Articles

Snapshot of the Employment Rights Act 2025: Key changes and actions for employers

4 Aug 2026 | 2 minute read

The Employment Rights Act 2025 (ERA 2025) introduces the most significant reforms to UK employment law in decades. While some provisions took effect immediately on Royal Assent (18 December 2025), most reforms are being implemented between April 2026 and 2027. Employers should use this period to review policies, strengthen processes and prepare for increased compliance obligations and litigation risk.

Key changes at a glance

Timing	Reform	Key impact
April 2026	Statutory Sick Pay reform	SSP payable from day one of absence; lower earnings limit removed.
April 2026	Day-one family rights	Paternity leave and unpaid parental leave become day-one rights.
April 2026	Holiday pay record keeping	Employers must retain annual leave and holiday pay records for six years.
April 2026	Protective awards increased	Maximum award for failure to collectively consult on redundancies doubles to 180 days’ pay.
April 2026	Fair Work Agency established	New enforcement body with powers to investigate employers and impose financial penalties.
October 2026	Sexual harassment reforms	Employers must take “all reasonable steps” to prevent harassment and may be liable for third-party harassment.
October 2026	Tribunal time limits extended	Most Employment Tribunal time limits expected to increase from three to six months.
October 2026	Enhanced trade union rights	Workplace access rights, electronic balloting and new employer notification obligations.
2027	Unfair dismissal reform	Qualifying period reduced from two years to six months; compensation cap removed.
2027	Fire and rehire restrictions	Most dismissals connected to contractual changes become automatically unfair.
2027	Zero-hours worker protections	Rights to guaranteed hours, notice of shifts and compensation for cancelled shifts.
2027	Collective redundancy reform	New business-wide consultation trigger to supplement the current establishment-based test.
2027	NDA restrictions	Confidentiality clauses relating to discrimination and harassment will be largely unenforceable.
2027	Gender pay gap and menopause action plans	Mandatory action plans for employers with 250+ employees.

Key changes already in force (April 2026)

Statutory Sick Pay (SSP)

SSP is now payable from the first day of absence.
The lower earnings limit has been removed.
SSP is payable at the lower of the statutory rate and 80% of normal earnings.

Family-friendly rights

Paternity leave and unpaid parental leave are now day-one rights.
New Bereaved Partner's Paternity Leave rights have also been introduced.

Holiday records

Employers must keep records demonstrating compliance with annual leave and holiday pay requirements for six years.
Failure to do so may result in a fine.

Redundancy consultation

The maximum protective award for failure to collectively consult has increased from 90 to 180 days' pay.

Whistleblowing

Disclosures concerning sexual harassment are now expressly protected under whistleblowing legislation.

Fair Work Agency

A new enforcement body has been established with powers to investigate employers, require information, recover underpayments and impose significant penalties.

Key reforms due in late 2026

Sexual harassment

Employers must take "all reasonable steps" to prevent sexual harassment.
Liability will extend to harassment by customers, clients and other third parties.

Trade unions

Trade unions will receive enhanced workplace access rights.
Employers must inform workers of their right to join a trade union.
Electronic balloting will be introduced.

Tribunal claims

Time limits for most Employment Tribunal claims are expected to increase from three to six months.

Tipping

Employers operating tipping arrangements will be required to consult workers or representatives on tipping policies and review those policies every three years.

Major reforms expected in 2027

Unfair dismissal

The qualifying period for ordinary unfair dismissal claims will reduce from two years to six months.
The statutory cap on unfair dismissal compensation will be removed.

Fire and rehire

Dismissals connected with an employee's refusal to accept specified contractual changes will generally become automatically unfair.

Zero-hours and agency workers

Eligible workers will gain rights to:

guaranteed hours based on working patterns;
reasonable notice of shifts; and
compensation for short-notice cancellations or changes.

Collective redundancies

A new business-wide consultation threshold will sit alongside the existing "20 redundancies at one establishment" test.

NDAs

Confidentiality provisions preventing workers from discussing harassment or discrimination allegations are expected to become unenforceable.

Equality and menopause action plans

Employers with 250+ employees will be required to publish action plans addressing gender pay gaps and workplace menopause support.

Priority actions for employers

Now

Audit compliance with holiday pay, SSP and working time obligations.
Update family leave, whistleblowing and harassment policies.
Review record-keeping practices and document retention procedures.
Assess exposure to Fair Work Agency investigations and enforcement.

Before 2027

Strengthen probationary, performance management and dismissal processes.
Review reliance on zero-hours and agency workers.
Consider any contractual changes that may become more difficult once fire-and-rehire restrictions take effect.
Train managers on new harassment, dismissal and flexible working requirements.

Although implementation is phased, the most significant changes for employers are the reduction of the unfair dismissal qualifying period to six months, removal of the compensation cap, expanded harassment liabilities, restrictions on fire and rehire, and new protections for zero-hours workers. Early preparation during 2026 will be critical to managing legal, operational and employee relations risks.