The Employment Rights Act 2025 – What Employers Need to Know
The landscape of employment law is changing rapidly, and with several updates arriving between 2026 and 2027, employers of all sizes need to prepare. In a recent webinar, Paul Roberts (Head of Department) and Ellie Walsh (Solicitor) guided businesses through the upcoming reforms in the Employment Rights Act 2025.
In chronological order, these are the key changes as set out in the government’s implementation plan: Implementing the Plan to Make Work Pay and Employment Rights Act – GOV.UK
February 2026 – Industrial Action Protections
Employees participating in industrial action will receive new protections against dismissal. This marks a significant shift in safeguarding workers’ rights in collective disputes.
April 2026 – Family Rights & Collective Redundancies
From April 2026, employees will gain enhanced rights from day one:
- Paternity leave from day one
- Unpaid parental leave from day one
Collective Redundancies
Employers should also note that the maximum protective award for failing to consult during collective redundancies will double to 180 days’ pay.
April 2026 – Statutory Sick Pay (SSP) Reform
Significant changes to SSP are coming:
- No more waiting days
- Removal of the lower earnings threshold
- SSP will be paid at 80% of pay or the SSP rate, whichever is lower
April 2026 – The Fair Work Agency
A major structural change arrives with the creation of the Fair Work Agency, a one‑stop shop combining the responsibilities of:
- Gangmasters and Labour Abuse Authority
- Director of Labour Market Enforcement
- HMRC Low Pay Unit
- Employment Agency Standards Inspectorate
This streamlined enforcement body aims to improve compliance and reduce exploitation.
October 2026 – Strengthening Trade Union Rights
Employers will have new obligations including:
- A duty to inform workers of their right to join a trade union
- Extended protections against detriment for participating in industrial action
- New rights and protections for trade union representatives
Tipping Legislation
New stronger tipping laws will come into force, ensuring fairer treatment of workers in hospitality and similar sectors.
Preventing Sexual Harassment
Employers will be required to:
- Take “all reasonable steps” to prevent sexual harassment
- Prevent harassment by third parties (e.g., customers, service users)
October 2026 – Tribunal Time Limits
The time limit for employees to bring most tribunal claims will increase from 3 months to 6 months, giving individuals more time to seek legal advice.
January 2027 – Ending “Fire and Rehire”
Key changes include:
- Automatic unfair dismissal for fire‑and‑rehire or fire‑and‑replace tactics
- Applies to core terms: pay, hours, pensions, shift patterns and time off
- The law now also covers replacing employees with independent contractors doing the same work.
There is a limited exemption for employers facing extreme financial distress.
Employers should also ensure their contracts include clear variation clauses to avoid the need to fire and rehire.
January 2027 – Unfair Dismissal Changes
Further reforms include:
- Qualifying service for unfair dismissal reduced to 6 months
- Removal of the cap on compensation (previously £118,223 or a year’s pay)
Our recommendation is that employers should introduce a 3‑month probationary period and review employees with under two years’ service by November 2026.
2027 – Gender Pay Gap & Menopause
Businesses with over 250 employees must publish mandatory gender pay gap and menopause action plans.
Additional Rights
- Enhanced rights for pregnant workers
- Flexible working refusals must be explained with clear business reasons
- Bereavement leave rights strengthened
2027 – Collective Redundancies
A second threshold will be introduced, either:
- A percentage of the workforce, or
- A set number of redundancies across the UK entity
This moves away from the current requirement of 20 redundancies at one site.
2027 – Zero Hours Contracts Reform
Major updates for zero-hours and low-hours contracts include:
- A guaranteed hours offer, based on a 12‑week reference period
- Compensation for lost pay if guaranteed hours are not offered
- These rules also apply to agency workers
- New obligations around:
- Reasonable notice of shifts
- Compensation when shifts are changed or cancelled at short notice
- Limits on contracting out
Despite the government’s rhetoric, “exploitative zero-hour contracts” are not actually banned.
What Employers Need To Do
- Update all documentation,
- Keep an eye out for further Regulations as details emerge
- Consider subscribing to our employment retainer service, which includes:
- Further webinars and discounted training
- Employment document reviews
- Access to precedents online
- Unlimited day‑to‑day employment advice
- Optional tribunal cost cover
For a quote, contact Ellie Walsh at ewalsh@keelys.co.uk or 01543 420404.
Training Sessions
We also offer practical training on Absence Management, Sexual Harassment Prevention and Performance Management.
Those can be booked at: www.keelys.co.uk/legal-events-seminars