What is the New Employment Rights Act 2025? 

The UK is set to undergo one of the most substantial changes to employment protections in decades, under the Employment Rights Act 2025 (ERA 2025). After more than a year of detailed parliamentary debate, the legislation received Royal Assent late last year and since then there have been several consultations led by the government that is now shaping the detail of these. The agreed changes are designed to give approximately 2.1 million workers across the UK greater rights in their roles. 

Employers will be expected to follow a phased programme of reforms running from 2026 through to 2027.  

Here’s what to expect from the new employment rights bill: 

 

From April 2026: 

Statutory sick pay – payable from day one 

You are probably aware that Statutory Sick Pay (SSP) will be available from the first day of absence, rather than day four. Plus, the Lower Earnings Limit will no longer apply – meaning that employees don’t have to earn a certain amount to receive it. 

Advice for employers: 

If you have not done so already, it is time to review contracts and policies to remove any references to waiting days or earnings thresholds, and to make sure payroll systems are set up to handle SSP correctly. Although new contracts are not required to introduce these changes if they were issued prior to April 2026.  

Paternity leave – a day one right  

Another change that is now in place is that Paternity leave and unpaid parental leave can be taken from the very first day of employment. Currently, it’s set at 26 weeks. There’s also a new Bereaved Partners’ Paternity Leave, which lets eligible partners take up to 52 weeks off if the child’s mother or primary caregiver dies within the first year after birth or adoption.  

Advice for employers: 

Employers should review and update their family leave policies, if you have not done so, with immediate effect. Offer letters, contracts and handbooks may all need amending.  

Collective redundancy – penalties could double to 180 days’ pay 

The maximum penalty an employer can face for refusing to follow the proper collective consultation rules during redundancies is expected to increase from 90 days’ pay to 180 days’ pay.   

Advice for employers: 

Employers will need to keep track of proposed redundancies and changes to terms and conditions at a business-wide level. The financial risk is also increasing, so if an employer fails to inform when required, the potential penalty becomes much higher. 
 

Fair Work Agency launches 

As part of the employment rights bill amendments, a new government body called the Fair Work Agency is being introduced to ensure employment rights are enforced. Therefore, workplace compliance is likely to be checked more closely than ever before. At first, it will focus on areas like minimum wage and Statutory Sick Pay. Over time, its powers are expected to expand to cover other rights, such as holiday pay. Some of our clients have had FWA inspections, gaining further understanding of how they are working in practice.  

Advice for employers: 

Contracts, policies, and employment records should all be accurate and up to date. Running an internal audit now can help you spot and fix any issues before this act comes into force. 

 

From October 2026: 

Stronger harassment duties 

Employers will have greater responsibilities when it comes to harassment and employment tribunal claims. If an employee raises a concern about harassment, employers must take ‘all reasonable steps’ to prevent and deal with such cases. This will include harassment from third parties, such as customers or clients.  

If an employee is fired on the basis of making a sexual harassment complaint, they’re within their rights to make a whistleblowing claim (as well as claims surrounding discrimination).  

Advice for employers: 

Employers should review their risk assessments and update policies. Plus, all staff members should receive sexual harassment training to prevent and manage cases accordingly. Additionally, NDAs are no longer permitted to prevent allegations of sexual harassment within their place of work. The time limit for most employment tribunal claims will increase from three months to six months. 

 

From January 2027: 

Limiting fire and rehire  

‘Fire and rehire’ refers to the practice of an employer dismissing an employee and then re-employing them on new terms. This usually happens because they want to change fundamental parts of the employee’s contract (like pay, working hours or pensions.) However, this will become illegal as of January 2027, and employee dismissal will be treated as automatically ‘unfair’. There are several limited cases where it may be permitted, such as genuine financial difficulty within the business. 

Unfair dismissal rights granted after six months  

The new Employment Rights Act unfair dismissal regulations mean that employees can make a claim after just six months of service, as opposed to the current two-year requirement.  

Advice for employers: 

Prepare for this change by reviewing onboarding processes. Probation periods should be written into contracts to assess the performance or suitability of the candidate. Plus, optional performance reviews should be offered on a regular basis.  

Greater rights for casual workers 

From 2027, workers on zero-hour contracts will gain greater job security. If they work above the minimum hours provided over a 12-week period, they have the right to receive a new contract which reflects their typical working patterns. Employers will be expected to provide reasonable notice of shifts. Where shifts are cancelled at short notice, workers may be entitled to compensation.  

Advice for employers: 

Review your current workforce and identify anyone whose working pattern is already regular enough that they may qualify for a guaranteed-hours contract.  

You should also assess your shift planning systems. By having this information in place, you can begin to plan for how to avoid these instances to prevent unnecessary payouts. 

 

What does the Employment Rights Act 2025 mean for your business? 

With reforms rolling out over the 18 months, the risks of non-compliance are increasing. 

Want to know how the changes apply to your organisation? We’re here to support you.  

The experts at Trusted HR can guide you through what needs immediate attention and can assist with putting practical steps in place to protect your business. Request a consultation to discuss how Trusted HR can step in and help you stay ahead of the changes.