The Employment Rights Act 2025: The road ahead

Having received Royal Assent on 18 December 2025, the much talked about Employment Rights Bill is now officially the Employment Rights Act 2025 (the “Act”).

Most of the changes provided for by the Act require commencement regulations to bring them into effect, with many also requiring further substantive regulations (with associated consultation) for this to happen. The aptly titled Employment Rights Act 2025 (Commencement No 1 and Transitional and Saving Provisions) Regulations 2026 (the “Commencement Regulations”) bring certain provisions of the Act into force on 6 January, 18 February and 6 April 2026 respectively.

It is worth noting that the 6 January provisions do not give rise to any new employment rights in themselves. Rather, they grant powers to make further substantive regulations (and in some cases codes of practice) in relation to a number of areas, including zero-hours contracts, flexible working and family-related leave.

The government has also recently updated its implementation roadmap, with key changes coming in 2026 and 2027.

Changes from 18 February 2026

The changes coming on 18 February are primarily focused on trade unions, with provisions including:

• Strengthened dismissal protection: The current 12-week “protected period” will be removed, making it automatically unfair to dismiss employees for striking at any time.
• Protection against detriment: Workers will now have the right not to be subjected to any detriment for partaking in industrial action and protection from any action (or inaction) with intent to dissuade them from doing so.
• Simplified balloting and industrial action processes:
  • The 40% support threshold for industrial action ballots in important public services (such as health, education, border control and fire services) will be removed. Unions will now only need more votes for industrial action than against.
  • The notice period required for industrial action will be reduced from 14 days to 10 days.
  • The industrial action mandate period will be extended from 6 months to 12 months.
  • Ballot papers will be simplified, with trade unions required to simply ask their members which type of industrial action they wish to partake in.

Other changes include:

• The removal of the requirement for picket supervisors;
• Updates to political fund rules;
• The repeal of trade union facility time publication requirements for employers in the public sector; and
• The removal of the prohibition on public sector ‘check-off’ (where an employer deducts trade union subscriptions from a member’s pay and passes the deducted amounts to the union on the member’s behalf).

The government has published a guidance paper titled Trade union law: transition to Employment Rights Act 2025, which contains further information on the trade union measures coming into force at this stage.

The risk of industrial action may increase, with this now becoming more accessible to unions. Employers may wish to assess the risk of disruption and ensure that contingency and communication plans are up to date and in force.

Changes from April 2026

Changes to family leave arrangements will take effect from 6 April 2026, including:

• Paternity leave:
  • This will become a ‘day one right’, removing the current 26-week qualifying period.
  • Additionally, in its interplay with shared parental leave, individuals will now also be able to take paternity leave after a period of paid shared parental leave, allowing parents more flexibility.
  • Importantly, however, the Act does not introduce a day one right to paternity pay.
• Ordinary (unpaid) parental leave: This will also become a day one right, removing the current one-year qualifying period.

For many employers, these new day one rights will mean that family leave planning could begin much earlier, with a potential increase in the uptake of parental and paternity leave. Businesses will need to review their onboarding processes, policies and systems to ensure that employees understand their rights and that leave can be managed effectively. Managers may also require training to best handle leave requests, set expectations, and minimise operational disruption.

Further changes also scheduled for April 2026 include:

• Statutory trade union recognition:
  • Currently, for a trade union's application to the Central Arbitration Committee (“CAC”) to be accepted, it must meet a number of admissibility requirements, one of which being that the CAC must be satisfied that at least 10% of workers in the bargaining unit are members of the union.
  • The Act retains the 10% threshold but provides for this percentage to be amended by regulations to between 2% and 10%.

The government has now launched a consultation on this area, looking at the revised code of practice on access and unfair practices during the recognition and derecognition process, which will close on 1 April 2026.

• Fair Work Agency (“FWA”):
  • The Act will provide for the creation of the FWA, a new public authority which will bring together the existing enforcement functions of HMRC (relating to the national minimum wage only), the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority.
  • This body is due to be established on 7 April 2026, but it is yet to be confirmed when its enforcement powers will come into effect.
  • Over time, the FWA is intended to take on the enforcement of a wider range of employment rights, including holiday pay and SSP, with there being flexibility for the enforcement of additional rights to be brought into scope.

Whilst not provided for in the Commencement Regulations, looking to the roadmap, the following changes will also come into force in April 2026:

Statutory Sick Pay (“SSP”)
The Act will remove the current £125 per week earnings threshold to qualify for SSP. SSP will also be payable from the first day of sickness absence, instead of after three “waiting days”.

Removing the lower earnings limit will bring more workers, particularly part-time, low-paid or variable-hours staff, into scope for SSP. With payment of SSP from day one significantly increasing costs, employers may wish to consider budgeting and planning for higher sick pay related expenditure, particularly where short or one-off absences are common. HR systems may also require updating, including absence‑reporting templates, employee self-certification forms, and manager notification procedures. Moreover, payroll will need to be adjusted to calculate SSP from day one.

