The Employment Rights Act 2025 – what employers must know, and what they can do to prepare.

Last updated: February 2026

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Employees need to be employed for two years before they obtain the right not to be unfairly dismissed. For employees with two years’ service, employers must provide written reasons for dismissal.

For a successful unfair dismissal claim, compensation is limited to no more than 52 weeks’ pay up to the ‘compensation cap’ set by the Government (currently £118,233).

The Act reduces the qualifying period for unfair dismissal to six months.

The Act removes the compensation cap on unfair dismissal claims, which means there is no longer any restriction on the amount of compensation that can be awarded.

According to the government’s revised implementation timetable, the reduction in qualifying period and uncapping of compensatory awards will take effect on 1 January 2027, but the practical impact for employers starts now, as every new hire from now may gain unfair dismissal rights sooner than they would have under the current law. In practice, anyone hired from around 1 July 2026 onwards will gain unfair dismissal protection from 1 January 2027.

For all employers, updating recruitment and performance monitoring procedures will be crucial.

The government has confirmed that it does not intend to consult further on these unfair dismissal provisions. An impact assessment has been published.

The Code of Practice on fire and rehire was put in place in July 2024. The practice of dismissing employees following consultation and reengaging them on new terms remains lawful, albeit increasingly high-risk from a reputational and industrial relations perspective.

The Act restricts an employer’s ability to use fire and rehire to change an employee’s terms of employment.

It will be automatically unfair to dismiss an employee for refusing a contractual change to their terms of employment and re-engage them on new terms or where an employer intends to employ another person on varied terms to carry out substantially the same role. The Act will also extend this protection to prevent employers from replacing dismissed employees with non-employees, such as agency staff or contractors.

Employers will only be able to defend such dismissals if they are in a situation of extreme financial distress which would affect the ability to carry on the business as a going concern. This sets a high bar for employers and is therefore likely to only apply in limited cases.

The restriction will only apply if an employer seeks to make a “restricted variation”. These are set out in the Act and include variations to pay, hours, pensions, and time off. There is also scope for regulations to add to or amend this list in time and consultation is ongoing with regards to this. It is currently not certain whether changes to contractual benefits will be included in the list of “restricted variations”. It does appear, however, that changes to place of work or to workplace duties will not restricted.

If an employee is dismissed and re-engaged to impose a contractual change not included in the above list of restricted variations, the dismissal will not be automatically unfair, although it will be subject to the usual unfair dismissal tests.

Anti-avoidance measures have also been included. Variation clauses which intend to bypass the ban on fire and rehire will be void.

On 4 February 2026, the government launched a consultation on which expenses, benefits, payments in kind, and shift pattern changes should constitute “restricted variations” for the purposes of these provisions. The consultation closes on 1 April 2026.

Following consultation, the government has confirmed that the maximum protective award for failing to inform and consult on fire and rehire will be increased from 90 to 180 days’ pay. This applies where it is proposed to dismiss and re-engage 20 or more employees during a 90-day period. The Roadmap indicates that the doubling of the protective award will happen in April 2026.

Employers should review their contracts to ensure they include specific variation clauses where necessary. Additionally, any bonus provisions should include discretionary language giving employers as much ability to vary or withdraw bonus awards as possible.

Employers will need to comply with the Code of Practice on fire and rehire, which the government has promised to update.

According to the revised timetable, the restrictions on fire and rehire will now take effect in January 2027, delayed from October 2026. An updated Code of Practice is expected in 2027.

Employers proposing to dismiss 20 or more employees at one establishment within a period of 90 days or less must collectively consult with recognised trades union or employee representatives.

Employers making redundancies across multiple locations can avoid triggering collective consultation as long as fewer than 20 redundancies are proposed “at one establishment”.

If an employer fails to comply with its statutory obligations, it may be required to pay a “protective award” of up to 90 days’ uncapped pay to each affected employee.

6 April 2026 – the maximum protective award for failure to collectively consult will be increased from 90 to 180 days’ pay.

The Act will add a new threshold test, in addition to the threshold test above. Collective consultation will be required if there are either 20+ proposed redundancies “at one establishment” or “some other threshold test” is met which is likely to involve counting employees across all sites/workplaces. The new threshold test will be defined in the regulations but may be based on a percentage or number higher than 20 (e.g. the lower of 10% or 100 employees across the business as a whole).

