Employment Rights Act 2025: Complete Employer Guide
This learning path provides a comprehensive walkthrough of all the major reforms in the Employment Rights Act 2025. It is designed for employers, HR professionals, and managers who want to fully understand the changes and their implications.
Time needed: 45-60 minutes for the full journey.
Structure: This journey is organised by topic area. You can complete it in one session or return to specific sections as needed.
Part 1: Overview and Timeline
The Employment Rights Act 2025 is described as "the biggest upgrade to workers' rights in a generation." It received Royal Assent on 18 December 2025.
Key implementation dates
18 December 2025
Royal Assent - Minimum Service Levels Act repealed
18 February 2026
Trade union reforms take effect
6 April 2026
Day-one rights (SSP, paternity leave, unpaid parental leave)
7 April 2026
Fair Work Agency launches
1 October 2026
Tribunal time limits
30 October 2026
Harassment duties, trade union access and recognition reforms
1 January 2027
Unfair dismissal qualifying period, compensation cap removal, duty to inform workers of their right to join a trade union
March 2027 (expected)
Fire and rehire restrictions
April 2027 (expected)
Mandatory equality action plans, bereavement leave, organisation-wide redundancy threshold
Complete overview with all implementation dates
Part 2: Day-One Employment Rights (April 2026)
Several employment rights become available from the first day of employment. This is one of the most significant changes for employers.
Statutory Sick Pay changes
SSP is fundamentally reformed:
Waiting days
None - SSP is paid from the first full day of sickness (from 6 April 2026)
Lower earnings limit
None - no minimum earnings needed (from 6 April 2026)
Rate calculation
80% of normal weekly earnings or the flat rate, whichever is lower (from 6 April 2026)
SSP day-one eligibility
This change significantly increases employer SSP costs but ensures all employees have income protection when sick.
Since 6 April 2026 , Statutory Sick Pay has had no waiting days and no minimum earnings requirement.
Waiting days (from April 2026)
REMOVED - SSP payable from the first full day of sickness
Lower Earnings Limit (from April 2026)
REMOVED - No minimum earnings threshold for SSP eligibility
Previous waiting days
3 days (first 3 days of sickness were unpaid)
Previous LEL
£125/week - employees earning less were not eligible
Effective date
6 April 2026
Who gains eligibility
Approximately 1.3 million low-paid workers previously excluded
What these changes mean
No waiting days: SSP is paid from the first full day of sicknessNo earnings test: The lower earnings limit is abolishedExtended coverage: Part-time workers, casual workers, and low-paid employees who previously fell below the LEL now receive SSP
Employer impact
Higher SSP costs: SSP is paid for more days and to more employeesMore employees eligible: Workers previously excluded by the LEL must now be paid SSPPayroll system updates: Systems must be updated to remove waiting day and LEL calculationsPolicy updates: Sickness absence policies need revision
Statutory Sick Pay guidance (opens in a new tab)
Detailed guide to SSP changes and payroll requirements
Family leave changes
Several family leave entitlements become day-one rights:
Paternity leave
Day-one right (was 26 weeks' service)
Unpaid parental leave
Day-one right (was 1 year's service)
Bereavement leave
Statutory entitlement as a day-one right, expected from April 2027
Checklist for implementing new family leave eligibility
Part 3: Zero-Hours Contract Reform (start date to be set)
While not an outright ban, zero-hours contracts are significantly reformed to end 'exploitative' practices. These rights are not in force, and the government has not set a start date.
Key changes
Guaranteed hours
Qualifying workers will have the right to be offered hours matching their actual working pattern
Shift notice
Right to reasonable notice of shifts
Cancellation pay
Compensation for short-notice shift cancellations
Agency workers
Extended to cover agency workers
Right to guaranteed hours
This applies to zero-hours contracts AND low-hours contracts where actual hours regularly exceed guaranteed hours.
The Employment Rights Act 2025 inserts sections 27BA to 27BI into the Employment Rights Act 1996. After each reference period, an employer must make a guaranteed hours offer to each qualifying worker. The offer must reflect the hours the worker actually worked in that period.
