Employment Rights Act 2025 (UK)
Resource Hub for Employers
After the Employment Rights Act 2025 was given Royal Assent on 16th December 2025, major changes are ahead for UK businesses like yours. These updates come into effect across 2026 and 2027.
It’s good business practice to start prepping now, with support from an expert UK HR support specialist here to help you along the way. As it’s vital you’re ready for each rollout phase of the Employment Rights Act 2025, otherwise your business may be non-compliant with new UK laws and face significant legal consequences.
To keep on top of everything, our resource hub is here to guide you through all the latest updates. It’ll give you a head start before changes kick in, the chance to be 100% compliant, and you’ll get total peace of mind.
Employment Rights Act 2025 data dashboard
Use the drop down icons below to discover what the new Act involves and how to prepare your business. This is your quickfire data dashboard that keeps you in the know.
REDUNDANCIES
A major change is with the collective consultation redundancy process, which previously only concerned 20 or more employees at a specific site. Under the Employment Rights Act 2025, the threshold that’s used to determine when collective consultation is triggered will change. And the “at one establishment” test will be abolished, meaning you must consider the entire business. This reform will make it more difficult for your business to split cuts across branches.
Non-compliance with these laws will also lead to larger financial consequences. From April 2026, the protective award given to an employee, where the business has failed in its duty to collectively consult, will double from 90 days to 180 days gross pay.
UNFAIR DISMISSALS
We expect most of these changes to take effect 1st January 2027. The UK government promises new rights for employees, with two key changes:
- Six-month rule: The qualifying period for ordinary unfair dismissal is cut from two years to six months. After six months, the employee will have full protection against unfair dismissals (the lowest threshold in the UK since the 1970s).
- Uncapped compensation: The current statutory cap (£118,223 or one year’s gross pay, whichever is the lower) on the compensatory award in successful unfair dismissal cases will be removed, meaning there’ll be no ceiling on the amount that could be awarded. This will be significant for claims involving senior and highly paid employees.
Additionally, fire and rehire practices (firing an employee and then rehiring them, or someone else) on less favourable contract terms and conditions will be deemed automatically unfair in almost all circumstances. It’ll apply where the change the employee doesn’t agree to, is classed as a ‘restricted variation’, which is expected to include changes to:
- Pay
- Hours of work and timings
- Pensions pay
From February 2026, dismissing employees for any industrial action (e.g. strikes), regardless of how long the strike lasts, is automatically unfair. Previously, there was a 12-week protection period limit.
PAY AND STATUTORY BENEFITS
There are three core changes to be aware of:
- Statutory Sick Pay (SSP): From 6 April 2026, the lower earning limit (once £125 a week), here the threshold for calculating who is eligible for SSP is removed. This means SSP is available to all workers no matter how much they earn. Consequently, a new method for calculating SSP will be in force. SSP will be calculated at either 80% of the worker’s normal weekly earnings, or the current flat rate of SSP (whichever is the lower). Additionally, SSP will also be paid from the very first day of sickness absence, rather than the fourth day due to the current “waiting days” being removed
- Guaranteed Hours: Not expected before 2027, workers on zero or low-hours contracts will have the right to a contract reflecting their regular working patterns. As the employer, you must provide financial compensation for shifts cancelled or shortened at short notice.
- Fair Tipping: From October 2026, existing tipping laws will be amended requiring your business to consult employees on a new tipping policy and every three years thereafter.
TAX AND COMPLIANCE
Changes will take place in April 2026. There are two main updates:
- Umbrella company regulation: PAYE (Pay As You Earn) and National Insurance are moving from umbrella companies to the recruitment agency or end-client. This is to tackle tax non-compliance and prevent potential fraud.
- Gender pay gap and menopause action plans To prepare for mandatory gender pay gap and menopause action plan reporting, the government is introducing this reform on a voluntary basis initially from April 2026. From April 2027, businesses with 250+ employees will be required to publish action plans in respect of gender pay gap and menopause.
TRADE UNIONS
The Employment Rights Act 2025 introduces the biggest change in industrial relations the UK has seen in decades. Through a phased implementation, the reforms include:
- Removal of the 10-year ballot requirement to maintain political funds
- Shorter notice periods for industrial action
- Doubling the strike mandate from 6 to 12 months
- Removal of voting thresholds for strike action
- Simplified paperwork in relation to ballot notices and strike action
- Simplified trade union recognition and balloting process
A couple more significant areas to highlight are:
- From October 2026, a “Rights of Access” for trade unions is the first time in the UK there’s a statutory right to enter workplaces for recruitment purposes. Previously, your business could provide this at your discretion, but the new rules mean independent unions can request digital access and physical entry. This is to meet, support, and represent workers.
