A new ‘ERA’: Everything you need to know about the Employment Rights Act 2025

The previous Government had introduced legislation which enabled the Secretary of State to set minimum service levels for strikes in key/emergency sectors. This legislation was immediately repealed on 18 December when the Employment Rights Act 2025.

What should employers do?

Employers do not need to take any specific action in response to this change but generally want to seek to ensure you have good relationships with your trade unions (where recognised) and/or have employee consultancy bodies with which you engage regularly (where no trade unions are recognised).

This piece of legislation restricted strikes in various ways and will be largely repealed, reducing the notice for strike action to 10 days (from 14), increasing the mandate for strike action to 12 months (from 6) and reducing the information trade unions are required to give in notices to ballot and in notices of strike action.

What should employers do?

Employers do not need to take any specific action in response to this change but need to be aware (where you have recognised trade unions) that strikes may become more frequent (and more difficult to change on validity grounds) where there is a dispute.

These changes will mean that the threshold for recognition will require a union to simply show that anywhere between 2% and 10% of a proposed bargaining unit are union members, with no need for majority support.

Consultation on these proposals were proposed and are awaited.

What should employers do?

Employers do not need to take any specific action in response to this change but need to be aware that there will be more scope for trade unions to be recognised and/or to widen then bargaining units. You generally want to seek to ensure you have good relationships with your trade unions (where recognised) and/or have employee consultancy bodies with which you engage regularly (where no trade unions are recognised).

At present, Trade Unions have to conduct ballots (including for strikes) by post. This change will enable them to conduct ballots using new methods of voting, including electronic balloting.

Consultation on these proposals was launched in November 2026 and is due to close 28 January 2026.

What should employers do?

Employers do not need to take any specific action in response to this change but should be aware of the changes in this regard where parts of your workforce have recognised trade unions.

SSP will be payable from the first day of absence (rather than after a waiting period of 3 days) and there will be no lower earnings limit (with the rate of SSP to be the lower of the statutory SSP rate and 80% of normal earnings).

What should employers do?

Employers should:

• Budget for higher statutory sick pay costs;
• Consider whether you want to amend any company sick pay schemes which are currently built around the SSP framework; and
• Consider also refreshing your absence management process and rolling out training on these to seek to deter malingering and/or increased absence levels.

Paternity leave (although not statutory paternity pay) will become a day one right for eligible employees (the current need to have 26 weeks service at the relevant date will be removed). In addition, employees will be able to take statutory paternity leave after a period of shared parental leave.

Parental leave (unpaid) will also become a day-one right.

What should employers do?

Employers should review and update policies of paternity leave and parental leave and consider any impact on contractual enhancements (especially where built upon the existing statutory framework).

The maximum protective award for a failure to collectively consult will double from 90 to 180 days’ pay.

The thresholds for collective redundancy will also change (but this is not due to come into effect until 2027, see below).

What should employers do?

Employers should:

• Keep accurate records of any redundancies made and proposed across your business as a whole to help you identify (across a 90-day period) when the relevant threshold might be triggered.
• Consider having a standing body of representatives for collective consultation purposes – you are likely to find that you need to enter into collective consultation more frequently.

Whistleblowing legislation (under the Employment Rights Act 1996) will be amended so that the definition of a qualifying disclosure will now explicitly include a worker making a disclosure that sexual harassment has occurred, is occurring or is likely to occur.

This is not a significant change; most employment lawyers would have previously considered a complaint about sexual harassment to have amounted to a qualifying disclosure (as it would come within the wider definition of breach of a legal obligation). However, it will mean that sexual harassment complaints will need to be handled under your whistleblowing policies (which is significant for regulated financial sector employers), those complaining about sexual harassment who have left employment may be able to claim interim relief (whereby they seek to be paid pending a full hearing), and employees can report sexual harassment complaints via a whistleblowing hotline, to the EHRC or their MP in addition to directly to their employer.

What should employers do?

Employers should:

• Amend whistleblowing policies to ensure that complaints of sexual harassment are explicitly referred to as a type of information which can form a qualifying disclosure.
• Refresh training for employees and managers on whistleblowing protection and policies.

