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Employment Rights Act 2025: what employers need to know and how to prepare

The Employment Rights Act 2025 is the most significant piece of employment legislation in a generation. It will bring about substantial change in the workplace, for which employers need to be ready.

Upgrading employees’ rights has been a key priority for the Labour Government since before the election. One of the first and most wide-ranging pieces of legislation introduced after entering Government in July 2024 was the Bill designed to deliver these reforms. Since then, there has been a long period of consultation and parliamentary scrutiny until the Bill received Royal Assent on 18th December 2025. While there are continuing consultations on the detail and practical implementation of many aspects, the legal framework is now fixed, with the changes being introduced in phases across 2026 and 2027.

Sarah Dureau, Partner in our Employment Law team, provides an overview of the current legal position, how the Act is being implemented, what changes will take effect during 2026, what is planned for 2027, and the practical steps employers should consider taking now.

Where are we with the Employment Rights Act 2025?

Now that the Act has received Royal Assent, it is formally part of UK employment law. However, it does not come into force all at once, as implementation will be phased through secondary legislation and regulations but there is a planned ‘roadmap’.

For employers, this means:

  • The legal framework is now in place;
  • The timing is set for many substantial changes during 2026 and;
  • The timetable for changes in 2027 will be subject to adjustment as consultation continues, and the detail for policies and relevant regulations is decided and drafted.

This phased approach gives businesses time to prepare, but it also places responsibility on employers to stay informed and ensure their practices are reviewed as each stage is introduced.

What is happening in 2026?

The main areas of the Act due to be introduced in 2026 that will impact businesses include:

  • Enhanced family protections, with the aim of giving employees earlier access to important rights when balancing work and personal commitments.
  • Improved Statutory Sick Pay provisions;
  • Moves towards improving the gender pay gap and menopause policies and;
  • Building on the statutory obligation to (take reasonable steps) to prevent sexual harassment in the workplace, to which employers became subject in October 2024. 

 

Day 1 right to Paternity leave and Parental Leave


From 6th April 2026, employees will be eligible to take paternity leave from day one of employment, which was previously an entitlement after an individual had worked for an employer for 26 weeks.

Similarly, ordinary parental leave, or unpaid parental leave, will become a day one right. This was previously only available for employees of one year or more.

From 18th February 2026, employees could give notice of their intention to exercise this right, and the period of notice temporarily reduced to 28 days (from 15 weeks). As an employer, you may already have employees, including relatively new employees, who have notified or will notify of their intention to use this right.

In addition:

  • The current restriction on taking paternity leave after shared parental leave will be removed.
  • Eligible fathers and partners will be able to take up to 52 weeks of unpaid bereaved partner's paternity leave if the mother or primary adopter dies. They must take this leave within 52 weeks of the child's birth (including surrogacy), adoption placement, or entry to Great Britain for overseas adoptions.

For employers, this reinforces the importance of:

  • Ensuring family-friendly policies are up to date
  • Training managers to understand eligibility and entitlement
  • Applying parental and other family-related rights consistently and fairly

Statutory Sick Pay reforms

The main changes relating to Statutory Sick Pay (SSP), to be introduced on 6th April 2026, include:

  • SSP is being extended to cover more workers, with reforms designed to improve financial security during sickness absence.
  • SSP will become payable from day one of an employee’s sickness absence, removing the current three-day waiting period.
  • Lower earnings thresholds are also being removed, bringing more workers within scope of entitlement:
    • SSP will be paid from the first day of illness, instead of the fourth day.
    • The lower earnings limit will be removed. Currently, workers must earn a minimum amount to be eligible for SSP.

For employers, this change is likely to have both financial and operational implications, particularly where short-term absences are common. Clear sickness absence policies, accurate record-keeping and consistent management of absence will be essential to ensure compliance and manage costs effectively.

Fair Work Agency

On 7th April 2026, the Fair Work Agency will be established to bring together existing enforcement bodies and take on enforcement of other employment rights, such as holiday pay and SSP.

April 2026 Employment law updates

In addition to these changes being introduced in April 2026, whistleblowing, gender pay gap, and menopause are also high on the agenda:

  • Whistleblowing - provisions strengthening protections for workers who ‘blow the whistle’ on sexual harassment come into force. Sexual harassment will become a ‘qualifying disclosure’ giving protection from detriment and unfair dismissal for whistleblowers who make such a disclosure.
  • For employers with over 250 employees there will be a need have action plans to address gender equality and supporting employees through the menopause, but these will be voluntary at this time, becoming mandatory in 2027.

