, flexible working requests and harassment duties
• carrying out risk assessments (e.g. third-party harassment, trade union rights of access)
• conducting an audit of atypical working relationships, which could be zero/low hours contracts caught by the legislation and consider revising planning processes for casual staff.
• ensuring payroll software is updated to handle SSP from day one
• staying up to date with government guidance and consultations e.g. redundancy thresholds, pay gap action plans

Key Dates for the Employment Rights Act 2025 and How Employers Can Prepare

Employment Rights Act 2025: What Employers Need to Know 

If you would like help understanding how the Employment Rights Act 2025 reforms affect your organisation, our employment team can support you.

Important information

This article provides general guidance only and should not be treated as legal advice.