As a result of the new threshold test, collective consultation is likely to apply far more often than before.

The government says it will consult on other ways to strengthen the regime and has promised further guidance on the legal requirements. Much will depend on exactly where the new threshold is set.

According to the Roadmap, the additional threshold test for collective redundancies will be introduced in 2027.

SSP is not currently payable for the first three days of sickness absence. Anyone earning under £123 a week doesn’t qualify for SSP.

The Act removes the current waiting period, so that SSP becomes payable from day one of sickness absence.

The Act also removes the lower earnings limit so for individuals earning less than the lower earnings limit SSP will be calculated at 80% of their normal weekly earnings.

It will be very important for employers to review and update sickness absence policies.

Employers should start monitoring short-term absence trends and strengthen return-to-work procedures.

Employers should provide training for managers to confidently manage short-term absences, address capability issues, and handle medical referrals.

The changes to SSP will take effect on 6 April 2026.

Zero-hour contracts are lawful but cannot restrict employees from working elsewhere.

Due to concern regarding precarious work and what the government are calling “exploitative, one-sided flexibility”, the Act will introduce a right to guaranteed hours. Employers will be required to offer a guaranteed hours contract to qualifying workers that reflects the hours they have worked regularly over a reference period. A “qualifying worker” will be someone who works under a zero hour contract or low hours contract and who regularly works more than the minimum number of hours specified in their contract.

The exact thresholds are yet to be confirmed, but the reference period is expected to be 12 weeks.

The guaranteed hours offered will need to reflect the hours worked by the worker during the reference period, and regulations are anticipated that will provide more detail. The employee will not have to accept the offer of guaranteed hours, but it must be offered. The duty will be ongoing, so the employer will be required to offer a guaranteed hours contract to a qualifying worker at the end of each reference period until they are no longer a qualifying worker.

An equivalent right will apply to qualifying agency workers. Under the latest set of amendments, end-hirers will be required to offer guaranteed hours to an agency worker on terms which are no less favourable than those the worker had previously been working under. This includes pay, which must be no less favourable than either the agency terms they have previously been working on or those of comparable workers doing similar work.

Amendments also clarify that when an agency worker accepts a guaranteed hours offer from the end-hirer, they will be classified as a worker – not as an employee.

Employers will need to review their processes and procedures to ensure they are compliant with the requirement to offer guarantees hours contracts to qualifying workers.

This is a complex regime with an ongoing set of obligations requiring exceptionally good record keeping. This will in turn create a heavy administrative burden on employers.

Employers will need to have clear communication with workers and the ability to explain and justify decisions.

According to the implementation timetable, these changes will take effect in 2027.

There is currently no statutory right to notice of shifts.

The Act will introduce a right for employees to receive reasonable notice of shifts.

Employees will also have the right to reasonable notice if their shift is changed or cancelled.

Notice will be presumed unreasonable unless it is provided a “specified amount of time” before the shift is due to start.

Employers will be under a duty to make payment to a worker each time there is a change or cancellation to a shift at “short notice”. Short notice will be specified in regulations, but the government has indicated that it will not exceed seven days before the scheduled shift’s start.

The regime will also extend to agency workers. It will be the responsibility of both the agency and end hirer to provide the agency worker with reasonable notice of shifts. The responsibility for cancellation or curtailment payments will fall to the agency only, although this can be recouped from the end hirer.

The proposals only captures shifts which are not already contractually guaranteed.

Employers should look at existing shift workers and consider how much notice is currently given to workers.

Employers may want to consider shift scheduling and explore ways to support with these new provisions.

Further consultation is expected on how much notice must be given, payment to be made and how any compensation will be calculated.

According to the implementation timetable, these measures will take effect in 2027.

Employees have the right to request flexible working from day one. The employer can refuse a request where it considers that one or more of the existing prescribed grounds apply.

The penalty for breaching the statutory flexible working regime is eight weeks’ pay, capped at £719 per week.

Employers will still be able to refuse flexible working requests on the prescribed grounds but there will be a new requirement for any refusal to be “reasonable”.

