UK Employment Rights Act 2025-2026: What Every Employer Must Know
The Employment Rights Bill became an Act of Parliament on 18 December 2025. The Employment Rights Act 2025 has been described as the biggest shift in UK employment law for a generation, introducing around 30 changes that will reshape how organisations recruit, manage, and support their people and, where necessary, part ways with them.
The good news is that employers do not need to have everything solved overnight. The changes are being introduced in stages across 2026 and 2027, and some of the detail is still being worked through. That gives you a valuable window to prepare calmly and practically by reviewing contracts, supporting managers, and making sure day-to-day people processes are ready before the key deadlines arrive.
In this guide, we have pulled out the key changes, the dates to have on your radar and the practical steps UK businesses can take now.
Why the Employment Rights Act 2025 matters for your business
This is more than a small update to existing rules. The Act introduces new rights from the start of employment, strengthens enforcement and increases the potential cost of getting things wrong. For employers, the opportunity now is to get ahead of the changes in a measured way, so the business is protected and people are treated fairly and consistently.
For businesses of 25 to 200 people, the practical impact falls into three areas: your contracts and policies, the everyday decisions your managers make, and your payroll and HR systems. Every significant change below touches at least one of these, and several touch all three.
A Timeline of Employment Law Changes: 2026 and beyond
Knowing when changes land is the first step to planning sensibly. The key dates below are drawn from the Government's published roadmap and the revised implementation timetable of February 2026. Some dates still depend on secondary legislation, so treat them as the current direction of travel rather than fixed points.
April 2026
This was the first big wave of changes that employees are likely to notice day to day. Key updates included a higher protective award where employers fail to consult properly on collective redundancies, day-one paternity leave and unpaid parental leave, important changes to statutory sick pay, and the launch of the new Fair Work Agency.
October 2026
From October, employers will need to take all reasonable steps to prevent sexual harassment, with new rules also covering harassment by third parties such as clients, customers and suppliers. There are also further changes to trade union access rights and related measures.
January 2027
This is when some of the most significant changes are expected to land. The unfair dismissal qualifying period will reduce from two years to six months, and the cap on unfair dismissal compensation will be removed. Restrictions on fire and rehire for core contractual terms are also due to come in, along with new guaranteed-hours rights for zero-hours and low-hours workers, subject to consultation and secondary legislation.
Through 2027
Further changes are expected during 2027, including new flexible working protections, additional bereavement leave, and gender pay gap and menopause action plans for larger employers. Some of these start on a voluntary basis first, so it is worth keeping them on the planning list rather than waiting until they become mandatory.
Some dates may still move as consultation continues, but the overall direction is clear. The best approach is to start preparing steadily now, rather than waiting for every final detail.
Day-one Rights for Employees: What Changed in April 2026
Two changes stand out from the April 2026 wave.
The first change is to statutory sick pay. SSP is now available from the first qualifying day of sickness absence, rather than after three waiting days. The Lower Earnings Limit has also been removed, which means more low-paid and casual workers are now covered. For lower earners, SSP is paid at whichever is lower: the statutory weekly rate or 80% of their average weekly earnings.
The second change is to family leave. Paternity leave and unpaid parental leave are now day-one rights, so employees no longer need a minimum length of service before they can take this leave. The separate rules for statutory paternity pay have not changed. A new right to bereaved partner’s paternity leave has also been introduced where the mother or primary adopter dies within the first year.
In practical terms, absence, family-leave and payroll processes all need to reflect the new rules. A new starter who is unwell in their first week, or whose partner is expecting a baby, may now have rights that would not previously have applied. Managers will need a clear steer on what has changed, so they can respond consistently, confidently and with care.
The Unfair Dismissal Qualifying Period: Why This Changes So Much
Of all the reforms, the change to the unfair dismissal qualifying period has the widest reach.