At present, the majority of employment rights are enforced by individuals bringing a claim to an employment tribunal. Some limited rights (e.g. in respect of NMW, SSP and agency workers) are enforced by the state on behalf of workers but via a fragmented group of bodies.

The Government thinks this is confusing and means many breaches/underpayments (especially for lower paid workers) go unchallenged.

The ERA 2025 creates a new state enforcement agency which is proposed to be called the Fair Work Agency, which will be an Executive Agency of DBT. This is proposed to enforce NMW, holiday pay, SSP, Modern Slavery and Agency worker rights and combine:

• HMRC’s National Minimum Wage Enforcement Team;
• Gangmasters and Labour Abuse Authority;
• Employment Agency Standards Inspectorate; and
• also have remit over the enforcement of holiday pay.

The Government has indicated that it fully intends that the Fair Work Agency would take on enforcement for a wider range of employment rights in time, creating a single place where workers and employers can turn for help. We have seen a reference to the potential for the Fair Work Agency to receive whistleblowing concerns.

The Fair Work Agency will have the power to:

• Appoint enforcement officers.
• Investigate – including by requiring the provision of information and entry to business premises.
• Require compliance – via Labour Market Enforcement Undertakings (which can be in place for up to 2 years).
• Issue civil penalties (of up to 200% of the sum due e.g. for holiday pay and SSP) .
• Order employers to compensate workers.
• Bring tribunal proceedings in place of a worker and/or provide legal assistance to workers.
• Recover enforcement costs from employers .
• Issue Labour Market Enforcement Court orders – prohibiting or requiring certain action for businesses who refuse or fail to comply.

What should employers do?

Employers should consider undertaking an internal audit to ensure confident compliance in respect of NMW, holiday pay, SSP, Modern Slavery and Agency worker rights.

What the Government means by “fire and rehire” is where an employer effectively forces new (and often worse) contractual terms on employees where they cannot be agreed by dismissing them on notice and offering immediate re-engagement on the new terms that the employer wants.

Currently, fire and rehire does remain a lawful way to change contractual terms where you have a sound business reason and where you have first engaged meaningfully in consultation seeking to reach an agreement in other ways.

The ERA 2025 will make fire and rehire unlawful (except in response to financial difficulties affecting the employer’s ability to carry on the business as a going concern) by making any dismissal automatically unfair where:

• The reason for dismissal is that the employee did not agree to the employer’s attempt to vary their terms and conditions of employment in relation to pay, working hours, pension, shift times, shift lengths, time off (or any other changes defined in regulations); or
• Because the employer intended to employ another person on varied terms to carry out substantially the same role.

What should employers do?

Employers should consider whether any contractual changes are required and could be achieved in accordance with the ACAS Code before this change in the law comes into effect in October 2026, and bear in mind that making changes to most contractual terms thereafter (without legal risk) will need the employee’s agreement (perhaps obtained through contractual ‘buy-outs’).

Most tribunal claims currently have a 3-month limitation period (meaning in practice employees need to initiate ACAS Early Conciliation within 3 months of the act relied upon). From October 2026, the ERA 2025 will extend the time limit to 6 months.

The ACAS Early Conciliation period (which stops the clock for limitation purposes) was increased from 6 to 12 weeks on 1 December 2025. This, when combined with the longer 6-month limitation period, will mean that claims could be lodged some 9 months after the act relied upon. Tribunals are experiencing high pressure, which means there are very often delays in claims lodged and being served upon employers. Altogether, employers may face around a year of uncertainty before they know whether an employee or ex-employee is bringing a claim against them. When combined with the significant delays in listings at tribunals, we will see many more full merits hearings occurring many years after the events from which they arose.

What should employers do?

Employers should consider:

• Their preferred approach to commercial settlements – they give a business certainty, but can create an unhelpful culture/expectation for departing employees.
• Ensuring that you do obtain a written record of key events from colleagues who were involved in any matter which gave rise to a complaint, dismissal or resignation. This will happen where a formal grievance is raised, but you should also now aim to do this even where there is no formal complaint (otherwise you can face a lack of recollection and/or evidence when a claim is lodged a long time after relevant events when relevant witnesses may have left your employment).

