Employment Rights Act 2025 update

If you have been following the progress of the Employment Rights Bill, you will know it moved through Parliament at pace over these last few weeks. The Bill has now completed all Parliamentary stages and received Royal Assent, meaning it is now law as the Employment Rights Act.

What matters most for employers is that the changes will not take effect all at once. The Government has confirmed that implementation will be phased, with many of the key reforms introduced through commencement regulations and detailed secondary legislation. Where possible, changes are expected to take effect on the usual common start dates of 6 April 2026 and 1 October 2026, giving employers time to prepare and adapt.

What follows is a detailed, plain English run through of what the Act is set to do, the direction of travel, and the practical HR issues it’s going to create for UK employers over 2026 and 2027.

Why this is a big deal for employers

Politically, this is being framed as the most significant upgrade to workers’ rights in a generation, and the press coverage reflects that. In practical terms for employers, it’s a package that is going to affect how you recruit, manage performance, handle sickness absence, plan redundancies, engage with unions, and settle workplace disputes.

There is also a strong “enforcement” thread running through the reforms, including a new Fair Work Agency (more on that below). The message is that the rules aren’t just changing on paper; the Government intends for compliance to be actively monitored and enforced.

Unfair dismissal: earlier protection, but not “day one”

This is one of the areas where expectations changed during the Bill’s passage.

The current position (as you know) is that ordinary unfair dismissal usually requires two years’ service. Under the latest position set out by ACAS, unfair dismissal protection is expected to become available after six months (rather than day one), with ACAS flagging January 2027 as the expected change date.

For employers, the practical impact is less about an explosion in claims on day one (which the Government appears to have stepped back from) and more about a much shorter runway to resolve mishires, capability concerns, conduct issues, or cultural fit problems. If you currently rely on “we’ll see how it goes and review at 6–12 months”, you’ll want to tighten that approach, because by the time problems become obvious, you may already be approaching a point where a dismissal will need a fair reason and a fair process, with the tribunal risk that goes with it.

There has also been significant debate about compensation and caps in this area during the Lords stages, which is one reason employers should expect further guidance and detail as commencement dates approach.

Statutory Sick Pay: “day one” entitlement and wider coverage

One of the clearest early implementation messages from Government is that day one rights to sick pay are intended to arrive in April 2026.

Alongside the day one principle, the reform direction is towards wider SSP coverage, including removing barriers that historically excluded some lower paid workers, and changing waiting day arrangements (these points have featured in Government messaging around the “Make Work Pay” plan and the Bill’s aims).

For employers, this is not just a payroll issue. It will affect absence patterns, fit note management, trigger points, and the overall approach to attendance—especially for businesses with high proportions of part time staff, variable hours workers, or seasonal work.

Family friendly rights: day one paternity and unpaid parental leave

The reforms also include day one access to certain family related entitlements, with reporting indicating day one paternity and unpaid parental leave from April 2026.

Even when leave is unpaid, eligibility changes can increase operational pressure because it expands the pool of people who can lawfully take time off at short notice. Employers should be thinking now about how they resource cover, how managers handle requests consistently, and whether policies and templates need a refresh so decisions are lawful and fair.

Insecure work: guaranteed hours, zero-hours reform, and compensation for cancelled shifts

This is one of the most commercially significant parts of the package, particularly for hospitality, leisure, care, logistics, retail, and any employer using variable hours patterns.

The direction of travel is away from “open ended flexibility” and towards predictability, with measures described publicly as banning exploitative zero hours practices and creating rights to guaranteed hours for people who regularly work set patterns.

Press reporting has also highlighted compensation for short notice shift cancellations as part of the reforms.

The detail here matters enormously (definitions, reference periods, what counts as a regular pattern, what exceptions exist), and much of that detail is expected to be delivered through regulations and consultation rather than sitting fully formed in the primary Act. The key employer takeaway is that if you rely on flexible labour, you should assume that documenting working patterns, communicating rosters, and managing changes to shifts is going to become more regulated and more contestable.

