Employment Rights Act: Implementation guidance for employers

The Employment Rights Act 2025 (ERA 2025) introduces a set of major employment law reforms which will reshape HR, employee relations and workplace governance. Many of the ERA 2025 provisions will be subject to further consultation and secondary legislation before they come into effect. Therefore, implementation will take place in phases, with key reforms being introduced in stages up to and including 2027, and the expected content of those reforms remains subject to change. Nevertheless, employers must be prepared and should consider a structured implementation strategy across policies, contracts, HR systems and operational practices.

The ERA 2025 is a lengthy and complex piece of legislation that has undergone several rounds of amendments and reviews. Below we give a brief overview of the key changes contemplated by the ERA 2025 that we believe will impact our clients the most, together with a brief summary of what employers could be doing now to prepare for compliance. Each of our clients will have their own concerns with respect to the sweeping reforms brought in by the ERA 2025 and we would encourage each of our clients to reach out to our employment solicitors directly to discuss their specific concerns.

1. Unfair Dismissal

The qualifying period for unfair dismissal claims (excluding those circumstances where a dismissal is ‘automatically’ unfair, to which generally no period applies) will be reduced from two years to six months, and the compensation cap for unfair dismissal claims (currently the lower of £118,223 or 52 weeks’ gross pay) will be removed.

What this means

Employees will be able to bring claims for unfair dismissal after six months of employment. Note this is a dilution from the Government’s initial plan to have “day one” dismissal rights for employees, however employers will still need to make a final assessment of an employee’s suitability at an earlier stage. It is anticipated that employees who have been employed for six months or more as at 1 January 2027 will immediately gain the new protections, as well as all employees who pass over the 6-month threshold after that date.

What employers should do now:

1. Review and formalise their probationary processes. Given the limited 6-month window to make a decision on an employee’s suitability, it will be vital to ensure that probationary periods and processes are properly managed.
2. Ensure performance concerns are documented from an early stage.
3. Update contracts to reflect clearer expectations.
4. Train managers on fair and consistent procedures.

Note: Final detail, including compensation changes, is subject to further legislation.

2. Contracts and Redundancy

The ERA 2025 introduces tighter restrictions on dismissal and re-engagement practices (so called ‘fire and rehire’). Dismissals where employees refuse ‘core’ contractual changes are expected to be automatically unfair unless the employer is in severe financial difficulty and has no reasonable alternative. This is likely to be a very high burden for an employer to meet.

Collective redundancy rules are also expected to expand, including broader application of the requirement to collectively consult where redundancies are proposed across multiple sites (i.e. the duty to collectively consult is likely to apply when: (a) employers propose 20 or more redundancies at one establishment or; (b) employers propose a number of redundancies across their entire organisation which meets a new (as yet unknown) threshold). In addition, as of 6 April 2026 the maximum protective award that can be made in respect of a a breach of the collective consultation requirements has increased to 180 days’ pay (from 90 days’ pay).

What this means

Changing ‘core’ terms of employment will become more difficult to implement. Redundancy processes will require greater care and the scenarios in which collective consultancy will be required will increase.

What employers should do now:

1. Review their approach to contractual changes and reduce reliance on dismissal and re-engagement. Employers should not be looking to rely on so-called ‘flexibility’ clauses for unilateral changes to employment contracts. Early and comprehensive consultation is key.
2. Strengthen redundancy consultation processes with employees and ensure managers across sites are aware of duty to consult.
3. Consider alternative approaches to ‘fire and rehire’, such as voluntary contractual changes or incentives.
4. More care should be given to contractual provisions at the outset of employment.

3. ‘Family Friendly’ Rights

The Act has introduced, as of 6 April 2026, a number of changes with respect to so called ‘family friendly’ rights, including day one rights to paternity leave, unpaid parental leave and bereavement leave, and expanded protections against dismissal for pregnant workers and those returning from maternity leave.

What this means

The current qualifying periods of service to be eligible for paternity and unpaid parental leave will no longer apply and employees will qualify for such leave from the outset of employment. Pregnant employees and employees returning from maternity leave (for six months after their return) will be protected from dismissal except in very limited circumstances (such as gross misconduct).

What employers should do now:

1. Review and update family leave policies and staff handbooks.
2. Review eligibility criteria within HR systems.
3. Prepare HR and payroll teams for administering new entitlements.
4. Communicate changes clearly to employees.
5. Be mindful of the additional protections given to pregnant employees and those returning from maternity leave and support them accordingly.

4. Flexible Working

The right to make a statutory flexible working request already exists from day one of employment and an employer can reject the request (after consultation) on the basis of one of eight statutory grounds for refusal. Under changes expected to be introduced in 2027, the existing day one right to make a flexible working request and the eight grounds for refusal will continue to apply, however such refusal must be reasonable and there must be both a consultation and explanation process.

What this means

Employers can only reject a flexible working request on one of the eight statutory grounds if it is reasonable to do so, and employers will need clear and well-evidenced reasons as to why a flexible working request cannot reasonably be accommodated.

