Employment Rights Act 2025 - key changes for employers
The Employment Rights Bill received Royal Assent on 18 December 2025 and is now the Employment Rights Act 2025 (the Act). The Act introduces wide-ranging reforms to UK employment law and signals a clear shift in policy towards enhanced statutory protection for workers. Implementation will take place in stages between December 2025 and 2027, with a number of provisions dependent on further regulations and guidance.
This briefing highlights some of the aspects of the Act which may be considered relevant to employers and employees and outlines practical steps employers should consider ahead of implementation.
1. Statutory Sick Pay
The Act provides for statutory sick pay to become payable from the first day of sickness absence, with the removal of the lower earnings limit. These changes will extend eligibility to a wider group of workers and increase the number of absences attracting statutory payment.
Employers should:
evaluate the financial impact of expanded SSP entitlement;
update sickness absence policies and payroll processes;
ensure managers apply absence procedures consistently and lawfully.
2. Paternity leave and unpaid parental leave: day-one rights
Qualifying service requirements for paternity leave and ordinary unpaid parental leave are expected to be abolished, making both rights available from the first day of employment. Restrictions relating to the interaction between paternity leave and shared parental leave are also expected to be relaxed, subject to further detail in regulations.
Employers should:
amend family leave policies and supporting documentation;
incorporate early-service leave into resourcing and planning assumptions;
train managers on handling leave requests during probationary periods.
3. Collective redundancy: increased protective awards
The maximum protective award for failure to comply with collective redundancy consultation obligations is expected to increase from 90 days’ pay to 180 days’ pay per affected employee. This significantly increases the potential financial consequences of non-compliance.
Employers should:
begin consultation planning earlier in restructuring exercises;
ensure consultation processes and decision-making are carefully documented;
revisit risk assessments and settlement strategies for collective redundancies.
4. Whistleblowing: sexual harassment disclosures
Sexual harassment complaints are expected to qualify as protected disclosures for whistleblowing purposes. Individuals raising such complaints will therefore benefit from enhanced protection against detriment and dismissal.
Employers should:
align whistleblowing, grievance and anti-harassment procedures;
ensure investigations are independent, proportionate and well-documented;
review confidentiality provisions in policies and agreements.
5. Harassment: third-party liability and enhanced preventative duties
The Act is expected to extend employer liability to harassment by third parties, including clients and customers, unless reasonable preventative steps have been taken. It also strengthens the duty on employers to prevent sexual harassment, with further clarification anticipated in 2027 as to what preventative steps are required in practice.
Employers should:
introduce and enforce standards of conduct for third parties;
establish clear reporting and escalation mechanisms for affected workers;
maintain records demonstrating preventative measures and training.
6. Dismissal and re-engagement (“fire and rehire”)
The Act introduces restrictions on dismissal and re-engagement practices. In broad terms, dismissals linked to the imposition of less favourable contractual terms are expected to be treated as automatically unfair, subject to limited exceptions to be defined in secondary legislation.
Employers should:
reassess approaches to contractual variation and harmonisation;
prioritise consultation and negotiated change where possible;
document business justification and alternatives considered.
7. Employment Tribunal time limits
The time limit for bringing most Employment Tribunal claims is expected to increase from three months to six months. This will extend the period during which claims may be brought and increase the importance of retaining relevant documentation.
Employers should:
review document retention and record-keeping practices;
ensure managers keep contemporaneous notes of key decisions;
consider early resolution strategies where disputes arise.
8. Unfair dismissal: reduced qualifying period
The qualifying period for ordinary unfair dismissal protection is expected to reduce from two years to six months. Although not a day-one right, the change substantially increases exposure during early employment.
Employers should:
strengthen probation and early performance management processes;
apply fair procedures earlier in the employment relationship;
review termination decision-making frameworks.
9. Zero-hours contracts and cancelled shifts
The Act provides for new rights for workers on zero-hours contracts to request guaranteed working hours and to receive compensation where shifts are cancelled, shortened or rescheduled at short notice. The detailed operation of these rights will be set out in regulations.
Employers should:
audit the use of zero-hours and variable-hours contracts;
review scheduling and notice practices;
update contractual documentation where required.
10. Flexible working, gender pay gap and menopause action plans
Employers rejecting flexible working requests will be required to provide detailed reasons explaining why refusal is considered reasonable. Action plans addressing gender pay gaps and menopause-related issues, introduced on a voluntary basis in 2026, are expected to become mandatory in 2027.
Employers should:
update flexible working policies and decision templates;
prepare data and governance structures for mandatory action plans;
ensure appropriate senior oversight.
11. Collective redundancy aggregation and further reforms
Collective redundancy obligations are expected to expand so that redundancy numbers are assessed across the organisation as a whole rather than by individual establishment. Further reforms are also anticipated in relation to trade union rights and the regulation of agency and umbrella company arrangements.
Employers should:
reassess redundancy counting methodologies across multi-site operations;
monitor further legislative developments closely;
ensure HR and legal teams are aligned on implementation planning.
Closing comment
The Employment Rights Act 2025 represents a clear move towards enhanced statutory protection and increased scrutiny of employer processes. Many of the most significant changes will depend on secondary legislation, and the period between now and 2027 should be treated as a preparation phase. Employers who take early steps to review policies, train managers and stress-test existing practices will be best placed to manage the transition and mitigate risk.
Speak to a Solicitor today
If you require any assistance or would like to find out your options in relation to Employment Law, please contact us by sending an email to info@lyoncroft.co.uk, calling us on 020 3576 7170 or complete a contact-us form. Our offices are in Park Royal, London and you can find our address at the bottom of the page.
This article has been authored by Abdullah Suker, Managing Director of Lyon Croft Law.
