The Employment Rights Bill
The Employment Rights Bill was introduced to Parliament on 10 October 2024 and received Royal Assent on 18 December 2025. It has now become the Employment Rights Act 2025 (“the Act”).
The Act represents the most significant overhaul of UK employment law in a generation, introducing wide‑ranging reforms that will affect employers and workers across the country. Some parts of the Act will begin to take effect from April 2026, with further provisions being phased in over time.
Below, you can explore the key changes the Act will bring.
If you want to know more about your rights, or you need support as an employer we can help, book a call with our legal experts or use our contact form here.
Q: Do employees still need 2 years’ service to claim unfair dismissal?
A: Yes. As the law currently stands, an employee needs 2 years’ service to make a claim for unfair dismissal in most circumstances.
However, from January 2027, the qualifying period will drop to 6 months’ service. This will apply retrospectively, meaning that anyone employed after January 2025 will not have to wait the full 2 years before being eligible to make a claim for unfair dismissal.
Q: What happened to the proposal to make unfair dismissal a day 1 right?
A: It was expected that unfair dismissal would become a day 1 right under the Act, but following opposition raised by business groups and the House of Lords this proposal was abandoned.
It remains possible for employees to make an unfair dismissal claim from day 1 of employment in limited circumstances, for example when the dismissal is as a direct result of whistleblowing or discrimination under the Equality Act 2010.
Q: What changes are being made to compensation in unfair dismissal claims?
A: Currently, the maximum compensatory award available in successful unfair dismissal claims is capped at the lower of 52 weeks’ gross pay or £118,223 (rising to £123,543 from April 2026).
Once implemented, The Act will remove the cap on the compensatory award entirely. This will expose employers to tribunal awards far in excess of this amount, encouraging very high earning employees to bring claims where they may not have previously.
The cap is expected to be removed in relation to dismissals that occur on or after 1st January 2027.
Q: How can employers prepare for this change?
A: Employers should prepare for these changes by ensuring that the first months of an employee’s employment involves a comprehensive onboarding process and a well-managed probation period to highlight any problems or performance issues early on. Employers should ensure that they provide regular feedback and that this is well documented.
Dismissal procedures should be applied in a fair, consistent and transparent manner and employee handbooks should be updated to ensure that employees understand expectations and processes.
If issues arise, seeking legal advice at an early stage can help to ensure that risk is kept to a minimum.
Q: Will SSP be available from the first day of sickness?
A: Yes. From 6th April 2026, SSP will be payable from day 1 of sickness, rather than on day 4.
Q: Will the Lower Earnings Limit continue to apply?
A: No. The Act also removes the current Lower Earnings Limit to make Statutory Sick Pay available to all employees regardless of their weekly earnings.
From 6th April 2026, the rate of Statutory Sick Pay will be paid from day 1 at a flat rate or at 80% of an employee’s weekly earnings, whichever is lower.
Q: How can employers prepare for this change?
A: These changes will mean that many more employees will be entitled to receive SSP. Employers should begin to prepare now by budgeting for increased costs, reviewing absence policies and contracts to make sure that they are in line with the new rules, and updating payroll systems to accurately calculate SSP payments from April onwards.
Q: Can employees take paternity or unpaid parental leave straight away?
A: From 6th April 2026, paternity leave and unpaid paternal leave will become a day 1 right. This means that employees will be entitled to take leave without the current requirements of having at least 26 weeks’ continuous service for paternity leave and 12 months’ continuous service for unpaid parental leave.
Q: Is there any change to statutory paternity pay under the act?
A: While the right to take paternity leave will become available from day 1 of employment, the 26-week qualifying period for statutory paternity pay remains unchanged by the Act.
The only change to statutory paternity pay will be the usual annual increase in line with inflation.
Q: When will these changes come into force?
A: It is expected that these changes will come into force in April 2026, however transitional arrangements are in place from 18th February 2026.
Employees who will become entitled to leave on or after 6th April 2026 will now be able to give notice and evidence early so that leave can be arranged as soon as the new day 1 rights take effect.
Q: Can I be made redundant while on maternity, paternity, or adoption leave?
A: Yes, but the Act confirms that enhanced redundancy protection will be provided for employees who are on maternity, paternity, or adoption leave. Regulations made under the Act will set out the detail of what the enhanced dismissal protections will look like.
It is expected that changes will come into force in 2027.
Q: Can employees take bereavement leave?
A: A new statutory right to bereavement leave, including for pregnancy loss, is included in the Act. This will significantly extend the current entitlement, which only applies to parents who lose a child under 18, or stillborn from 24 weeks.
Under the Act, bereavement leave will no longer be restricted to parents and will apply more broadly to those who have lost a close relation.
The Act specifically covers pregnancy loss before 24 weeks.
Q: Will bereavement leave be paid?
A: No, the Act only establishes a right to unpaid bereavement leave, so any pay received for this type of leave would be at the employer’s discretion.