Qualifying worker
Worked under a zero hours contract or arrangement, or under a contract with a minimum number of hours and worked more than that minimum, for the number of hours set in regulations
Excluded
Excluded workers, as defined in regulations
Reference period
First period starts on commencement or the worker's first day after it; later periods set in regulations
The offer
A variation of existing terms or a new contract, reflecting hours worked in the reference period
Worker response
Accept or reject by notice before the response period ends; no response counts as rejection
Information duty
Take reasonable steps to make potentially qualifying workers aware of their rights
Agency workers
Covered by Part 1 of new Schedule A1 to ERA 1996: the hirer makes the offer
Enforcement
Employment tribunal complaint, generally within 6 months; declaration and compensation for financial loss
Commencement
Not in force. Sections 1 to 4 and Schedule 1 came into force on 6 January 2026 only for powers to consult and make regulations
Low-hours contracts The Act does not use the term low-hours. A contract that requires the employer to make available up to a minimum number of hours qualifies where the worker worked more than that minimum in the reference period. Regulations will set the hours and further conditions.
Zero-hours contracts (opens in a new tab)
How to comply with guaranteed hours and shift notice
Part 4: Unfair Dismissal Changes
Major reforms to unfair dismissal law come in two phases.
March 2027 (expected): Fire and rehire
Fire and rehire is expected to become automatically unfair dismissal in March 2027, with only a narrow exception for genuine financial crises.
Fire and rehire restrictions
This effectively bans fire and rehire except in extreme circumstances. The financial difficulties exception is very narrow.
Section 28 of the Employment Rights Act 2025 inserts section 104I into the Employment Rights Act 1996. It will make a dismissal automatically unfair where the reason is that the employee did not agree to a restricted variation of their contract, or that the employer wants to re-engage or replace them on a contract with a restricted variation. At 31 October 2026 no commencement regulations had been made for section 28, so it is not in force.
Status at 31 October 2026
Enacted, not in force
Restricted variations (s.104I)
Cutting pay or an entitlement to a payment, changing how pay is measured, pension terms, hours, shift timing, time off, and others set out in the Act or regulations
Qualifying period
None: automatically unfair
Exception (s.104I(8))
Financial difficulties affecting, or likely soon to affect, the ability to carry on as a going concern, and the need for the variation could not reasonably have been avoided
Code of Practice on Dismissal and Re-engagement
In force; up to 25% uplift to a tribunal award for unreasonable breach
The financial difficulties exception The employer must show both that the reason for the variation was to eliminate, prevent or significantly reduce, or mitigate, financial difficulties that were affecting or likely in the immediate future to affect its ability to carry on the business as a going concern, and that in all the circumstances it could not reasonably have avoided the variation. Where the exception is met, the tribunal still considers matters such as consultation with the employee and any recognised union, and anything offered in return. Public sector employers and local authorities have their own wording.
Dismissal and re-engagement: code of practice (opens in a new tab)
January 2027: Qualifying period
The qualifying period for ordinary unfair dismissal claims reduces from 2 years to 6 months. The compensation cap is also removed.
Qualifying period (from January 2027)
6 months (reduced from 2 years)
Compensation cap (from January 2027)
REMOVED - Awards based on actual losses
Impact
Fair dismissal procedures required from much earlier
A dismissal is fair only if you can show a fair reason and acted reasonably, which usually means following a fair procedure.
Detailed guidance on fire and rehire restrictions
Part 5: Harassment Protections (30 October 2026)
Employer duties to prevent harassment are strengthened significantly.
Third-party harassment
Employer liable for harassment by customers, clients, contractors
Standard
Must take 'all reasonable steps' to prevent sexual harassment, and to stop third parties harassing employees
Types covered
Sexual harassment, and for third parties harassment related to any protected characteristic
Earlier incidents
No 'two strikes' needed - you can be liable from the first incident
Third-party harassment liability
This is particularly significant for customer-facing sectors like retail, hospitality, healthcare, and transport.
From 30 October 2026, section 21 of the Employment Rights Act 2025 adds subsections (1A) to (1C) to section 40 of the Equality Act 2010. An employer must not permit a third party to harass an employee. This restores a protection that was removed from the Act in 2013.