Collective redundancy protective award
Where an employer fails to carry out proper consultation for collective redundancies affecting 20 or more employees, a tribunal can now award a protective payment of up to 180 days’ gross pay, doubling from the previous maximum of 90 days.

Harassment as a protected disclosure
Whistleblowing protections will be enhanced, with the explicit recognition of sexual harassment complaints as protected disclosures. This will provide workers with more robust legal protection against detriment and unfair dismissal, provided they reasonably believe the disclosure is in the public interest. 

Changes coming later in 2026

October 2026 will see further changes, including:

Harassment
Currently, there is a proactive duty on employers to take “reasonable steps” to prevent sexual harassment in the workplace. The Act will strengthen this duty, requiring employers to take all reasonable steps to prevent sexual harassment.

Employers will also have a duty to take all reasonable steps to prevent third-party harassment of employees in the course of their employment, which will cover all types of harassment.

The Government has also said that in October 2026 it will introduce a power to enable regulations to specify steps that are to be regarded as ‘reasonable’, to determine whether an employer has taken all reasonable steps to prevent sexual harassment. However, the regulations themselves are not expected until 2027. In the meantime, it would be prudent for employers to undertake risk assessments to identify particular areas of risk for sexual harassment or harassment by third parties with appropriate action being taken to then reduce this risk as far as possible. Ensuring that training and policies are updated for the changes coming into effect is also advised.  

Tipping
Employers must consult workers or their representatives before introducing a tipping policy and must review the policy every three years. The government has launched a consultation on the changes it is proposing to make to this area of the law which closes on 1 April 2026. 

Changes coming in 2027 and beyond

Thereafter, the following changes are expected to come into force in 2027:

• A dismissal will be automatically unfair if the reason, or principal reason, for the dismissal is the employee’s refusal to agree to particular contractual variations, unless the employer can rely on the narrow statutory exception of financial difficulty (“fire and rehire” protections). This change was originally due to come into force in October 2026 but the updated implementation roadmap provides for an effective date in January 2027. The government has also launched a consultation in relation to these proposals which is open until 1 April 2026;
• Enhanced protections from dismissal during or after statutory family leave or pregnancy;
• Extension of the right to parental bereavement leave to broader “bereavement leave” available to more groups;
• Strengthening flexible working by making it a legal requirement for employers to give justification for denying flexible working requests. The government has also launched a consultation on this area which is open until 30 April 2026;
• Introduction of the right to reasonable notice of shifts, guaranteed hours, as well as the right to be paid if a shift is cancelled or rescheduled; and
• Reforms to the collective redundancy threshold.

The Act will also introduce reforms in the realm of non-disclosure agreements, making any agreement preventing a worker from making allegations or disclosures about harassment or discrimination, including disclosures about the employer's response, void. However, with this provision not part of the roadmap, there is currently no expected date for when this change will come into effect.

Spotlight: Unfair dismissal

Reduction in qualifying period
The Employment Rights Bill had initially intended to make protection from unfair dismissal a day-one right. However, in order to resolve parliamentary deadlock, the government stepped back from this in favour of a six-month qualifying period, a reduction on the current two-year period.

Regulations will need to be made to give effect to the relevant provision of the Act, with the government having confirmed that they intend for this change to come into force in January 2027. They have also confirmed that they intend to adopt a “commencement approach”, meaning that as of this date, any employee who has six months’ service or more could raise an unfair dismissal claim. Therefore, for example, employees whose employment starts in July 2026 would be able to raise an unfair dismissal claim if dismissed in January 2027, in accordance with this approach and timeline. We also expect this new qualifying period to be applicable to any dismissal taking effect on or after 1 January 2027.

While a statutory probationary period is no longer being introduced as was previously expected, ensuring proper management of contractual probation periods is still likely to become more important once this change takes effect. Organisations will want to ensure managers are properly trained in managing probation periods with a system in place for flagging in advance when a probationary period is due to end.

It is worth noting that unfair dismissal claims where there is currently no qualifying period, such as where the dismissal is alleged to be due to an employee making a protected disclosure or for any discriminatory reason, will continue to be day one rights.

Removal of compensatory cap
The Act will also see the removal of the statutory cap on compensation in unfair dismissal claims, once the relevant provision is brought into force. At present, the cap is the lesser of a year’s gross salary and the statutory limit which is fixed each year (currently sitting at £118,223).

Once the cap is removed, compensation will be assessed on actual financial loss, significantly increasing potential financial exposure for employers faced with unfair dismissal claims. The government has advised that it intends for this change to also take effect in January 2027.

We expect this change to be particularly relevant when considering the exits of senior executives who are more likely to earn above the current cap with arguments around bonuses, equity and potentially pension loss, becoming more important. There will likely also be more of a focus on arguments around what an employee could have done to mitigate their losses.

If you wish to discuss any of these changes in more detail, please reach out to a member of our employment team.

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