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14-10-2026

Employment Rights Act 2025: What Does This Mean for Employers?  

The implementation of the Employment Rights Act 2025 sees employment law entering a period of significant change.  The Act seeks to reshape the relationship between employers and their workforce, with its primary purpose being to strengthen statutory rights, modernise the legislative framework and improve job security. For employers, this will impact the way in which they deal with and respond to workplace issues on a day to day basis.

The wide-reaching changes are being introduced gradually, with some provisions having already come into force and others scheduled for a phased implementation throughout 2026 and 2027.

It is particularly important for employers to understand how these changes will affect their organisation and to seek relevant legal advice as early as possible.

This article considers some of the key changes and gives some practical tips as to what  employers should be doing to prepare.

What has changed so far?

As of 6 April 2026, the first phase of reforms is already in force.

Statutory Sick Pay

The Lower Earnings Limit and the three day waiting period for Statutory Sick Pay has been removed.

Eligible employees, regardless of their earnings, now qualify for Statutory Sick Pay from the first qualifying day of sickness, rather than having to wait until the fourth day.

Employers will need to do more than simply update the sickness policy. Payroll systems, absence management processes and employee communication records will all need to be reviewed and updated. Specifically, employers should consider whether there are any particular teams, roles or working practices where short-term absence is more common. This could present an opportunity to address underlying reasons of absence and think about whether greater flexibility or earlier support could be provided to help prevent longer periods of absence.

Paternity and Parental Leave

Whereas, previously, employees generally had to satisfy a period of qualifying service, paternity leave and unpaid parental leave are now “day one” rights.

Employers should ensure their family leave policies, HR systems and standard correspondence reflect the change. Line managers should also be familiar with the new entitlement, so that requests for leave are handled consistently and lawfully.

Collective Redundancy Protective Awards

The maximum period used to calculate the protective award for a failure to comply with collective redundancy consultation requirements has been doubled.

The change increases the potentially significant financial consequences for employers that fail to comply with collective consultation obligations.

Employers should, therefore, ensure their redundancy policies and procedures are up to date, robust and correctly implemented, with appropriate records kept throughout the consultation process.

Whistleblowing and Sexual Harassment

Sexual harassment disclosures are now standalone protected disclosures under whistleblowing law, giving employees safeguards against detriment and unfair dismissal.

This runs parallel to the existing legal framework governing sexual harassment in the workplace and the statutory duty on employers to take reasonable steps to prevent sexual harassment.

Whistleblowing, grievance and harassment procedures should, therefore, operate effectively together to ensure that complaints and concerns are identified, escalated and handled appropriately.

The overlap between sexual harassment and whistleblowing claims could also result in more complex pleadings and disclosure during litigation. Employers will need to consider whether their existing procedures adequately identify and manage the potential for complaints to engage more than one area of employment law.

The Fair Work Agency

The Fair Work Agency is a new executive agency that consolidates several existing state enforcement functions (such as holiday pay, statutory sick pay and national minimum wage). Its purpose is to move away from a fragmented system and, instead, introduce a more accessible and consistent framework for employment rights protection.

For employers, this promises a better-resourced and more proactive enforcement structure than what previously existed. However, the change also brings an increased risk of enforcement action. Employers should, therefore, be thinking not only about whether their compliance systems are up to date, but also whether they can demonstrate compliance.

The ability to show what and when steps were taken and who was responsible may become increasingly important where an employer’s compliance is challenged, although employers should not wait for an investigation to find gaps in their compliance procedures.

What are the changes expected in October 2026?

Further important reforms are due to take effect from October 2026.

Employment Tribunal Time Limits

The time limit for bringing most Employment Tribunal claims will increase from three to six months, bringing a significant change to the litigation landscape.

The extension encourages increased access to justice whilst offering employees and employers more time to resolve disputes internally or through the conciliation process before a claim is issued.

However, longer claim periods may also mean that disputes remain live for longer periods of time, which could contribute to delays in resolving matters. As time goes on, this poses a risk to the preservation of evidence and the accuracy of witness’ recollections.