From 1 January 2027, the period after which most employees can bring an ordinary unfair dismissal claim falls from two years to six months. The Act also removes the cap on unfair dismissal compensation, which currently sits at the lower of 52 weeks' pay or £123,543 statutory payments, as of April 2026. For higher earners in particular, that significantly increases an employer's potential exposure when a claim succeeds.
Because the change applies to people who are already employed on that date, anyone who joined around the start of July 2026 will reach six months’ service by 1 January 2027. In simple terms, unfair dismissal protection will start much earlier in the employee journey than many employers are used to.
That makes recruitment, onboarding and probation even more important. The focus should be on helping people settle in well from day one: setting clear expectations, checking in regularly and giving honest, two-way feedback throughout the first few months. If concerns do come up, it is much better to raise them early, clearly and supportively than to leave everything until the end of probation.
Probation should feel like a fair, useful assessment period for both sides. That means being clear about what good looks like, keeping simple records of conversations and decisions, and giving people a genuine chance to improve where support is needed. If the role is not the right fit, a fair and well-documented process will help protect the business and make the outcome easier to explain.
Fixed-term employees on payroll will also gain unfair dismissal protection after six months. That means decisions not to renew a fixed-term contract will need the same level of care as other dismissal decisions. A sensible first step is to review current fixed-term arrangements now, so there are no surprises as January 2027 approaches.
Fire and rehire: what the law now restricts
From January 2027, employers will have far less room to dismiss and re-engage employees as a way of forcing through changes to certain core contractual terms. It is not banned in every possible situation, but using it as a blunt tool to push through restricted changes is much more likely to be automatically unfair.
This change was originally expected in October 2026, but was moved to January 2027 in the Government’s revised roadmap.
Case study: USDAW & Ors v Tesco Stores Ltd [2024] UKSC 28
The risks of trying to strip away agreed terms were laid bare in this Supreme Court case. In 2007, Tesco offered warehouse staff a permanent Retained Pay enhancement as an incentive to relocate rather than accept redundancy, describing it as a lasting, guaranteed benefit. In 2021, Tesco sought to end Retained Pay, warning that anyone who refused a lump-sum buy-out would be dismissed and re-engaged without it. On 12 September 2024, the Supreme Court unanimously restored an injunction that prevented Tesco from using dismissal and re-engagement to remove the benefit. The court held that a term should be implied to stop Tesco terminating contracts purely to defeat a benefit it had promised would be permanent. The message is plain: if you make a promise to secure a deal, that promise is binding. The Employment Rights Act 2025 only reinforces this.
Zero-hours and Guaranteed Hours: What Is Changing
For employers who use flexible or casual labour, this is an important change to have on the radar. The Act is expected to introduce a right to guaranteed-hours contracts where someone’s working pattern becomes regular over time. Workers will also have rights to reasonable notice of shifts, and compensation where shifts are cancelled or cut short at short notice. Zero-hours contracts are not disappearing, but they will need to be used more carefully and transparently. These changes are expected in 2027, subject to consultation and secondary legislation.
If your business uses zero-hours contracts, now is a good time to take stock. Look at who is working regular hours, how long those patterns have been in place, and where a guaranteed-hours offer might be needed once the new rules come in.
Case study: Harpur Trust v Brazel [2022] UKSC 21
This case is a helpful reminder that casual arrangements can be more complicated than they first appear. Mr Brazel was a music teacher on a permanent zero-hours contract who worked during term time only. She challenged the way her holiday pay had been calculated, and the Supreme Court found that permanent part-year workers were entitled to the full 5.6 weeks’ statutory holiday, with pay averaged over a reference period rather than pro-rated.
The law has since moved on. For holiday years starting on or after 1 April 2024, the Working Time Regulations were updated to reintroduce a 12.07% accrual method for irregular-hours and part-year workers. Even so, the key takeaway still stands: casual contracts need careful management, because the rights and calculations behind them are not always as simple as they look.
What Does October 2026 Mean for Harassment and Workplace Culture?
