Employment Rights Act 2025: what the new law means for employers

Overview

The Employment Rights Act 2025 (ERA 2025) received Royal Assent on 18 December 2025. It reforms employment rights, trade union law and the enforcement of labour market legislation. Most of its employment rights reforms apply in England, Scotland, and Wales only.

The Act does not take effect all at once. Implementation is phased over more than a year, with the first changes from Royal Assent itself and the last major reforms arriving in 2027. Employers must prepare for multiple deadlines.

Implementation timeline

Key implementation dates for employers. Dates marked "planned" are the government's published planned dates, which remain subject to parliamentary processes and may change.

Day-one employment rights (from 6 April 2026)

Since 6 April 2026, several employment rights have been available from an employee's first day of work, with the previous qualifying periods removed:

• Statutory Sick Pay: Payable from day one of sickness (3-day waiting period removed). The lower earnings limit is abolished, so all employees qualify regardless of earnings. A new rate calculation applies: 80% of weekly earnings or the flat rate, whichever is lower.
• Paternity leave: Available from day one. The previous qualifying period of employment no longer applies.
• Parental leave: Available from day one. The previous qualifying period of employment no longer applies.

Bereavement leave is not part of this change. The Act extends the existing parental bereavement leave to other bereaved people, including after pregnancy loss, but the government's planned date for this is 2027.

Zero-hours contract reforms

The Act introduces significant changes to zero-hours and low-hours contracts. These are not yet in force: the government has said their timings will be updated after consultation.

• Guaranteed hours: After each reference period, employers will have to offer qualifying zero-hours and low-hours workers guaranteed hours that reflect the hours they worked in that period. Which workers qualify, and how long reference periods are, will be set in regulations. Workers can accept or reject the offer, and must not be subjected to a detriment for doing either.
• Shift notice: Employers will have to give reasonable notice of shifts, and of cancelling or changing a shift. If they cancel, move or cut short a shift at short notice, they will have to make a payment to the worker, of an amount set in regulations.

Employers using zero-hours or low-hours contracts should start reviewing those arrangements and keeping track of the hours workers actually work.

Fire and rehire (planned for January 2027)

Dismissing an employee for refusing a restricted change to their contract — such as a cut in pay, or a change to pension terms or working hours — or in order to re-employ them or someone else on such changed terms, will be automatically unfair dismissal. The government's planned date for this is January 2027, subject to parliamentary processes. The only exception is where the employer shows the reason for the change was to eliminate, prevent, significantly reduce or mitigate financial difficulties affecting, or likely soon to affect, its ability to carry on the business as a going concern, and that it could not reasonably have avoided the change.

Even where that exception applies, the dismissal is not automatically fair. In deciding whether it was fair, a tribunal must consider any consultation with the employee and their union or representatives, and anything offered in return for agreeing to the change.

Harassment protections (planned for 30 October 2026)

The government's planned date for these changes is 30 October 2026, subject to parliamentary processes. Employers will be under a new obligation not to permit third-party harassment of their employees — for example by customers, clients, patients and members of the public. An employer permits it if the harassment happens in the course of employment and the employer failed to take all reasonable steps to prevent it. The existing duty to prevent sexual harassment of employees will also be strengthened from "reasonable steps" to all reasonable steps.

Employers should review harassment policies, provide training for customer-facing staff, and document the preventive steps they have taken.

Fair Work Agency (from 7 April 2026)

A new enforcement body — the Fair Work Agency, an executive agency of the Department for Business and Trade — was established on 7 April 2026. The Act abolishes the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement (section 148), and the agency brings together the work of the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority and the Office of the Director of Labour Market Enforcement.

Since 7 April 2026, the Fair Work Agency has enforced:

• National Minimum Wage and National Living Wage (HMRC carries out this enforcement for the agency under contract until it fully transfers in April 2027)
• Employment agency standards
• Gangmasters licensing
• Modern slavery and labour exploitation

The Act also provides for it to enforce statutory sick pay and holiday pay. When checked on 15 September 2026, those enforcement powers had not yet been brought into force.

Unfair dismissal changes (from 1 January 2027)

For dismissals where the effective date of termination is on or after 1 January 2027, the qualifying period for unfair dismissal claims reduces from 2 years to 6 months. The cap on the compensatory award is removed from the same date.

Employees remain protected from day one for automatically unfair reasons, such as pregnancy, whistleblowing and health and safety activities.

What employers should do now

The phased implementation means further deadlines through 2026 and 2027:

• Now: Check payroll for the April 2026 SSP changes and family leave policies for the removed service requirements, and audit zero-hours contracts
• By 1 October 2026: Prepare for extended tribunal time limits
• By 30 October 2026 (planned): Update harassment policies, and prepare a written statement of the right to join a trade union to give workers with their statement of employment particulars
• By January 2027: Review probation and dismissal procedures for the 6-month qualifying period, and review fire-and-rehire practices (planned)