For that reason, early evidence gathering and preserving relevant documents will be more important than ever. Employers should consider whether their existing document retention processes are sufficiently robust.

Sexual Harassment:

Employers will be required to take “all reasonable steps” to prevent sexual harassment of their employees in the course of employment. The legislation also extends to harassment involving third parties such as customers, suppliers, contractors and visitors.

Employer obligations will extend beyond merely having a harassment policy in place. They should be able to demonstrate the practical steps they have taken to identify and reduce the risk of sexual harassment including monitoring workplace culture, appropriate training and acting on concerns when they arise. Employers should also consider the risks arising from interactions with third parties and whether their existing reporting and escalation procedures are sufficiently robust.

Trade Union Reform

Several trade union reforms took effect during 2026, with further provisions due to be implemented in October this year. These include new requirements to inform workers of their right to join a trade union, strengthened trade union rights of access and changes affecting trade union recognition and derecognition processes.

Employers with recognised trade unions, or those operating in sectors where trade union recognition is likely, should consider whether the changes have practical implications for their business. Managers should also understand how to appropriately deal with trade union representatives and requests for recognition or access.

What will change in 2027?

Unfair Dismissal

Perhaps the most commercially significant reform for many employers is the reduction in the qualifying period for ordinary unfair dismissal. From 1 January 2027, the two-year qualifying period will be reduced to six months’ continuous service. This represents a major shift in the protection afforded to employees in the early stages of employment.

Importantly, the change will not only affect employees recruited after 1 January 2027.  Employees who reach six months’ continuous service by that date (i.e. those employed from July 2026) may also be protected.

The statutory compensation cap (currently £123,543) for ordinary unfair dismissal claims will also be removed, with compensation being assessed by reference to actual financial loss, subject to the usual rules on mitigation, causation and contributory fault. This may increase the value of some unfair dismissal claims, particularly where the claimant is a high earner, and should be factored into employers’ assessment of litigation and settlement risk.

The reduction in the qualifying period also makes effective probation and early performance management more important. Employers should ensure they keep a clear record of expectations, feedback and support provided especially in circumstances where an employee may not be meeting the required standards. Managers will need to be appropriately trained to identify and address issues at an early stage.

Employers should, therefore, take sufficient steps in reviewing performance management procedures, disciplinary procedures and dismissal processes and make sure that managers have the training and support to apply them.

Any decision to dismiss should be properly documented and supported by a clear evidential record.

Zero-hours contracts and atypical work

The Act will implement new rights for workers engaged on zero-hours contracts and other arrangements where there is no guarantee of work, offering greater predictability and protection over working patterns.

The precise operation of these rights will depend in part upon secondary legislation and the applicable regulations. Employers who use zero-hours contracts or other forms of casual or atypical working should monitor the implementation timetable and consider whether their current rostering and contractual arrangements remain workable under the new rules.

Preparing for Change

The impact of the Employment Rights Act 2025 cannot be determined by merely the wording of a well-drafted policy; having a policy in place does not guarantee compliance. Rather, the greater challenge for employers will be to show they are correctly implementing those policies when dealing with issues in the workplace.

Employers should get ahead of the changes and not wait for a difficult situation to expose a gap in their processes. This means reviewing policies, making sure those policies work in practice, giving managers the training and confidence to apply them and, importantly, ensuring the organisation could evidence its approach if a dispute or enforcement action arises.

The implementation timetable also means this is an ongoing compliance exercise rather than a one-off review. With further changes still to come, employers should continue to monitor developments, review their practices and understand where the greatest risks lie.

The question to ask, therefore, in not simply “is my business prepared for the changes?”, but “will the business’ approach stand up when tested?”

Contact

If you would like to discuss any of the issues raised in this article, or need general advice about Employment related matters, please do not hesitate to contact our Employment Department on 020 7625 6003 or Raj Dhokia (Head of Commercial & Employment) by email at r.dhokia@fgdlaw.co.uk