What employers should do now:

1. Review which roles genuinely require fixed working patterns.
2. Create clear and consistent decision-making frameworks.
3. Update flexible working policies and procedures.
4. Train managers on handling requests fairly and consistently.
5. Clearly document and evidence the reasoning for allowing or refusing requests.

5. Zero Hours Contracts

The ERA 2025 strengthens protections for so-called ‘zero hours’ workers, including a right for workers to be offered guaranteed hours based on regular working patterns, likely to be calculated based on a 12-week reference period. Employers will also be required to give employees reasonable notice of shifts and compensation for short-notice shift cancellations.

What this means

Informal working arrangements will need to be formalised and working hours will need to be closely monitored. Employers will need to align contracts more closely with actual working patterns and be more structured in how work is offered.

What employers should do now:

1. Review use of zero hours and variable hours contracts.
2. Identify individuals with regular working patterns.
3. Assess potential cost implications of guaranteed hours.
4. Ensure scheduling practices are clearly documented.

6. Anti-Harassment Compliance

The ERA 2025 strengthens the existing requirement for employers to take reasonable steps to prevent sexual harassment (from October 2026, the requirement will become to take all reasonable steps), alongside wider protections for those reporting concerns such as the voiding of provisions in non-disclosure agreements (including settlement agreements) purporting to prevent the reporting or disclosure of harassment or discrimination (except for certain ‘excepted agreements’, but we do not know what these will be yet) and, as of 6 April 2026, including sexual harassment as a qualifying disclosure under whistleblowing laws.

In addition, from October 2026 employees will be protected from harassment from third parties (such as clients, suppliers and customers) and an employer can be found liable for such harassment unless they can show they had taken all reasonable steps to prevent such harassment from taking place.

What this means

Employers will be judged on the steps they take in practice to prevent harassment, not just whether policies are in place, and employers will likely be unable to rely on non-disclosure agreements with respect to allegations of harassment. There will be greater expectation around training, reporting and, importantly, prevention. Although we await clarification on what “all reasonable steps” means with respect to the prevention of sexual harassment, the changes are likely to be implemented before this clarification is given and so employers must assume this is going to be a very high bar.

What employers should do now:

1. Review anti-harassment policies and training programmes.
2. Ensure reporting and investigation processes are robust.
3. Assess risks in client-facing or third-party environments.
4. Keep clear records of preventative steps taken.

7. Fair Work Agency

A new Fair Work Agency was established on 7 April 2026, bringing together enforcement powers that currently exist across multiple agencies. The Fair Work Agency is expected to exercise investigatory and enforcement functions with respect to minimum wage, statutory sick pay, labour exploitation and holiday pay (amongst other things).

What this means

There is likely to be more proactive enforcement of matters within the scope of the Fair Work Agency, with increased scrutiny of employer practices and greater powers to investigate and act.

What employers should do now:

1. Ensure wage, hours and employment records are accurate and accessible.
2. Review overall compliance processes and policies.
3. Strengthen internal reporting and whistleblowing procedures.

8. Statutory Sick Pay (SSP)

As of 6 April 2026, the Lower Earnings Limit (currently £125 per week) for eligibility for SSP has been removed and employees are now entitled to receive SSP from their first day of sickness absence (removing the three-day waiting).

What this means

More employees will qualify for SSP, employers will likely see increased costs linked to SSP and payroll processes for SSP will need to be updated.

What employers should do now:

1. Update sickness policies and employment contracts.
2. Reconfigure payroll systems for new SSP rules.
3. Train HR and management teams on updated processes.
4. Assess the potential financial impact of an increase in SSP payments.

9. Holiday Records

A late change to the ERA 2025 requires employers, as from 6 April 2026, to maintain “adequate” holiday records. These must include a record of annual leave taken and carried over, holiday pay and payments made in lieu of holiday. Such records must be kept for a minimum of 6 years from the date they were recorded.

What this means

It will be an offence not to keep “adequate” holiday records showing the correct recording of holidays and associated pay. It is expected that enforcement of these provisions would fall within the remit of enforcement powers of the Fair Work Agency, who will have the power to inspect such records.

What employers should do now:

1. Start maintaining and storing records of employees’ holiday entitlements, leave taken and payments made in respect thereof.
2. Ensure that such records are in a clear and accessible format and can be maintained for the required minimum of six years. Such records must also comply with GDPR obligations.

In Conclusion

The ERA 2025 will continue to introduce a wide range of changes through 2027 and, whilst a lot of the detail is still to be confirmed, the direction towards increased employee protection is clear. Employers will need to take a more structured approach to managing their workforce, particularly in areas such as probation, contractual changes, working patterns, training with respect to harassment, leave entitlements and internal processes.

If employers do not adapt to these changes correctly, the financial repercussions for non-compliance could be severe. Taking time now to review existing arrangements to comply with these changes (and to get ahead of those yet to be implemented) will make compliance far more straightforward and will reduce risk as the legislation continues to be implemented.