In force
30 October 2026 (SI 2026/1065)
Third party
Anyone other than the employer and its employees, such as customers, clients, service users, contractors and visitors
When the employer is liable
The third party harassed the employee in the course of their employment, and the employer failed to take all reasonable steps to prevent it
Harassment covered
Harassment within section 26 of the Equality Act 2010: conduct related to age, disability, gender reassignment, race, religion or belief, sex or sexual orientation, and unwanted sexual conduct
Previous rule (1 October 2010 to 30 September 2013)
Employer liable only after two earlier incidents
New rule
No "two incidents" requirement
Who is protected
Employees
All reasonable steps The Act does not list the steps an employer must take. Whether an employer took all reasonable steps depends on the circumstances, and the same words also apply to the duty to prevent sexual harassment (section 40A of the Equality Act 2010, also from 30 October 2026).
Harassment at work (opens in a new tab)
How to comply with harassment prevention duties
Part 6: Trade Union Rights (February 2026)
Significant strengthening of trade union rights, including repeal of previous restrictions.
Minimum Service Levels Act
REPEALED (immediate from Royal Assent)
Trade Union Act 2016
Largely REPEALED (from 18 February 2026)
Workplace access
New statutory right for union access (from 30 October 2026)
Electronic balloting
Permitted for statutory union ballots (from 25 August 2026)
Recognition
Simplified threshold
Written statement
Must inform workers of right to join union (planned from 1 January 2027)
Implications for employers
Easier for unions to gain recognition
Must allow union access to workplace
Must inform employees of right to join unions
Strike action will be easier to organise
The extra 40% support threshold for important public services was removed from 18 February 2026, though the 50% turnout threshold still applies
Part 7: Fair Work Agency (April 2026)
A new unified enforcement body launched on 7 April 2026.
Fair Work Agency enforcement
The FWA consolidates multiple existing enforcement bodies and gains new powers.
The Fair Work Agency is a unified enforcement body for specified labour market legislation, created by the Employment Rights Act 2025. The Act's enforcement part extends to the whole UK, but the Agency can only enforce rules that apply where you employ people. It regulates employment agencies and businesses in England, Scotland and Wales only, not Northern Ireland.
Launch date
7 April 2026
Chair
Matthew Taylor
Nations covered
UK-wide Act; agency regulation in Great Britain only
Replaces
Employment Agency Standards Inspectorate
Replaces (labour market)
Director of Labour Market Enforcement
Replaces (gangmasters)
Gangmasters and Labour Abuse Authority
National Minimum Wage
FWA responsibility; HMRC enforces under contract until staff transfer in April 2027
Holiday pay
Enforcement expected to begin in 2027
Employment agency rules
Enforced by the Agency (England, Scotland, Wales)
Gangmaster licensing
Enforced by the Agency
Umbrella company practices
ERA 2025 s36 (GB); commenced 6 January 2026 for regulation-making only
Unpaid tribunal awards
Can issue non-payment penalties; does not collect the award
Enforcement tools
Notices, financial penalties, inspections, public naming
Enforcement powers, employer checklist and the transitional arrangements for minimum wage cases
Part 8: Collective Redundancy (2026-2027)
Changes to collective redundancy consultation rules.
Protective award (from April 2026)
Doubled from 90 to 180 days' pay
Organisation-wide threshold (from 2027)
New threshold in addition to establishment test
Financial risk
Significantly increased for consultation failures
Guide to collective redundancy changes
Part 9: Large Employer Requirements (2027)
New requirements for employers with 250+ employees.
Gender pay gap action plans
Expected to become mandatory in 2027 (voluntary from April 2026)
Menopause action plans
Expected to become mandatory in 2027 (voluntary from April 2026)
First UK legislation
Explicitly mentions menopause
Part 10: Employment Tribunal Changes (October 2026)
Time limits for bringing tribunal claims are extended.
Standard time limit
Extended from 3 months to 6 months, for problems on or after 1 October 2026
Early conciliation
Up to 12 weeks since 1 December 2025
Impact
Maintain records longer, more time for claims
Summary and Next Steps
The Employment Rights Act 2025 represents the most significant change to employment law in a generation. Key actions for employers:
In force since April 2026: SSP from the first day, day-one paternity and unpaid parental leave, the Fair Work AgencyIn force since October 2026: Harassment duties, tribunal time limitsBy January 2027: Unfair dismissal procedures, trade union notice in written statementsBy March and April 2027: Fire and rehire restrictions, action plans (if 250+)Ongoing: Monitor secondary legislation for zero-hours and redundancy thresholds
Quick 10-minute compliance check