If an employer refuses an application for flexible working, the grounds for refusal must be stated in writing and they must explain why it considers that it is reasonable to refuse the application on those grounds.

Employers will need to review their flexible working policies and practices in the light of the changes, and ensure managers receive training in how to handle flexible working requests.

The new requirement for the refusal to be reasonable may have a limited impact but it remains to be seen how this will be interpreted by tribunals and government guidance.

On 5 February 2026, the government launched a consultation on new requirements relating to flexible working. The consultation closes on 30 April 2026.

According to the implementation timetable, these measures will take effect in 2027.

From 26 October 2024, employers have been under a new duty to take reasonable steps to prevent sexual harassment in the workplace.

Employers will be placed under an obligation to take all reasonable steps to prevent sexual harassment in the workplace.

Employers will be liable for harassment by third parties, unless they take all reasonable steps to prevent it. This covers all types of harassment not just sexual harassment.

Employers should re-visit steps taken to comply with the existing preventative duty and consider any additional steps which could be taken.

Employers who have already put reasonable steps in place should be in a good position, however, it will be important to review all anti-harassment measures to ensure all reasonable steps are being taken.

Employers should look to carry out sector specific analysis of the types of third parties likely to meet staff and the frequency of this. They should consider contracts with third parties, consider adding signage in the workplace and carry out dedicated training of staff.

Regulations will specify the steps that employers should take, such as carrying out risk assessments and implementing harassment policies and complaints procedures.

These measures are due to take effect in October 2026, with further regulations about harassment following in 2027. The whistleblowing protections will take effect on 6 April 2026.

The power to make regulations specifying what constitutes “reasonable steps” has been brought forward from 2027 to October 2026 per the revised timetable.

NDAs place specific confidentiality requirements on parties and can be stand-alone agreements, or included as clauses in wider contracts or agreements.

NDAs cannot prevent individuals from reporting a crime to a law enforcement agency or regulator, or from making a “protected disclosure” (i.e., whistleblowing). A clause which seeks to limit an employee’s ability to do any of these things would be void.

Significantly, the Act makes NDAs void if they attempt to prevent a worker from making an allegation or disclosure of work-related harassment or discrimination.

The NDA restrictions are wide enough to cover any alleged discriminatory conduct and also cover allegations about harassment by a third party. A further amendment extended these provisions to expressly cover a failure to make reasonable adjustments.

This proposal sees a move away from the routine use of NDAs as a means of securing an employee’s confidentiality, and will have implications for confidentiality wording in contracts and policies, as well as settlement agreements.

Employers may be more reluctant to settle harassment or discrimination claims if they cannot prevent public disclosure in any event.

It is not yet clear when this restriction on NDAs will come into effect.

Right to bereavement leave

There is no general statutory right to bereavement leave unless an employee’s child dies under 18 or is stillborn after 24 weeks (whereby statutory parental bereavement leave may apply).

Currently there is no entitlement to leave for pregnancy loss that takes place before 24 weeks.

Parental leave from day one

Employees need to have one year’s service to be eligible for parental leave.

Changes to paternity leave and shared parental leave

Employees are required to have been employed for 26 weeks (accrued by 15 weeks before the expected week of childbirth) to be entitled to statutory paternity leave.

Employees lose any entitlement to paternity leave and pay if they take shared parental leave and pay before exhausting their paternity leave entitlements.

Discrimination

Under the Equality Act 2010, pregnancy and maternity are protected characteristics.

Unfair dismissal

The Employment Rights Act 1996 makes it automatically unfair to dismiss a woman or select her for redundancy if the reason is connected with pregnancy, health or safety related to pregnancy, the fact she is or was on maternity leave, or because she has given birth.

Enhanced redundancy protections

Enhanced redundancy protections apply to pregnant women or new mothers. Where a suitable alternative vacancy exists, the employer must offer this role to the employee.

Return from maternity leave

The Act introduces powers for regulations to prohibit employers from dismissing or making redundant employees who are pregnant, on maternity leave or are in the six-month period following their maternity leave. This will also extend to employees who are on, or returning from, adoption or shared parental leave.

Right to bereavement leave

The Act introduces a day one right to a minimum of one week of bereavement leave for employees and a window of at least 56 days for the employee to take the leave.

