What are the implications of The Employment Rights Act 2025?

The Employment Rights Act 2025 (ERA), which was passed in December 2025 and rolled out throughout 2026/2027, introduces significant reforms to the legislation that aims to strengthen employee protections in the workplace.

As a Trainee in Biscoes’ Employment department, understanding these changes is key to advising both employers and employees effectively. This blog aims to provide a brief overview of the updates and what these may mean in practice for both employees and employers. 

Key Changes Under the Employment Rights Act 2025

Job Security & Contracts: (Unfair Dismissal, Zero-hours, Fire & Rehire) 

One of the changes from the Act is regarding unfair dismissal. At present, employees usually need two years’ continuous service before they can bring an ordinary unfair dismissal claim. Under the new reforms, that qualifying period is to be reduced to 6 months, giving employees protection much earlier in their employment. In practice, this means employers will need to take extra precaution when managing probationary periods, performance concerns and early dismissals. 

Further, the Act seeks to abolish the compensation cap of 52-weeks’ pay and £123,543 from January 2027. A quick or poorly documented dismissal could carry greater risk than before. Employers should consider shortening probation periods to extend scope, improve new hire assessments and recruitment, tackle underperformance now and regularly update documents. 

The amended Act also places greater focus on protection of employees during pregnancy, family leave and “fire and rehire” situations. Fire and rehire it where an employer seeks to dismiss an employee for refusing changes to their contract but then offers them immediate start ona  revised contract term on the bais that the employee would need to establish that they had not failed to mitigate their losses by refusing reasonable alternative employment. 

After the changes come into force in [enter], where an employee is dismissed for refusing changes to their contract, that dismissal may be treated as automatically unfair unless limited exceptions apply. When in force, the Act will outlaw employers dismissing employees and replacing them with someone prepared to accept a ‘worse’ contract. The ban on contract changes covers pay, hours, pension, shift times/lengths and time off. Minor changes have an alternative test i.e. moving to a new premises, dismissal won’t be automatically unfair and instead a tribunal will weigh whether the change was reasonable, the consultation and what was offered in return. 

Another important area is record keeping. Employers will need to keep accurate records of working time and annual leave, which may mean reviewing internal HR systems and processes. 

For workers on zero-hours contracts, the changes are designed to provide more certainty. Where a worker regularly works a consistent pattern of hours, they may become entitled to be offered a contract that reflects this. Workers may also be entitled to compensation where shifts are cancelled or moved with unreasonable notice. For employees and workers, this should provide predictable hours, income and security. For employers, it is likely to mean less flexibility and a greater need to monitor working patterns. 

Work-Life Balance Rights: (Flexible working, Family leave) 

The ERA has introduced a day one right for employees to request flexible working from their employer. Employers in response must provide a reasonable justification for refusals. 

Day-one rights have similarly been introduced for paternity leave and unpaid parental leave. Additionally, bereavement leave has been introduced, including pregnancy loss and there is also the ability for paternity leave to be taken after shared parental leave. 

Pay & Financial Protection (Statutory Sick Pay (SSP), Tips) 

The ERA has introduced SSP as a day-one right to all employees. There has been a removal of the lower earnings limit, therefore broadening the eligibility for workers. An employee will receive whichever option is the lowest of either the weekly rate of £123.25 (risen from £118.75) or 80% of their average weekly earnings. Due to this change, employers may experience an increase in employee sickness, therefore re-enforcing the importance of record-keeping and potentially increasing admin and cost to businesses. Employers should consider updating policies and contracts, brief their managers and payroll of the update and review their absence management procedures. 

There is stronger regulation of tip allocation policies and a requirement to consult workers on said policies. 

Workplace Protection: (Harassment, NDAs, Whistleblowing) 

There is now a new duty on Employers to take ‘all reasonable steps’ to prevent sexual harassment at work. Additionally, from October, employers can potentially be liable for third-party harassment e.g. customers, clients, contractors or visitors, unless they have taken all reasonable steps. Employers should therefore be able to show that they took all reasonable steps to prevent the incident although there is no clear definition at present as to what those steps would look like.

Further provisions and protections have also been introduced from April 2026, for whistleblowing related to sexual harassment. To qualify for such protections, the individual must reasonably believe the disclosure is in the public interest. Employers should therefore refresh manager’s training so they can spot a potential whistleblowing complaint and respond appropriately. Employers should further ensure that their whistleblowing policies include sexual harassment as a concern encouraged for staff to report. The act seeks to introduce a limit placed on those using NDAs to prevent the disclosure of harassment or discrimination, however, this element of the act is still under consultation and not due to be implemented or in what form, until some point in 2027.

Enforcement & Systems (Fair Work Agency, Tribunals, Union

Industrial action rules have been simplified, making it more streamline for workers to utilise and increased protections for workers participating in strikes. Employers should be aware that there is now an obligation for them to inform employees of their union rights. 

The Fair Work Agency will act as an enforcement body for employment rights. The body will have the powers to investigate, enforce and bring claims against employers. New powers include initiating investigations without a worker complaint, inspect workplaces and initiate tribunal claims on behalf of workers and recover costs, make arrests in connection with labour offences and action underpayment orders for payment within 28 days. The agency can impose a penalty of 200% of sum owed, capped at £20,000 per worker, reduced to 100% if paid within 14 days. 

The act seeks to implement an extension from October 2026, for bringing a claim against an employer from 3 months to 6 months. This will in turn increase litigation risk for employers. 

Redundancies

Redundancies will be specifically amended. The Act has introduced during 2027, expanded collective redundancy obligations for employers. Employers must consult collectively where there are 20 or more redundancies in one establishment or where redundancies across the entire organisation hit a new threshold. This implementation closes loopholes where employers avoid consultation by splitting redundancies across sites. 

The protective award has been increased from 90 days’ pay to 180 days’ pay per affected employee. This significantly increases the financial risk for non-compliance of employers. Penalties have also been doubled for getting collective consultation wrong. 

Consultation must be genuine and fully compliant with notification duties. This is positive for employees as there is a greater likelihood of being included in a collective consultation process and receiving stronger protection and compensation if employers fail to comply. 

For employers, it is now harder to avoid consultation obligations, there is a financial risk for mistakes and a need for more careful planning and genuine consultation process. The ERA 2025 significantly strengthens redundancy protections by expanding collective consultation obligations, increasing penalties for non-compliance, and closing existing loopholes, making redundancy processes more rigorous and employee focused.

Conclusion

Overall, the Employment Rights Act 2025 marks a significant shift towards stronger workplace protections and greater accountability for employers. For employees and workers, the changes should provide earlier protection, clearer rights around working patterns, and stronger safeguards in sensitive areas such as harassment, family leave and redundancy.

For employers, preparation is highly important. Businesses should review their contracts, policies, HR systems and management training to ensure they are compliant. Detailed record keeping, fair processes and early legal advice will be important in reducing risk and avoiding costly disputes.

Although some of the reforms may create additional administrative and financial pressures, they also offer an opportunity for employers to build more transparent and compliant workplaces. As the changes continue to be rolled out, both employees and employers should stay informed and seek advice where needed to understand how the new Act applies in practice.