Fire and rehire: a much tighter regime, with a phased start

“Fire and rehire” has been a political lightning rod for a while, and the Bill/Act responds with a regime designed to stop the most abusive versions of it.

Public reporting suggests a ban on most fire and rehire practices, with a phased implementation that some coverage places around October 2026.

The UK Parliament Commons Library has also highlighted how the Government narrowed the scope to “restricted variations” of contract and extended protections to like for like replacement scenarios involving agency workers or contractors.

For employers, the real-world point is this: where you need contractual change, you should expect to have to lean much more heavily on genuine consultation, negotiated change, and careful planning rather than treating dismissal and reengagement as a pressure tactic. If your organisation has any history of “we’ll impose new terms if we have to”, it’s time to rethink that playbook.

NDAs and workplace culture: limits on silencing harassment and discrimination disclosures

The Commons Library briefing notes amendments that make NDAs invalid if they prevent disclosures of work-related harassment or discrimination.

This is an important cultural and legal signal. Settlement agreements will still exist, and confidentiality clauses will still exist, but employers will need to be far more careful about drafting and about the internal messaging around “confidentiality”, particularly when the underlying facts involve protected disclosures about harassment or discrimination.

Trade unions, industrial action, and collective issues

The package also strengthens aspects of trade union recognition and rights, and it has been widely reported that some changes in this area are intended to take effect relatively early after Royal Assent.

The Government’s implementation roadmap indicates that some measures take effect shortly following Royal Assent, including repealing most of the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023, as well as adding protections against dismissal for taking industrial action.

For non-unionised SMEs, it’s easy to assume “that won’t touch us”. In practice, anything that makes union access and recognition easier can change the temperature in workplaces that are already under pressure (pay, workload, scheduling, restructures). If your employee relations approach relies on informal arrangements and “we’ll sort it out as we go”, you may want to formalise a bit more so you can demonstrate consistency and fairness if challenged.

Enforcement: The Fair Work Agency and a more assertive compliance environment

A recurring theme in commentary is the creation of a Fair Work Agency as part of the reforms, with an enforcement role that goes beyond what many employers are used to in day to day HR compliance.

Even if your organisation is conscientious, a stronger enforcement regime tends to increase the importance of record keeping and manager capability. It becomes less about what you intended to do and more about what you can evidence you did.

When will the changes take effect?

The short answer is in phases through 2026 and 2027, with a mix of “soon after Royal Assent” changes and later commencement dates.

Government messaging points to April 2026 for day one sick pay and paternity leave, alongside bringing the Fair Work Agency into operation.

ACAS currently points to January 2027 for the shift to unfair dismissal protection after six months.
The Government’s roadmap also indicates a preference for common commencement dates of 6 April and 1 October for regulations.

The important point for employers is that “phased” does not mean “distant”. It means you should treat 2026 as the year you’ll need to update contracts, policies, manager training, and workforce planning so you’re not scrambling when a commencement date is confirmed.

What UK employers should be doing now

If you want a sensible, low drama approach, the best preparation is to focus on fundamentals that will matter whichever sector you’re in.

Start with contracts and working patterns. If you use variable hours, check how predictable your patterns truly are in practice, because predictable patterns are the strongest evidence workers will rely on when claiming a right to more certainty.

Then look at performance management and probation. If unfair dismissal protection is coming in at six months, you want your managers to be confident documenting concerns early, holding proper review meetings, offering support, and making decisions that are fair and evidence based.

Next, refresh sickness and leave processes. If sick pay and family leave become day-one rights, consistency becomes even more important because inconsistent treatment becomes easier to spot and easier to challenge.

Finally, keep an eye on settlement agreement templates and “standard” confidentiality wording so you’re not inadvertently drafting clauses that will be unenforceable in the harassment/discrimination space.