Employment Rights Act 2025
Key takeaways for employers
On 18 December 2025, after multiple rounds of Parliamentary “ping pong”, the Employment Rights Bill received Royal Assent and therefore the Employment Rights Act 2025 has come into effect.
We summarise the key changes to employment law and rights and share some practical considerations for employers to think about as we head into 2026.
Highest priority
Changes expected to come into effect in 2026
Statutory sick pay (SSP)
Current law: SSP is only payable from the fourth day of sickness and only workers earning above the weekly lower earnings limit (currently £123) may qualify for SSP.
New position (from April 2026): SSP will be payable from day one of sickness. The lower earnings limit will be removed – therefore all eligible employees will be entitled to SSP regardless of their earnings.
Actions / considerations for employers:
- Review and update sick policies and payroll systems to reflect SSP from day one.
- Consider how to better manage sickness absence processes.
Paternity and parental leave
Current law: Entitlement for statutory paternity and parental leave requires a minimum length of service: one year of employment for parental leave; 26 weeks of employment (assessed at 15 weeks before the expected birth week) for paternity leave.
New position (from April 2026): The minimum length of service has been removed such that both paternity leave and parental leave are day one rights.
Actions / considerations for employers:
Review and update paternity leave and parental policies to reflect that there is no longer a length of service requirement.
Fire and rehire
Current law: “Fire and rehire” is currently lawful but the Code of Practice implemented in July 2024 must be adhered to.
New position (from October 2026): The Act significantly restricts the use of fire and rehire practices to change employee terms and conditions – in particular, using the practice to implement changes to certain key terms of an employee’s contract (such as pay or the number of hours they work) will be deemed automatically unfair.
Actions / considerations for employers:
Engage in training to ensure HR teams and managers are informed of these new restrictions.
Harassment
Current law: Employers are required to take “reasonable steps” to prevent sexual harassment of their employees. They are also not directly liable if their employees are harassed (not just sexual harassment) by third parties in the workplace, for example, by clients or customers.
New position (from October 2026): Employers will be required to take “all” reasonable steps to prevent sexual harassment in the workplace. In addition, employers will be directly liable if harassment (again, not just sexual harassment) is committed by a third party on an employee in the workplace and the employer did not take all reasonable steps to prevent this.
Actions / considerations for employers:
- The changes in the law require a much more proactive approach from employers in respect of sexual harassment and harassment generally. In due course, we expect more guidance from the Government on what constitutes "all" the reasonable steps an employer should take.
- Employers should review and update policies, as well as provide regular harassment training to their workforce (particularly to those in management positions).
Medium priority
Changes expected to come into effect in 2027
Collective redundancy
Current law: If an employer proposes to make more than 20 redundancies at one establishment within a 90 day period, then the employer must undertake collective consultation with those employees as part of the redundancy process. Should an employer not comply with its collective consultation obligations, then it could be liable for a maximum protective award made against it of up to 90 days’ pay per employee.
New position: The Act will bring in a new threshold that will likely involve calculating employees across all of the employer’s locations, and then considering whether a certain percentage of those employees has been reached. The Act also increases the maximum protective award to 180 days’ pay.
Actions / considerations for employers:
Employers will need to ensure they have in place good mechanisms for tracking redundancies across their business (i.e. across multiple locations/sites) to ensure that collective consultation thresholds are not accidentally breached. The increase to the protective awards means that there are burdensome consequences if this obligation is not complied with.
Unfair dismissal
Current law: Employees must serve two years with their employer before being able to benefit from unfair dismissal protections. In addition, any unfair dismissal claim brought by an employee is capped at the lower of 52 weeks’ salary or the statutory cap (currently £118,223).
New position (from 1 January 2027):
- The two years’ qualifying service requirement will be reduced to six months (with the six month period taking ‘immediate effect’ from 1 January 2027 – i.e. any employee that commences employment on or after 30 June 2026 will have sufficient protection by 1 January 2027). While this is a shift from the Government’s “day one” rights promise, this is still a notable reduction.
- Further, the unfair dismissal claim compensation cap will be removed so the 52 weeks’ salary or statutory cap no longer applies – meaning there is no limit to awards an employment tribunal can make for unfair dismissal.
Actions / considerations for employers:
- Dismissal policies and procedures will need to be reviewed as formal processes will need to be undertaken much earlier in an employee’s service than previously.
- Managers and HR teams will need to be trained to identify any performance issues early on in an employee’s service with the company, so that employers can part ways with an employee before six months if needed.
Protection from dismissal during pregnancy and on / after maternity leave
Current law: There are existing protections and rights for employees who are pregnant, on maternity or have returned from maternity leave. This includes, in a redundancy scenario, a requirement for employees who are pregnant, on maternity leave, and, for a period of 18 months after the child is born, to receive priority for a suitable alternative role (if there is one available). Further, dismissals because of pregnancy or maternity leave are automatically unfair.
New position (from 2027): Although subject to further consultation (which closes on 15 January 2026), it will be unlawful to dismiss those who are pregnant, those on maternity leave and those who return to work from maternity leave for at least a six month period after they return (except in specific circumstances). The consultation also seeks views on whether this dismissal protection should apply to employees on certain other types of family leave, such as adoption or shared parental leave.
Actions / considerations for employers:
Employers should monitor developments in this area over the next year. In due course, maternity leave policies will need to be updated to reflect the greater protections for those who go on and return from maternity leave.
Bereavement leave
Current law: Bereavement leave may only be taken in certain limited circumstances – where an employee’s child under the age of 18 dies or where a baby is born ‘stillborn’ after 24 weeks of pregnancy.
New position (from 2027):
Bereavement leave of at least one week’s unpaid leave will be a day one right for employees. There is upcoming consultation to map out the finer details such as the necessary relationship to qualify for the leave. The bereavement leave will also now include pregnancy loss that occurs before week 24 of the pregnancy.
Actions / considerations for employers:
New bereavement leave policies will need to be drafted and/or updated as needed.
Flexible working
Current law: Employees have a day one right to request flexible working. There are eight business reasons set out in statute that permit an employer to refuse.
New position (from 2027): A small change has been made so that an employer must now be “reasonable” when refusing a flexible working request.
Actions / considerations for employers:
- Review and update flexible working policies as needed.
- When drafting a refusal to a flexible working request, the letter should state the statutory ground relied upon and explain to the employee why the refusal is reasonable in the circumstances.
Zero-hour contracts and guaranteed hours
Current law: Employers are permitted to use zero-hour contracts for their workers, without requiring them to offer any level of guaranteed hours.
New position (from 2027):
If requested, employers will be obligated to offer workers a contract that reflects the hours worked over a certain reference period.
Actions / considerations for employers:
Employers that rely heavily on zero-hour contracts will need to review their use of such workers. They will need to more carefully review the needs of their workforce and, if guaranteed hours are to be offered, identify more accurately the workers needed for a certain period of time.
Low priority
Change that does not yet have a date specified to come into effect
Record-keeping for holiday entitlement and pay
Employers will be expected to keep records of each employee’s holiday entitlement and pay.
Get in touch
If you would like to discuss any of these developments, the impact they could have on your organisation or the practical steps you need to take, please get in touch with Northridge Employment Partner Jamie Feldman.
Disclaimer
This update should not be treated as legal advice and only provides general information on the issues discussed.