The Act extends the right to bereavement leave to employees who suffer pregnancy loss before 24 weeks.

The Act also states that the entitlement to leave must include protection against unfair treatment, contractual rights and unfair dismissal.

Parental leave from day one

The Act removes any length of service requirement for parental leave.

Changes to paternity leave and shared parental leave

The Act removes any length of service requirement for paternity leave, making it a day one right.

Employees will be able to take paternity leave and pay even after they have taken shared parental leave and pay.

Bereaved partners’ paternity leave

Brought in by legislation separate from the Act, from 6 April 2026, 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 within the first year of the child’s life.

On 23 October 2025, the government published two consultations on leave for bereavement including pregnancy loss and enhanced dismissal protections for pregnant women and new mothers. Both consultations closed on 15 January 2026.

Return from maternity leave

Employers will need to ensure they have appropriate processes and training in place to ensure that they do not unlawfully dismiss employees who are on, or have recently returned from, family leave.

The enhanced dismissal protections for pregnant women and new mothers will take effect in 2027. The consultation on this closed on 15 January 2026.

Right to bereavement leave

Many employers already offer some form of bereavement leave, so this might have very limited impact for some, but employers who do not have such policies in place should take steps to introduce these in preparation for the new bereavement leave rights.

We await further detail on the necessary relationship with the deceased in order to qualify.

The Act is silent on pay and the expectation is that this leave will be unpaid.

Parental leave from day one

Most employers are unlikely to see a big impact from this change as uptake of parental leave remains quite low and short in duration, partly because it is an unpaid entitlement.

This change takes effect on 6 April 2026.

Changes to paternity leave and shared parental leave

This change widens the number of employees who will be eligible for paternity leave, however, the length of leave remains low at just two weeks.

There is currently no proactive obligations for employers to produce action plans to accompany gender pay gap reporting or supporting employees going through menopause.

Employers with more than 250 employees will be required to produce gender pay gap action plans to accompany their gender pay gap reports.

Employers with more than 250 employees will need to produce and publish menopause action plans to show how they support employees through menopause.

There will be penalties for not producing these action plans, so larger employers (with more than 250 employees) will need to ensure they are complying with the new regulations.

Regulations are likely to make provision about the content of the plans, the form, frequency and requirements for senior approval for plans.

According to the implementation timetable, the gender pay gap and menopause action plans will be introduced on a voluntary basis from 6 April 2026, before becoming mandatory in 2027. New menopause guidance will also take effect on 6 April 2026.

No obligation on employers to keep records demonstrating compliance with holiday entitlement and pay.

There will be a new duty on employers to keep holiday records.

Employers will be required to keep records showing compliance with their obligations under the working time regulations with holiday entitlement (amount of leave and pay and pay in lieu when an employee leaves employment).

No set format but records must be kept for six years and failure to comply will be a criminal offence.

Employers should review their records on holiday and holiday pay to ensure they can demonstrate compliance.

There has not yet been any confirmation as to when this change will take effect.

There is no general right for trade unions to access workplaces for recruitment and organisation of members.

The Act strengthens the rights of trade unions.

Employers will have a new duty to inform workers of their right to join a trade union and this must be provided at the same time as the s1 Statement of Particulars and at other prescribed times (subject to secondary legislation).

Under this new provision union officials will have the right to enter a workplace to communicate with workers or communicate with workers digitally. The Union will be able to make an access request, and the employer has a short period of time to respond to this. They will have a short negotiating period to agree voluntary access. If an employer fails to comply, the union can apply to the Central Arbitration Committee (CAC) who can decide whether it should have access.

The access purposes are to meet, support, represent, recruit or organise workers and to facilitate collective bargaining. Organising industrial action is expressly excluded.

On 23 October 2025, the government published two consultations on trade union right of access and a duty to inform workers of their right to join a trade union. Both consultations closed on 18 December 2025.

On 4 February 2026, the government launched a further consultation on trade union e-balloting and unfair practices, including a revised Code of Practice on Access and Unfair Practices. This consultation closes on 1 April 2026.

Employers will need to update documentation to include the right for their employees to join a trade union.

This change is likely to mean trade unions will have a greater role to play in employee relations.