The ERA 2025 will strengthen the existing proactive duty for employers to take reasonable steps to prevent sexual harassment of employees and workers in the course of employment by:

• Requiring employers to proactively take “all reasonable steps” not just “reasonable steps” to prevent sexual harassment in the workplace, with provision (in force in 2027) for the Government to set out in regulations what amounts to “reasonable steps”.
• Making employers liable for harassment (of any kind, not just sexual) by third parties unless they took all reasonable steps to prevent this.

The duty to take all reasonable steps to prevent sexual harassment of employees, including by third parties, is extremely burdensome on employers. Compensation for successful sexual harassment claims was already increased by up to 25% in October 2024. It will be very difficult to successfully defend a sexual harassment claim; the statutory defence of ‘all reasonable steps’ which already exists in relation to an employer’s vicarious liability for all discrimination under section 109(4) Equality Ac 2010 is rarely successful.

The duty to take all reasonable steps to prevent third-party harassment will be particularly challenging for employers who operate in hospitality and retail given an employer’s ability to control third parties is much more limited than their ability to control the conduct of employees (especially when it bumps up against individual Article 10 human rights to freedom of expression).

What should employers do?

Employers should:

• Pending regulations on what amounts to “all reasonable steps”, ensure that they are already complying with the 8 steps recommended by the EHRCto prevent sexual harassment.
• Consider in particular how you will handle third-party harassment in your business (as part of your sexual harassment risk assessment).
• Run annual training on sexual harassment for employees and managers.

From October 2026:

• Trade Unions will have the right to access workplaces both physically and by communication with workers. Trade unions will be able to make an “access request” proposing terms for access and there will then be a response and negotiation process for the employer to enter into in order to agree written terms for access (and the trade union can apply to the Central Arbitration Committee if the employer does not respond or negotiations are unsuccessful). Workplaces that have large numbers of employees are likely to be the main target for trade unions looking to utilise this right initially.
• Employers will be required to give workers a written statement advising that they have the right to join a trade union at the same times as providing the worker’s section 1 statement (i.e. employment contract for employees) and at prescribed other times (to be set out in regulations). Exactly what it must state and how will also be set out in regulations. A consultation on this closed in December 2025.
• Employees will be protected against detriments short of dismissal for taking part in strikes and other industrial action and protected against blacklisting by bodies other than employers or employment agencies.
• A new statutory role of Union Equality Representative will be introduced for recognised unions, with a remit to promote and support matters relating to equality.

What should employers do?

Employers should:

• Consider access agreements and provision for Equality Representatives with any recognised trade unions.
• Diarise to check in March 2026 for regulations which specify the nature of the written statements that you will need to build into contracts/statement of terms.

New laws already came into effect in October 2024, which required employers to pass all qualifying tips onto workers and have a written policy setting out how tips would be allocated.

From October 2025, the ERA 2025 will require employers to consult with trade unions, elected representatives or workers before producing the first version of a written tips policy. They will also need to review the tips policy once every year (and consult each time). You will also need to make an anonymised summary of the views expressed in the consultation available to workers.

Consultation on these measures is anticipated before they come into force.

What should employers do?

Employers who deal with tips should:

• Ensure they already have a written tips policy.
• Consider who you will consult with when required to do so (do you want to elect representatives now for this purpose?).

From 1 January 2027, the qualifying period of service to bring a claim for unfair dismissal will be reduced to 6 months (where it is currently 2 years). Any employee who has 6 months service on or after 1 January 2027 will therefore be able to claim unfair dismissal (when dismissed and/or where they resign in response to a fundamental breach of contract).

The compensation cap (which is currently the lower of the statutory limit (currently £118,223) and 52 weeks’ gross pay) will also be removed. It is not certain when this will come into effect, but it is likely to be at the same time as the service requirement changes on 1 January 2027. The Government has said it will publish an impact assessment on the impact of removing the compensation cap, but there is no commitment to a consultation on the effects, and ERA 2025 simply removes the cap on compensation.

