The Employment Rights Act 2025: What Employers Need to Know in 2026

Although many changes will be introduced gradually, early preparation will be essential. This guide highlights what employers need to know, what’s changing, and when to expect new obligations to take effect.

A Phased Introduction – Not a Sudden Overhaul

While the Act received Royal Assent in December 2025, only a handful of provisions take effect immediately. Most major reforms will roll out in April and October over the next two years.

Key early changes include:

Repeal of the Strikes (Minimum Service Levels) Act 2023
Amendments to the Trade Union Act 2016
Day‑one rights for statutory sick pay and paternity leave (expected April 2026)
Launch of the Fair Work Agency, responsible for workplace rights enforcement

A headline reform won’t arrive until 1 January 2027:

The qualifying period for unfair dismissal will drop from two years to six months, with the compensation cap removed.

Unfair Dismissal: Earlier Exposure and Higher Risk

For employers, this is one of the most impactful parts of the new legislation.

You’ll need to prepare for:

Six‑month qualifying period for unfair dismissal claims
No cap on unfair dismissal compensation
An increased tribunal limitation period: six months instead of three

Practical implications:

Probationary processes must be robust, well‑documented, and consistently applied
Early‑stage performance management will carry more legal risk
Claims may increase in both volume and value, especially given ongoing tribunal backlogs

Strengthened Trade Union Rights and Consultation Duties

The Act widens trade union access rights and increases obligations around collective consultation.

Key areas for employers:

Lower thresholds for union access to workplaces
Stronger protections for union members and activists
Tightened requirements for collective redundancy consultation

Even employers with minimal historic union activity should ensure:

Managers understand the new rights
Internal communications are careful and consistent
Policies reflect the updated regulatory landscape

Zero‑Hours Contracts, Agency Workers and Predictable Work Patterns

Several reforms aim to address what the Government describes as “one‑sided flexibility.”

New obligations include:

The right for zero‑hours workers to request guaranteed hours
Reasonable notice of shifts
Compensation for short‑notice cancellations
Parallel protections for agency workers

Impact for employers:

Workforce planning—especially in hospitality, retail and logistics—will require closer monitoring
Scheduling practices may need redesigning to avoid new penalties
Requests for guaranteed hours must be assessed fairly and transparently

Family‑Friendly and Wellbeing Measures

The Act expands protections for workers dealing with health issues and family responsibilities.

Key updates:

Day‑one eligibility for Statutory Sick Pay
Day‑one rights to paternity leave
New unpaid bereavement leave, including for pregnancy loss before 24 weeks
Stronger protections against dismissal during pregnancy, maternity leave, and for six months after returning

Gender equality and culture requirements:

Larger employers must publish gender pay action plans
Mandatory reporting on support for employees going through menopause
Employers must now take all reasonable steps (a higher bar) to prevent sexual harassment, including harassment by third parties

This will likely require:

Updated training
Improved reporting mechanisms
A more proactive approach to creating a safe culture

A More Proactive Enforcement Environment

The new Fair Work Agency will consolidate enforcement of:

National Minimum Wage
Holiday pay
Agency worker regulations
Labour exploitation laws

Why this matters:

The Agency can bring tribunal claims on behalf of workers
Civil penalties will become more common
Employers should expect closer scrutiny of pay, working hours and contractual arrangements

Strategic Planning for 2026 and Beyond

Employer reactions to the Act have been mixed, mainly due to concerns about cost, administrative burden and operational flexibility. But the scale of reform is clear.

To prepare effectively, employers should:

Map out when each change affects their business
Review handbooks, contracts and policies
Re‑train managers on probation, performance management and conduct issues
Audit scheduling practices and zero‑hours arrangements
Strengthen HR documentation and decision‑making trails

The coming years will reshape how employers manage people, risk and compliance. Those who plan early will adapt more easily—and avoid costly mistakes.