First published on Wednesday, July 2, 2025
Last updated on Friday, December 19, 2025
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The Employment Rights Bill has made its way through parliament, receiving Royal Assent on 18 December 2025. It is now officially law, becoming the Employment Rights Act 2025.
For employers across the country, now it is time to understand these employment law reforms and what you can do to stay compliant. In this article, we uncover the biggest changes to law. For more information, download our Employment Rights Act 2025 guide.
What is covered by the Employment Rights Act 2025?
The Employment Rights Act 2025 covers a wide range of important topics for employment rights. Changes will take effect from the end of 2025 and throughout 2026 and 2027.
Including changes to Unfair Dismissal, Paternity Leave and Parental Leave to Statutory Sick Pay and Sexual Harassment Policies, these updates to employment law in the UK are some of the biggest in a generation. They require businesses just like yours to make huge changes to HR processes, policies, and documentation.
Types of family leave
The Act removes the requirement for length of service for Paternity Leave and Unpaid Parental Leave for parents, making this type of leave more inclusive for all. These changes will come into effect from April 2026.
In addition, an extension of the rights and protections for pregnant workers will come into effect in 2027.
Leave and absence are key elements of people management, so ensure your policies reflect the changes and documentation and are up to scratch. This will ensure you are compliant with these important employment law updates.
Statutory Sick Pay (SSP)
While amendments to SSP had already been introduced in 2025, further amendments are expected to roll out in April 2026.
The Employment Rights Act 2025 will remove the Lower Earnings Limit (LEL) and waiting period requirements for SSP. This means all employees will be entitled to receive SSP from their first day of absence regardless of how much they usually earn. SSP will be paid at either 80% of usual earnings or the current statutory rate, whichever is lower.
These changes will first require employers to review their absence and sickness policies but also to consider the extra cost they will incur as a result.
Fire and Rehire
From October 2026 onwards, the use of fire and rehire practices will be limited to very specific circumstances. This will make it difficult for businesses to tactically adjust employment contract terms to potentially favour the business rather than the employee.
This change sets out to protect employees, ensuring that employers are acting in a fair and reasonable way when seeking to amend contracts and dismiss employees.
Flexible working requests
From 2027, employers will have to explain why it was reasonable to refuse a flexible working request under one of the eight statutory reasons.
Unfair dismissal
Despite a back and forth with the House of Lords, one of the biggest changes coming out of the new Act is an update to unfair dismissal laws.
From 1 January 2027 onwards, the service requirement for ordinary unfair dismissal claims will be shortened to 6 months, from 2 years.
This will apply retrospectively, meaning any employee with six months of service on that date will have the right to claim unfair dismissal.
Changes to payment of tips to workers
For the hospitality industry in particular, changes to how tips will be paid is an essential update.
As of October 2026, laws will tighten surrounding the payment of tips, gratuities, and service charges to workers who are eligible, with the intention of formalising the process across workplaces.
To prepare for these changes, employers should review their current tipping policies. Or if they don’t have one already in their business, they should write one.
Establishment of a Fair Work Agency body
The Fair Work Agency will oversee the enforcement of employment rights throughout the UK. Allowing a single agency body to take responsibility for this task removes the requirements from various bodies and organisations such as HMRC and GLAA.
With the roadmap predicting a date of April 2026, it won’t be long before your business will be under the watchful eye of the new Fair Work Agency. More details of this can be found in our dedicated article detailing exactly what the FWA will set out to do and how.
Other changes to the law include:
Repeal of the majority of the Trade Union Act 2016 (at Royal Assent or shortly afterwards)
Introduction of dismissal protections for taking industrial action (at Royal Assent or shortly afterwards)
Additional whistleblowing protections regarding sexual harassment (April 2026)
Workers will be required to be informed of their right to join a trade union (October 2026)
Tighter regulation of umbrella companies (2027)
Mandatory gender pay gap and menopause action plans (2027)
Requirement to offer zero-hour, low hour and agency workers a guaranteed hours contract reflecting their usual working hours (2027)
Failure to comply
As with any employment law in the UK, failure to comply will result in consequences. And since so many changes will come into effect over a relatively short time period, the consequences of failing to comply with any or all the new measures outlined within the Employment Rights Act 2025 could have serious financial, reputational, and legal impacts for your business.
What employers need to do now
Employers are required to prepare ahead of major changes. Having water-tight HR policies, documents, and procedures in place, ready for these updates, will guarantee that your business stays on the right side of the law.
For some handy tips, download our guide for an action plan on how to prepare.
BrightAdvice employment law experts are only a call away. They’re available 24/7 to provide you with the advice you need to guarantee HR compliance for your business.
If you’re worried about these changes to UK employment law or would like support in updating your processes, our team can help you. Get in touch or book a free demo today.