Although employers are often opposed to trade union involvement, it will be important for employers (especially those with many employees who have not previously had union representation) to prepare for this change and look at managing ways to keep the unions involved in a way that benefits the workplace.

The government will be required to publish secondary legislation setting out in detail the statutory process for requesting access, the grounds on which the CAC would be able to refuse requests for access and the default access arrangements which the CAC may impose.

According to the implementation timetable, the new duties in relation to trade union right of access and a duty to inform workers of their right to join a trade union are expected to come into effect in October 2026.

The Act will extend existing laws that protect trade union members from discrimination and being “blacklisted” – the practice of compiling lists of trade union members to deny them employment. The expected implementation date is 2027.

Workers have the right to take part in lawful industrial action, such as strikes.

The Act makes various changes relating to the process for conducting industrial action, including:

• Repealing the 50% industrial action ballot turnout threshold so no specific level of turnout is required.
• A reduction in the period of notice of industrial action to be served on the employer from 14 days to 10 days.
• An extension to the expiration date for an industrial action mandate from six to 12 months.
• Repeal of the Strikes (Minimum Service Levels) Act 2023 which gave the government powers to set minimum service levels during strikes in essential services.
• The introduction of e-balloting.

Employers are recommended to get ahead of these changes to avoid potential disruptions once the provisions are introduced.

Some employers are considering putting works councils or other consultative forums in place to give employees a real alternative to having to engage with a trade union.

Several of these measures have already taken effect. The repeal of the Strikes (Minimum Service Levels) Act 2023 took effect on 18 December 2025 (Royal Assent). On 18 February 2026, the following took effect: simplifying industrial action notices and ballot notices; removing the 10-year ballot requirement for trade union political funds; protections against dismissal for taking industrial action; reducing notice of industrial action to 10 days; extending industrial action mandates to 12 months; and removing the requirement for a picket supervisor.

The removal of the 50% turnout threshold and the introduction of e-balloting for statutory trade union ballots will take effect no earlier than August 2026 (previously expected April 2026). E-balloting for recognition and derecognition ballots is expected in 2027.

The UK has limited state enforcement of employment rights. There is not enough funding to support the enforcement of rights and there is low risk of employers being investigated or inspected by the enforcement agencies.

A new public authority called the Fair Work Agency will be created to consolidate existing state enforcement agencies into one body in an aim to create a single place for employees to seek advice.

The Fair Work Agency will bring together existing enforcement functions, including minimum wage and statutory sick pay enforcement, as well as introducing the state enforcement of holiday pay.

The agency will have the authority to issue an underpayment notice to employers, detailing the amount payable, which must be settled within 28 days. A penalty of 200% of the sum due will also be imposed, payable to the Secretary of State.

The enforcement of holiday pay will have major implications for employers who get holiday pay wrong across a workforce. It is important for employers to be aware of this and ensure compliance with holiday pay.

The Fair Work Agency body is due to be established on 7 April 2026 (though it is not yet clear when it will be fully up and running).

Terms and conditions, including pay, in the adult social care sector are set by individual employers.

The Act provides for the establishment of a social care negotiating body, composed of representatives of employers and unions in the social care sector.

The Act provides that the negotiating body will be concerned with remuneration, terms and conditions and “any other specified matter”.

The Secretary of State would be able to ratify agreements reached by the negotiating body and they would then become binding on all employers in the sector.

According to the revised timetable, regulations to establish the Fair Pay Agreement Adult Social Care Negotiating Body in England are due to be brought forward in October 2026.

Fair Pay Agreements will inevitably raise costs for local authorities. For them to be effective they need to be properly resourced. How much impact they have and how quickly they are introduced is largely dependent on funding and resources.

Tribunal claims must be lodged within three months (or three months less a day) of the act in question.

The Act extends the time limit for bringing tribunal claims from three to six months.

This will apply to all types of claims.

Longer deadlines are likely to lead to an increase in claims, particularly from those individuals who previously lacked time or resources to act.

While the change could improve access to justice, it risks straining an already struggling tribunal system and increasing legal costs.

Employers will also face extended periods of uncertainty and may need to review internal grievance procedures and invest in conflict resolution training to prevent litigation.

According to the implementation timetable, this is expected to take effect no earlier than October 2026.