- Also from October, there’ll be new legal requirements to issue all new workers with a statement notifying them of their rights to join a Trade Union. This’ll be a similar duty to providing a written statement of employment particulars.
- Other reforms in this area include, a new right to reasonable accommodation and facilities for trade union representatives carrying out their duties, a new statutory role of union equality representatives with the right to paid time off to carry out duties, and extending protections against detriments for industrial action
Also, should negotiations fail the CAC (Central Arbitration Committee) has the right to mandate and issue fines for non-compliance.
HARASSMENT OR DISCRIMINATION
Following the changes to sexual harassment laws in 2024, the Employment Rights Act 2025 will further strengthen the law by changing the current legal duty of taking “reasonable” steps to taking “all reasonable” steps in the prevention of sexual harassment during the course of employment. This’ll come into force from October 2026 with further updates as to what defines “reasonable steps” expected in 2027.
To regulate this area of employment law, the newly created Fair Work Agency will have the power to investigate sexual harassment compliance, for which they can fine businesses. There’’ll also be a new legal duty placed on you to prevent third party harassment (customer, client). October 2026 changes will indicate your business may be liable for changes from third parties (customers or clients) unless you take reasonable steps to prevent harassment from occurring.
We also expect a change in the law to non-disclosure agreements (NDAs). It’ll become unlawful for employers to to prevent employees from making allegations or disclosures about harassment or discrimination. Any contractual clause preventing claims of this nature will be void.
We’ll also see clarification to the UK’s existing whistleblowing laws, in that what is defined as a protected disclosure will be broadened to include sexual harassment.
EMPLOYEE WORK-LIFE WELLBEING
Flexible working laws will be updated in 2027. The bar for denying flexible working requests is getting higher. Under the updated laws, you won’t just need a valid business reason to say “no” (as they currently do), you’ll have to formally prove the refusal is reasonable and provide justification in writing.
FAMILY LEAVE
Family leave laws will be reformed under the ERA and on a phased basis, beginning with changes from 6th April 2026 that include:
- Both paternity leave and parental leave will be a day one right.
- Staff will be able to take paternity leave after shared parental leave, which was previously restricted.
- A new leave entitlement called bereaved partner’s paternity leave will be introduced that will entitle employees who are fathers or partners to a period of up to 52 weeks unpaid leave where the child’s primary carer dies and they have main responsibility for the child’s upbringing.
Then sometime in 2027, a new bereavement leave will be introduced for all employees, which will include circumstances involving pregnancy loss.
Don’t delay! Future-proof your business for the Employment Rights Act 2025
The sooner you step up your preparation for the next few hectic years the better. We urge businesses to:
- Learn about updates online and keep up-to-date with new changes
- Understand how each of the reforms impact your entire business, not just your people, by carrying out an impact assessment
- Understand workplace risk, by carrying out a workplace audit – look at your handbooks, policies, contracts and workplace practices
- Revise and update key employment documentation – your contracts of employment, your handbook and employment policies
- Explore how the reforms impact your payroll function and systems
- Take part in consultations so you can contribute to how UK wide policy is developed
- Train your workforce, especially ensuring all line managers are fully trained on managing new workplace rules and practices.
- Request external specialist support
By outsourcing your HR needs to expert services like ours, we can help you navigate the employment law storms ahead with the minimum of hassle. Contact us today for a free consultation on how we can help your business.
faqs
What was the Employment Rights Bill 2025?
It was an employment bill introduced aimed at addressing workplace inequality and raising standards as part of the UK government’s plan to Make Work Pay. It took 15 months to progress through the parliamentary process involving debates and amendments in the House of Commons and House of Lords. It was eventually agreed upon and passed as law in December 2025.
When will the Employment Rights Bill become law?
It received Royal Assent on 18th December 2025 and became the Employment Rights Act 2025. The purpose of the Act is to add in new changes to UK laws across 2026 and 2027 and beyond.
What is the latest Employment Rights Act?
It’s the Employment Act 2025, which came into effect in December 2025 and is a series of important updates to the current Employment Rights Act 1996. This Act still remains a critical piece of employment legislation
What is the Employment Rights Act?
It’s a vital piece of UK legislation that details the working relationship between employers and employees. In the legislation, it details statutory rights for members of staff and workers, plus the obligations they have in their role and the obligations a business must follow.
Why is the Employment Rights Act important?
It’s a vital piece of UK legislation for employees and workers. It reduces insecure and/or low-paid jobs by restricting zero-hour contracts and limiting fire/rehire practices and enhancing trade union rights.
For employers, it’s a new piece of employment legislation that, with other laws, sets the legal framework to follow to ensure legal and fair employment practices, whether this is staff dismissals, redundancies, or to reduce the risk of employment tribunal claims. It’s mandatory for businesses to remain compliant with these new legislations.