Q: How much time off can be taken for bereavement leave?
A: Employees will be entitled to a minimum of one week of bereavement leave, which they will have 56 days to take from the date of the bereavement.
The Act provides a baseline which can be extended by employers, if they choose to do so.
Q: When will these changes come into force?
A: The Act deals only with the basic framework for bereavement leave. Further details will need to be set out in secondary legislation. The consultation covering bereavement leave closed on 15th January 2026, and it is expected that the changes will come into force in 2027.
Q: Can reporting sexual harassment count as a whistleblowing disclosure?
A: From April 2026, the Act will amend the statutory list of qualifying disclosures set out in the Employment Rights Act 1996 to expressly include sexual harassment.
Whilst sexual harassment can already be classed as a qualifying disclosure, explicitly listing sexual harassment within legislation will reinforce whistleblowing as a recognised route for raising such concerns and is intended to reduce uncertainty and encourage increased reporting.
Q: What duties do employers have in relation to harassment?
A: From October 2026, employers will be under a duty to take all reasonable stepsto prevent harassment, which will include harassment by third parties such as clients, contractors or service users.
This is stronger than the current reasonable steps test and means that employers will also need to assess potential external risks and implement safeguards beyond their direct workforce.
Q: What will be classed as ‘all reasonable steps’?
Regulations will be issued to clarify what all reasonable steps will include. Until then, employers should review anti-harassment policies and ensure that clear reporting routes are in place. Training on sexual harassment should be provided for all staff members and managers should be trained to both prevent and respond properly to any reports of sexual harassment.
Q: Can employers still ‘fire and rehire’ under the Act?
A: In most cases, no. From 2027, terminating employment and then rehiring the same employee on less favourable terms, often called ‘fire and rehire,’ will be classed as an automatically unfair dismissal, unless the employer can genuinely demonstrate all of the below:
- Evidence of financial difficulties that were affecting, or likely to affect, their viability.
- That the contractual changes were made with the purpose of eliminating, preventing, or mitigating those financial difficulties.
- That the need to make the change in contractual terms was genuinely unavoidable.
This will protect employers in narrow circumstances where there is no alternative.
If the above is demonstrated, the dismissal will not be automatically unfair, but the tribunal will still assess whether the dismissal was fair in the circumstances.
Q: What should employers do instead?
Alongside the Act, a new Code of Practice has been introduced, which sets out how employers should proceed when trying to change contractual terms. If employers do not follow the Code, the tribunal can uplift compensation in successful claims by up to 25%.
Employers must engage in meaningful, transparent consultation with employees, taking all reasonable steps to explore alternatives to dismissal. Information should be provided as soon as possible, with employees being given sufficient time to consider the proposed changes.
The Code prohibits using the threat of dismissal too early in negotiations to place undue pressure on employees to accepting the proposed changes.
You can read the Code in full here.
Q: How will tipping policies change?
A: From October 2026, employers must consult with workers or their representatives when creating tipping policies. Employers must also review or update their policies at least every 3 years.
Q: How will this work alongside The Employment (Allocation of Tips) Act 2023?
A: The Employment (Allocation of Tips) Act 2023 came into effect on 1 October 2024, making it mandatory for all tips and service charges that employers have ‘control or significant influence’ over to be passed over to workers. The Employment Rights Act 2025 does not repeal this legislation and will work alongside it.
Q: Can non-compliance be enforced?
A: Yes. If an employer does not consult properly with workers, they will be able to submit a claim to the employment tribunal.
A tribunal will be able to order an employer to compensate each worker by up to £5,000.
Q: When will these changes come into force?
A: These changes are expected to come into force in October 2026
Q: Will zero-hours contracts be banned?
A: No. The Act does not ban zero-hours contracts, but from 2027 workers on these or similar arrangements will have the right to a guaranteed hours offer (‘GHO’) based on the hours that they regularly work.
This aims to balance the one-sided flexibility that currently exists in favour of employers.
Q: Can an employee reject a GHO?
A: Those who are provided with GHOs will be able to turn the offer down and can choose to remain on their current contract or arrangement should they prefer to do so.
Q: What if shifts are cancelled?
A: Workers will be entitled to reasonable notice of shift changes. Workers may also be entitled to compensation if their shifts are cancelled or cut short without proper notice. This will reduce flexibility for employers and will likely increase staffing costs in sectors such as retail and hospitality.
Q: What will be classed as ‘reasonable’ notice?
A: The Government will set out what will be classed as reasonable in due course.
Depending upon the circumstances it is possible that even very short notice could be classed as reasonable, but employers should always give as much notice as possible to reduce risk.
Q: Will this apply to agency workers?
A: Yes, these changes will apply to agency workers. GHOs for agency workers must match the most favourable pay received by comparable employees.
Q: What should employers do to prepare for these changes?
A: These changes will require employers to track hours, monitor reference periods, and issue or respond to GHOs. Whilst these changes are only expected in 2027, businesses that rely heavily on casual workers should start preparing for these changes as soon as possible.