From October 2026, the Act strengthens the duty on employers to take all reasonable steps, rather than simply reasonable steps, to prevent sexual harassment, and introduces liability for harassment of employees by third parties such as clients, customers or suppliers. Sexual harassment is also added to the matters protected under whistleblowing law.
Ahead of October 2026, a risk assessment, clear manager briefings, active bystander guidance, and a documented action plan are the foundations that demonstrate genuine prevention rather than a policy that exists on paper.
How does the Fair Work Agency change enforcement for UK employers?
From April 2026, the new Fair Work Agency brings several enforcement areas together in one place, including minimum wage, statutory sick pay, holiday pay, agency worker rules and protections against labour exploitation. The important shift for employers is that enforcement is expected to become more joined up and more proactive, rather than relying mainly on individual complaints.
In other words, it is better to assume that your records, processes and payroll arrangements could be looked at, even if no one has raised a complaint. A light-touch check now can help avoid bigger issues later.
What to do now
You do not need to tackle everything at once, but a plan is necessary. Based on what we are working through with clients, the priorities are:
Check your contracts and handbook so they reflect the new rules on family leave, sick pay, probation and changes to contractual terms.
Look at your fixed-term contracts and note any end dates, especially where someone may still be employed on 1 January 2027.
Tighten up recruitment, onboarding and probation so expectations are clear early on and any concerns are picked up, discussed and documented in good time.
Give managers simple, practical guidance on absence, performance, family leave and harassment, so they know how to respond fairly and consistently.
Review zero-hours and casual working arrangements to see who is working regular hours and where guaranteed-hours offers may be needed.
Make sure payroll and HR systems are ready for day-one SSP and family-leave processing.
Keep good records of key decisions, consultation and process steps, so you have a clear evidence trail if decisions are challenged later.
Refresh your approach to harassment prevention by updating policies, completing a risk assessment and giving managers and employees clear guidance before October 2026.
How JourneyHR can help
If this all feels like a lot to get your head around, please do not worry, you are definitely not alone. We help businesses make sense of employment law changes in a calm, practical and people-first way. Whether you need a full HR partner, a quick contract or handbook refresh, support for your managers, or just someone sensible to talk things through with, we would be very happy to help you work out what matters most and what to do next.
Get in touch: enquiries@journeyhr.com or journeyhr.com
FAQs
When does the Employment Rights Act 2025 come into force?
The Act became law on 18 December 2025, but its provisions are being introduced in phases across 2026 and 2027. The first major employee-facing changes arrived in April 2026, with further measures in October 2026 and January 2027. Some provisions depend on secondary legislation that is still being drafted.
Is unfair dismissal now a day-one right in the UK?
No. The original proposal for day-one unfair dismissal protection was dropped before the Act passed. Instead, the qualifying period for ordinary unfair dismissal claims falls to six months from 1 January 2027. The automatically unfair reasons for dismissal, such as whistleblowing or pregnancy, already apply from day one and remain in force.
What are the new day-one rights for employees in the UK?
From April 2026, paternity leave and unpaid parental leave became available from day one, and the qualifying service that previously applied was removed. Statutory sick pay also changed: the three waiting days were removed so SSP is payable from the first qualifying day of absence, and the Lower Earnings Limit was abolished, bringing many lower-paid and casual workers into scope for the first time.
When does the unfair dismissal qualifying period change to six months?
The reduction from two years to six months takes effect on 1 January 2027. At the same time, the cap on unfair dismissal compensation (currently the lower of 52 weeks' pay or £123,543, reviewed each April is being removed, which significantly increases employers' potential financial exposure in successful claims.
What is the first thing a business should do to prepare?
Start with the areas that carry the highest risk. Review employment contracts and the handbook; strengthen recruitment and probation processes ahead of the six-month qualifying point; and make sure managers understand the new family-leave and sick-pay rules that arrived in April 2026. Then review any zero-hours arrangements and check your payroll system can handle the new day-one rights.
