As you will no doubt be aware the government has been looking to pass the Employment Rights Bill for some time now. It was delayed a number of times as it was passed backwards and forwards by the House of Commons and the House of Lords in what is known as legislative “ping-pong”. This process has now stopped as both houses have now agreed on the provisions in the Bill and it received Royal Assent on the 18th December 2025.
We will be giving more detail and training on all the changes in the near future and as each gets closer to being implements, but for now we will set out below a brief breakdown of the changes,
What is the Employment Rights Act 2025 and why is it significant?
The Employment Rights Act 2025 is the most comprehensive overhaul of UK employment law in decades. It brings in 28 major legal reforms designed to reflect the changing nature of work. These aim to enhance job security, ensure fair pay, protect workers on zero-hours contracts, regulate dismissal practices, expand family leave, strengthen anti-harassment protections, increase trade union influence, and introduce a new enforcement body.
What major changes affect unfair dismissal rights?
From 1 January 2027, ordinary unfair dismissal protection applies after six months of service, down from two years. More significantly, the maximum compensation limit has been abolished, allowing tribunals to award uncapped damages. This presents a considerable change in liabilities, especially when managing senior-level exits, and will necessitate more robust performance management and exit strategies.
How will the Act change ‘fire-and-rehire’ practices?
The Act tightens controls over restructuring tactics. Terminating employees or re-engaging them on reduced terms, such as changes to pay, hours, pensions, shift patterns, or benefits will be considered automatically unfair dismissal, unless the employer is under severe financial pressure. This removes the previous “reasonableness” defence and places employers under stricter standards when proposing contract changes.
What protections are introduced for zero‑hours workers?
After a defined “reference period,” likely around 12 weeks, workers must be offered guaranteed hours that reflect their actual work patterns. Employers also have to provide reasonable advance notice of shift schedules and compensate for cancellations made at short notice. Agency workers will receive similar protections.
How does the Act enhance family‑friendly rights?
From April 2026, all employees will have access from day one to statutory sick pay, paternity leave, unpaid parental leave, and extended bereavement leave (including in cases of pregnancy loss). This lack of qualifying periods for core family rights marks a major shift toward equitable benefits from the start of employment.
What are the key changes to Statutory Sick Pay?
Previously, SSP was only payable from the fourth qualifying day of sickness employees wouldn’t receive sick pay for the first three days. Under the Act, this waiting period is abolished, making SSP payable from the first day of sickness.
Employees were previously required to earn a minimum amount (the Lower Earnings Limit) to qualify. This threshold has been eliminated, meaning all workers, regardless of earnings, become eligible for SSP.
What’s new on workplace harassment and NDAs?
Employers will be legally obligated to take proactive steps to prevent sexual harassment not just respond to incidents. Liability extends to harassment by third parties such as clients or contractors. Complaints of harassment are treated as protected disclosures under whistle-blowing laws, and NDAs cannot be used to prevent employees from reporting harassment or discrimination.
How long will a person have to bring an Employment Tribunal claim?
From October 2026, individuals will have six months (not three) to bring forward Employment Tribunal claims. In cases of collective redundancies, the threshold for consultation is lowered, and protective award levels are doubled to up to 180 days of pay.
What changes affect trade unions and industrial action?
Immediately following Royal Assent, requirements such as the 50% ballot turnout rule and other provisions from the Trade Union Act 2016 will be repealed. This change simplifies industrial action procedures, makes union recognition more accessible, and enhances protections for union representatives.
What enforcement powers does the new Fair Work Agency hold?
The creation of the Fair Work Agency marks a new era of enforcement. Starting in 2026, it will monitor compliance across workplace rights like holiday pay, sick pay, zero-hours contracts, flexibility, and redundancies. This body adds a regulatory dimension to what has traditionally been a largely tribunal-led system.
Key Milestones
December 2025: Royal Assent; union ballot restrictions repealed.
April 2026: Day-one rights for statutory sick pay, paternity & parental leave; Fair Work Agency launches.
October 2026: Tribunal claim limits extended; redundancy penalties doubled.
January 2027: Unfair dismissal reforms—6-month qualifying period and removal of compensation cap.
What should employers and HR teams do now?
Organisations should immediately audit their employment practices, update contracts, handbooks, and policies, particularly on dismissals, zero-hours, redundancies, harassment, and parental and sickness leave. Robust tracking systems are needed to monitor shift guarantees and ensure timely notice. Training and budget preparation are essential, especially in anticipation of uncapped tribunal awards for dismissal. Employers should also rethink settlement strategy for senior positions, preparing for increased scrutiny and potential litigation.
Thank You, Merry Christmas & Happy New Year!
To all our valued clients: we sincerely thank you for your continued trust and partnership throughout the year. As the Employment Rights Act 2025 reshapes the legal landscape, rest assured we are here to guide you, whether that’s adapting policies, delivering manager training, or preparing documentation. Here’s to a successful and Happy New Year ahead!
Please contact us should you require further advice or support.