Both changes combined mean that employers are likely to face more claims for unfair dismissal and find them more difficult to settle (especially for higher earners).

What should employers do?

Employers should:

• Improve probationary processes to ensure that performance/suitability is rigorously reviewed with the first 6 months of employment.
• Consider effecting dismissals for any undesirable employees who will have less than 2 years’ service at the end of 2026 before the end of the year.
• Ensure dismissal processes are clearly recorded and a fair process is adhered to.
• Anticipated increased litigation (and settlement costs) in budgeting.

Qualifying zero/low hours workers will have the right to:

• Be offered guaranteed hours (permanently or for a fixed period where this is reasonable) where they work regular hours over a reference period (suggested to be 12 weeks) (albeit they can refuse);
• Reasonable notice of shifts/changes to shifts; and
• A payment each time a work shift is cancelled, moved or curtailed at short notice.

These rights will be supported by corresponding rights not to be subjected to a detriment and/or automatically unfairly dismissed (in relation to guaranteed hours entitlement).

Details on what constitutes low hours, the reference period for calculating hours regularly worked, how regularity is established and what is reasonable and/or short notice are all matters for secondary legislation, making the impact of these provisions difficult to predict and prepare for.

The same rights (to guaranteed hours, the right to reasonable notice of shifts and the right to compensation for late notice changes) will also apply to agency workers. The obligation to offer guaranteed hours sits with the end-hirer, the liability for reasonable notice of shifts is on both the employment agency and the end-hirer, and the responsibility for payment of late notice changes rests with the agency (although this can be dealt with under a commercial agreement between the end-hirer and the agency).

Employers are able to contract out of these new rights under a collective agreement with a recognised trade union.

Consultation is proposed to take place in 2026.

What should employers do?

Employers should:

• Ensure you have a good grasp on which parts of your business currently rely on zero hours/low hours workers or agency workers.
• Consider whether you may be able to meet the workload demand in a way which does not rely on zero or very low hour contracts with workers or agency workers. Should you consider engaging some of these employees on fixed hours contracts if they are already frequently working a repeated pattern?
• Consider whether your resource planning tools will be sufficient if you plan to continue to utilise zero/low hours workers and how this will be monitored/staffed in practice.

Currently, employers proposing 20 or more redundancies “at one establishment” within a period of 90 days must go through a collective consultation process before making any redundancies. If employers don’t comply, employees can claim a protective award of up to 90 days’ pay (this will increase to 180 days in April 2026, as set out above).

The ERA 2025 will:

• Keep the old “establishment” based threshold but add an additional alternative threshold test (that doesn’t cover “establishment”), so that employers will need to collectively consult where they either:
  • Propose 20 or more redundancies at one establishment (as per the current law); or
  • Meet the other threshold test which will relate to employee percentage or numbers across the whole business.
• The new threshold will be defined in regulations and is likely to involve a number between 20 and 100 and/or be a % test across the employing entity as a whole.
• Enable employer to consult with employee representatives in different groups when carrying out collective consultation across different establishments – avoiding the need for employee representatives to be physically brought together as a central group over batches of unconnected local redundancies which are all happening close together in time only.

Consultation is proposed to take place in 2026.

What should employers do?

Employers should:

• Keep accurate records of any redundancies made and proposed across the business as a whole (to ensure employers can correctly identify when the threshold is triggered.
• Consider having a standing body of representatives for collective consultation purposes.

Employers will be required to state the grounds for refusing a flexible working request and explain why it is reasonable to refuse the request on those grounds in any decision letter. The 8 business reasons for refusing a flexible working request will remain unchanged.

This change is minor and reflects the existing good practice most employers already adopt when dealing with flexible working requests in order to limit risk of claims for sex discrimination.

What should employers do?

Employers should:

• Already action flexible working requests quickly and give meaningful consideration to them, setting out detailed reasons for any refusal (not just stating the business reasons for refusal).
• Review and update flexible working policies to reflect these new requirements.