Q: How long do I have to make a tribunal claim?
A: Once implemented, the Act will extend the time limit to bring most employment tribunal claims from 3 months to 6 months from the date of the incident or dismissal. This will enable many claims to progress which would previously have been out of time.
An updated timeline has now been published for the implementation of the Act, which states that changes to tribunal time limits will come into effect ‘no earlier than’ October 2026.
Q: What is the Fair Work Agency?
A: The Act establishes a new Fair Work Agency (‘FWA’) in order to enforce employment rights such as statutory sick pay, holiday pay and minimum wage.
This brings together the functions of several existing bodies and introduces new enforcement powers.
Q: What will the Fair Work Agency be able to do?
A: The FWA will have both investigatory and enforcement powers in respect of businesses that do not comply with the law.
This will include the power to inspect workplaces and a new civil proceedings power. This means that the FWA will be able initiate tribunal proceedings to enforce rights like holiday pay and statutory sick pay.
Q: When will the Fair Work Agency be established?
A: It is expected that the FWA will be established on 7th April 2026.
Q: Will flexible working rights change?
A: Yes. From 2027, employers must consult employees properly when considering a flexible working request, following a specified process which will be set out in secondary legislation in due course. If a request is rejected, the employer must explain why their decision is reasonable.
Employees will be able to make 2 requests per year (currently 1 request per year), and employers must respond within 2 months (currently 3 months).
Q: How can employers prepare for the changes?
A: Employers will need to document their decision-making processes more thoroughly and should ensure that managers are trained in both assessing and communicating refusals to flexible working requests appropriately.
Internal policies should also be reviewed to ensure that they accurately reflect these changes.
Q: How has the law on industrial action changed under the Act?
A: Many provisions of the Trade Union Act 2016 will be repealed. Minimum service level rules for strikes were repealed when the Act became law at the end of last year.
Several more changes were introduced 18th February 2026, including:
- Dismissal for taking part in industrial action is now classed as automatically unfair.
- The time needed to give notice of industrial action has now been reduced from 14 to 10 days.
- Picket supervisors are no longer required
- Industrial action mandates will now last for 12 months, instead of 6.
- The support threshold rule for trade union ballots has been removed, meaning that only a simple majority is now required rather than at least 40% of the total eligible votes to support action.
Q: What other changes are due to come into effect?
A: Further changes will happen in October 2026:
- Employers will have a duty to inform workers of their right to join a trade union
- There will be updated rules on a trade union’s right of access to the workplace
- The Code of Practice on trade union recognition will be updated to provide guidance for employers and unions
- The Act will introduce increased protection against detriment for industrial action. Workers who take part in industrial action will be protected against detriment (being treated less favourably by their employer), in addition to the existing dismissal protection.
Q: What are the changes being made in respect of collective redundancies?
A: Currently, the law requires employers to carry out collective consultations when they propose to make redundant 20 or more employees at 1 establishment within a period of 90 days or less.
Under the Act, this will be amended to cover 20 or more redundancies across the entire organisation.
Q: What if there is a failure to consult?
A: If an employer does not follow consultation requirements, employees can claim a protective award from the employment tribunal. Under the Act, the maximum protective award that employees can claim will double from 90 days’ pay to 180 days’ pay per employee.
Q: When will the changes take effect?
A: The increase of the protective award period is expected to come into force in April 2026, with changes to the collective consultation threshold expected in 2027.
Q: What changes has the Act made to NDAs?
A: The Act will make void a NDA between an employer and a worker where it seeks to prevent the worker from speaking out about relevant harassment or discrimination.
Q: Does this cover all harassment and discrimination?
A: No, the Act only covers ‘relevant’ harassment or discrimination, which must be carried out (or alleged to have been carried out) by the employer or a colleague.
Q: Will it be possible to enter into a NDA in relation to discrimination or harassment in any circumstances?
A: Yes, but only under very strict conditions. The Secretary of State for Business and Trade can set rules for ‘excepted agreements’ which may remain valid even in cases of harassment or discrimination.
Further details, including an implementation date, are expected after consultation.
Q: Will this change apply to NDAs retrospectively?
A: No, it will only apply to NDAs which are entered into after the implementation date.
Q: What are Equality Action Plans?
A: The Act introduces a new power to make regulations to require employers to publish Equality Action Plans. Under these plans, employers will be required to provide detail of the actions they are taking to improve gender equality amongst their employees.
This includes addressing the gender pay gap and providing support to women during the menopause.
Q: Which employers will these rules apply to?
A: Large employers (those with 250+ employees).
Q: How will employees access this information?
A: Employers may be required to publish pay information (for example, on their company website) and also make it available internally to their workers upon request.
Q: When will these requirements come into force?
A: Secondary legislation is required to specify the exact reporting requirements and timelines.
It is likely that implementation will be in 2027.