Following many months of debate and “ping-pong” between the House of Commons and the House of Lords, the Employment Rights Bill (“the Bill”) has now been agreed and is set to receive Royal Assent this week. Following this, the Bill will officially become law, to be known as the Employment Rights Act 2025 (“the Act”), bringing to a conclusion its passage through Parliament which began in 2024.
Significance of the Act
The Act gives rise to the most substantial reform of UK employment law in recent decades and brings to life one of the Government’s headline manifesto pledges in relation to workers’ rights. The Act introduces a broad range of changes which concern numerous key areas of employment law, including dismissal rights, workplace protections, flexible working, zero-hours contracts, trade unions and Employment Tribunal time limits. The Act will also remove the cap on compensation for unfair dismissal claims (which is currently set at a year’s gross pay or a statutory cap, currently £118,223 from 6 April 2025, whichever is the lower) – a significant change to the current position.
Employees will receive a number of new and/or enhanced protections. For employers, HR professionals and businesses, understanding and preparing for the new obligations and reforms introduced by the Act will be crucial in adapting to these changes.
What the Act Will Change
The reforms introduced by the Act will not arrive all at once and will instead be implemented in a phased approach throughout 2026 and 2027.This phased approachwill provide employers and businesses with an opportunity to understand and adapt to the changes coming into force.
Consultations on some of the changes set out in the Act are ongoing and will continue into 2026, with the implementation dates of the reforms subject to change as a result., However, key changes are expected to be implemented according to the following timeline and include:
From early 2026
- Increased dismissal protections for industrial action
- Changes to rules and time limits relating to trade union activity, including notices of industrial action
From April 2026
- A day 1 right to paternity leave and unpaid parental leave
- Establishing the “Fair Work Agency”
- Changes to statutory sick pay (SSP) to be paid from day 1 of illness instead of day 4 and removal of the lower earnings limit
- Doubling the maximum collective redundancy protective award (from 90 days to 180 days’ pay per employee)
- Whistleblowing protections for sexual harassment
- Changes to allow electronic trade union voting
From October 2026
- Restrictions on “fire and rehire” practices
- Requirements for employers not to permit the harassment of their employees by third parties and to take all reasonable steps* to prevent sexual harassment of their employees
- Extension of employment tribunal claim time limits from 3 months to 6 months
- Changes to tipping laws including a requirement to consult workers (or their representatives) on any tipping policy, which must be updated every 3 years
*meaning of “reasonable steps” expected to be confirmed in 2027
From 2027
- Protection from unfair dismissal after a 6-month qualifying period (previously expected to be a day 1 right)
- Lifting of the cap on compensation for unfair dismissal (and the Government has committed to publishing a public impact assessment on the removal of the cap before it comes into force)
- Increased rights for workers who are pregnant or returning from maternity leave
- Changes to the collective redundancy rules and threshold
- Changes to flexible working
- Right to statutory bereavement leave
- Restrictions on zero-hours contracts and right to guaranteed working hours
- Right to compensation for cancelled shifts
- Further changes to harassment requirements, including confirmation of the “reasonable steps” an employer must take to prevent sexual harassment
- Further changes to trade union requirements including changes to the industrial relations framework and protections from discrimination for trade union members
Practical Steps for Employers To Prepare for the Act
With the Act introducing a wide-ranging and significant number of changes to the employment law landscape, employers will need to take proactive steps to adapt and ensure compliance. Actions employers can look to take now include; auditing and reviewing employment contracts, workplace policies and procedures, particularly those in relation to disciplinary, dismissal, flexible working and other paid leave entitlements, and to ensure key documentation is amended and updated in preparation for the new changes in the Act.
Employers should also consider preparing for the phased implementation of the changes in the Act by monitoring and diarising implementation dates and ensuring that managers and decision makers have received relevant training, communication and updates on the new rights and obligations coming into force at the appropriate times. In view of the new shorter 6-month qualifying period for unfair dismissal, it will be crucial to train managers and key staff on identifying and managing disputes, as well as addressing issues with performance and capability, given that employees will have a longer period within which to bring claims in the Employment Tribunal. Employers should also review their data retention policies, as documentation may need to be retained for longer timescales as a result of increased limitation periods.
The removal of the compensation cap for unfair dismissal claims will also increase potential exposure to risk and higher costs for employers in these circumstances. Changes to zero-hours working and restrictions on “fire and rehire” practices will also require employers to carefully consider any approach to restructuring of the workforce. Early and thorough preparation will therefore be essential for employers to mitigate the risks of non-compliance or disputes, as the new provisions of the Act begin to be implemented in the coming months and years.
Broadfield is uniquely positioned and ready to assist with these practical steps, including providing bespoke training, reviewing and updating policies and contracts, providing in-depth support at all stages of disputes and employment tribunal claims, in addition to providing other informed advice.