Employment law changes to harassment in the workplace

From October 2026:

  • employers will be liable for harassment from third parties, for example customers or clients, unless they have taken all reasonable steps to prevent it happening. This will apply to all types of harassment.
  • employers will need to take 'all reasonable steps' to prevent sexual harassment; the current law says 'reasonable steps'.

For employers, these provisions are a continuation of already well-publicised moves towards greater protection of employees in the workplace and the employer’s obligations to do more than pay lip service to these. It will be vital for employers to have well designed policies that are genuinely implemented and monitored for compliance.

Being a responsible employer should be standard practice. However, compliance will become even more important as the Government increases its focus on enforcement. With longer time limits for bringing claims and further reforms expected in 2027, employers who do not meet their obligations are likely to face a higher risk of legal claims. Insurance will go some way to cover the significant financial costs that could be incurred, but not the administrative burden and often reputational damage.  

Future changes in 2027 and beyond

Changes to unfair dismissal qualifying periods and compensation

Earlier proposals to introduce day one unfair dismissal rights did not become law. Instead, the qualifying period for ordinary unfair dismissal will be reduced from two years to six months.

This will apply from January 2027, but its effect is already with us as any employee with six months or more employment in January 2027 will be eligible to bring a claim.

In addition, the current statutory cap on compensatory awards for unfair dismissal claims will be removed in January 2027. Tribunals will be able to award compensation reflecting actual financial loss, aligning unfair dismissal claims more closely with discrimination and whistleblowing cases.

For employers, while this reform does not remove qualifying periods altogether, it will significantly shorten the timeframe in which employees gain protection. As a result, employers will need to place even greater emphasis on effective probation management, fair processes and clear documentation. The removal of the cap represents a potential increase in financial exposure for employers where processes are not followed correctly.

“Fire and rehire” practices

The Act also signals a tougher approach to the use of so-called “fire and rehire” practices. From January 2027, dismissing someone then rehiring them on worse terms and conditions will become an automatically unfair dismissal in most cases. 

For employers, this is likely to place greater emphasis on meaningful consultation and exploring alternatives before such steps are taken.

Other employment law changes in 2027

In addition to those changes noted above, there will be additional changes under the Act, including:

  • action plans on gender equality and supporting employees through the menopause (mandatory) 
  • enhanced dismissal protections for pregnant women and new mothers  
  • specifying steps that are to be regarded as ‘reasonable’, to determine whether an employer has taken all reasonable steps to prevent sexual harassment 
  • flexible working improvements
  • bereavement leave including pregnancy loss 
  • introduction of the right to guaranteed hours and the right to reasonable notice and short notice payments (affects ’zero hours contracts’)

Beyond these reforms, further employment law changes remain under discussion and may be introduced through additional legislation or consultation. These could include developments around employment status, enforcement and Tribunal processes.

What employers should be doing now

Although not all changes are in force yet, the Act is now law, and employers should not wait to review their arrangements.

Practical steps include:

  • Reviewing contracts of employment, particularly probation and flexibility clauses
  • Updating workplace policies, including disciplinary, dismissal and absence procedures
  • Training managers on fair process and record-keeping
  • Auditing current practices, especially informal or long-standing arrangements
  • Seeking advice early where existing practices may need to change

Taking proactive steps now can significantly reduce risk and disruption later.

Contact our Employment Law Solicitors

The Employment Rights Act introduces change, but it also provides an opportunity to strengthen employment practices and reduce long-term risk.

Our Employment Law team works closely with employers across a wide range of sectors, supporting with:

  • Contract and policy reviews
  • Practical, commercial HR advice
  • Manager training and guidance
  • Dismissal, grievance and Tribunal support

We understand the pressures facing SMEs and owner-managed businesses, and we focus on giving clear, proportionate advice that works in the real world.

To discuss how the Employment Rights Act may affect your business, or for support reviewing your employment documentation, our Employment Law team is here to help. Contact your local office using the numbers below, or complete our Contact Form.

 

This is for information purposes only and is no substitute for and should not be interpreted as legal advice.  All content was correct at the time of publishing, and we cannot be held responsible for any changes that may invalidate this article.