The ERA 2025 will make any provision in an agreement between an employer and a worker (e.g. a settlement agreement or contract) void to the extent that it prevents the worker from either making an allegation of, or disclosing information about, harassment or discrimination (or the employer’s response to it). There will be provision for “excepted agreements” (which might include NDAs requested by the worker, subject to independent legal advice and/or where time-limited) but these are a matter for consultation in due course.

The Government suggests this ban will help victims (by enabling them to speak freely) but previous considerations of this kind have suggested that banning NDAs in this way takes a choice away from victims and means there will less compensation readily available to victims or alleged victims leaving victims with less choice (i.e. having to pursue a claim even where this may be not their preferred route for many reasons).

The ban on NDAs was a late addition by the Government and, as such, there is no reference to it in the roadmap published so it is not currently clear when this provision will come into effect, but we anticipate it will be in 2027.

What should employers do?

Employers should:

• Take all complaints of harassment and discrimination seriously, carrying out a detailed investigation.
• Be ready to prepare PR statements/responses as an alternative route where NDAs are not available.

The ERA 2025 will give the Government the power to introduce a day one right to a week of unpaid bereavement leave where family or dependents die and/or a pregnancy is lost before 24 weeks of pregnancy (currently, a worker becomes entitled to maternity leave where a pregnancy is lost after 24 weeks).

What should employers do?

Employers should:

• Review policies and note where amendments will need to be included when the regulations clarify how this new right will work in practice.

At present, in redundancy situations, women who are pregnant, on maternity/adoption/shared parental leave or have recently returned from such leave (up to 18 months after birth/placement) have priority right to be offered a suitable alternative vacancy (where one is available) before being made redundant.

The ERA 2025 will give the Government power to introduce regulations to give enhanced protection from dismissal (i.e. for any reason, not just redundancy) during pregnancy or during or following return from maternity/adoption/shared parental/neonatal care/extended bereaved parent paternity leave, adoption leave and shared parental leave, neonatal care leave and bereaved partner’s paternity leave. The protection is likely to apply for 6 months following return from family leave.

We need the details that will be set out in regulations to be sure, but it appears that the intention is to restrict the circumstances in which an employer can dismiss a pregnant employer or someone on/recently returned from family statutory leave by making it unlawful, subject to some exceptions. We don’t know what those exceptions might be, but this may include gross misconduct, illegality or redundancy (where there is no suitable alternative role).

Consultation on these changes closes in January 2026.

What should employers do?

Employers should:

• Make sure that you have good records for exact dates for family-related leave and that these are kept up to date.
• Already consider priority rights for those on/recently returned from family leave when planning/executing restructures/redundancies – and be sure to be across these changes when advance planning.

Large private and voluntary sector employers (with 250 or more employees) must report their gender pay gap. Specified public sector employers are also subject to this requirement. Reports are based on a snapshot taken on 5 April each year and must be published within a year of the relevant snapshot date. There is currently no requirement for employers, when publishing their gender pay gap reports, to say anything about what they plan to do to close the gender pay gap – although many publish this voluntarily.

The ERA 2025 will give the Government the power to amend gender pay gap reporting via regulations (yet to be published), including:

• A new requirement for employers to identify providers/employers of outsourced workers when publishing their gender pay gap reports. Employers won’t need to include outsourced workers in their pay gap calculation. This is an attempt to address a concern/loophole that organisations can show a smaller gender pay gap if they outsource any low paid work which is predominantly carried out by women.
• An additional requirement to publish “equality action plans” setting out the steps they are taking to ensure gender equality, including closing the gender pay gap and supporting employees going through the menopause. The proposal is for there to be specific penalties for failing to publish an action plan.

What should employers do?

Employers should:

• Consider voluntarily publishing an action plan as to how you will close the gender pay gap (if you have to report on your gender pay gap but do not yet publish an action plan).
• Keep an up-to-date list of contract workers which includes key pay information and benchmark this against non-contract worker employees to ensure consistency in pay rates.
• Put a specific menopause policy in place and take other proactive measures e.g. training for managers on how to support employees going through menopause.

The ERA 2025 defines what constitutes an umbrella company, enabling the Government to introduce regulation of umbrella companies in order to ensure workers benefit from employment rights, to protect competition and to avoid tax loss.