Employment Rights Act 2025: what employers need to know

Implementation timeline

The Act's provisions are being phased in over approximately two years. The key dates are:

Day-one employment rights (April 2026)

Statutory Sick Pay

SSP becomes payable from the first day of sickness absence. The 3-day waiting period and the lower earnings limit are both abolished. A new percentage-based rate (80% of weekly earnings or the flat rate, whichever is lower) replaces the flat-rate-only system, extending SSP to approximately 1.3 million previously excluded low-paid workers.

Family leave

Paternity leave and unpaid parental leave both become day-one rights, removing the previous qualifying service requirements (26 weeks for paternity, 1 year for parental leave). A new statutory bereavement leave entitlement is also introduced, covering early pregnancy loss for the first time.

Fair Work Agency

A new unified enforcement body, the Fair Work Agency (FWA), launches on 1 April 2026. It consolidates functions from HMRC's National Minimum Wage team, the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority, and the Director of Labour Market Enforcement. The FWA gains new enforcement powers over SSP, holiday pay, and umbrella company compliance.

October 2026 changes

Third-party harassment

From 1 October 2026, employers become liable for harassment of employees by third parties including customers, clients, and contractors. This reintroduces protection removed in 2013 and strengthens the preventative duty from 'reasonable steps' to 'all reasonable steps'. Unlike the previous provision, there is no requirement for harassment to have happened before - liability applies from the first incident.

Employment tribunal time limits

Most employment tribunal claim time limits extend from 3 months to 6 months from 1 October 2026. The early conciliation period through Acas also extends from 6 weeks to 12 weeks. This means employers may face claims relating to events up to 9-10 months earlier, and should retain employment records accordingly.

Collective redundancy

The collective consultation threshold changes so that employers must count redundancies across their entire organisation, not just at a single establishment. This means businesses with multiple sites are more likely to trigger the formal consultation requirements when making 20 or more redundancies.

January 2027 changes

Unfair dismissal

From 1 January 2027, the qualifying period for ordinary unfair dismissal claims reduces from 2 years to 6 months of continuous employment. A new 'initial period of employment' concept applies during the first 6 months, during which employers may use a lighter-touch process for dismissal. Anyone already employed with 6 or more months' service on 1 January 2027 immediately gains protection.

Provisions awaiting commencement dates

Zero-hours and low-hours contracts

Workers on zero-hours and low-hours contracts gain the right to be offered guaranteed hours reflecting their actual working pattern. Employers must also provide reasonable notice of shifts and pay compensation for short-notice cancellations. The exact commencement date will be set in regulations.

Fire and rehire

Dismissing an employee to re-engage them on less favourable terms ('fire and rehire') becomes automatically unfair dismissal. A narrow exception exists where the employer can demonstrate genuine financial difficulties that threaten the viability of the business and has explored all reasonable alternatives. This significantly restricts a practice that was widespread during and after the pandemic.

Trade unions

The Act introduces a right for trade unions to access workplaces to recruit and organise members. It also simplifies the statutory recognition process and lowers the threshold for union recognition ballots. The requirement to include information about the right to join a trade union in written statements of employment particulars takes effect from Royal Assent.

Equality action plans

Large employers (250+ employees) will be required to publish equality action plans addressing gender equality and the gender pay gap. This builds on the existing gender pay gap reporting requirement by requiring employers to set out what actions they are taking to close gaps.

What employers should do now

The reforms require action across multiple areas of your business. As a priority:

1. Update payroll systems for SSP changes before April 2026
2. Review sickness absence and family leave policies to reflect day-one rights
3. Prepare for the Fair Work Agency by auditing NMW, holiday pay, and SSP compliance
4. Assess harassment risk and strengthen prevention measures before October 2026
5. Review dismissal procedures ahead of the January 2027 qualifying period change
6. Audit zero-hours contracts and begin tracking actual hours worked
7. Retain employment records for longer periods to account for extended tribunal time limits
8. Communicate changes to managers who handle day-to-day employment decisions