Employment Rights Act 2025

The upcoming two years will see some of the most significant shifts in UK employment law in over a decade. Following the introduction of the Employment Rights Act 2025, which was implemented to support employers, workers and unions while modernising the legislative framework around current day employment rights, a wide range of reforms will take place from February 2026 onwards. The reforms will impact everything from sick pay and flexible working to trade union rights and unfair dismissal policies.

If you are an employer, HR professional, or business leader, now is the time to prepare. Keeping ahead of the changes in law gives your business a head start. Below, I break down the key changes, along with what they could mean for you and your organisation.

The government is introducing a package of measures designed to make trade union processes more efficient and accessible. They intend to do this in a few ways, such as:

• Simplifying balloting and shortening notice periods from 14 days to 10 days.
• Extending mandates for industrial action from 6 months to 12 months.
• Increasing union access to the workplace and adding extra protection for employees engaging in union activities.

From February 2026, dismissal for taking part in industrial action will be classed as automatically unfair.
These changes will require employers to review workforce relations and strategies, and to ensure managers understand the new access rights.

One of the most impactful changes is the overhaul of Statutory Sick Pay (SSP).
For those who may not be aware, SSP is a government mandated payment system made to support employees who cannot come to work due to illness. It works like a safety net, ensuring employees still receive income when they are unwell.

From 2026, SSP will be available from day one, not day four. The Lower Earnings Limit (LEL) is scrapped, which ensures any employee, regardless of pay, is entitled to SSP. Payments shift to 80% of normal weekly earnings, or you could opt for the standard flat rates, only where relevant.

The Lower Earnings Limit, or LEL, is the minimum weekly earnings a person must have to qualify for certain state benefits, rising to £129 from £125 a week within the 2026 to 2027 period.

This reform is likely to influence absence management processes and payroll planning.

Penalties for failing to properly consult in collective redundancy situations will double. Employers must ensure their consultation approach is compliant, documented, and transparent.

Statutory Collective Consultation Requirements are triggered when an employer is attempting to dismiss 20 or more employees as redundant from one workplace within a 90-day period or less. Where an employer is proposing to dismiss 100 or more employees under redundancy, the consultation must take place between 45 and 30 days before any dismissal can happen.

If you fail to follow these rules, you may find yourself paying out 180 days of pay, as opposed to 60 days under a Protective Award.

Family-friendly rights are expanding, meaning new parents’ working lives are about to take a turn for the better.

Paternity leave and unpaid parental leave will now be classed as a day-one right, and some procedural restrictions will be removed completely, such as the restriction on taking paternity leave after shared parental leave.

Despite the changes, paternity leave still requires a 15 week notice period before the EWC (Expected Week of Childbirth), and a 12-day notice period before unpaid parental leave. These changes do not affect pay either, and eligibility for paternity leave remains at 26 weeks.

Sexual harassment is now explicitly recognised as a qualifying disclosure for whistleblowing purposes. In addition, NDAs (Non-Disclosure Agreements) designed to prevent individuals from reporting harassment, including discrimination, are expected to be strictly prohibited. This is an important shift towards transparency, as well as ensuring the safety of employees.

This means workers who report such behaviour will not be grounds for punishment and will be protected from unfair dismissal for coming forward with their experiences.

From 2027, large employers must publish gender pay gap data and menopause impact reporting. However, voluntary reporting begins now, in 2026, and gives employers an opportunity to demonstrate good practice and set an example for the rest of the market.

These changes build on the existing obligation that a company holding 250 or more employees must report annually. The new laws push these employers further by enforcing mandatory gender pay gap and menopause action plans.

Employers will be liable for harassment caused by customers, clients or other third parties unless they can demonstrate that they took all reasonable steps to prevent it. This means clearer training, risk assessments, and incident reporting will become essential in the workplace.

This will apply to all types of harassment towards the protected characteristics stated in the 2010 Equality Act: sex, sexual orientation, gender reassignment, maternity and pregnancy, marriage and civil partnership, religion or belief, disability, race and age.

Employees will now have six months to bring claims, as opposed to three months, giving more time for an early resolution and potentially increasing the number of claims.

For those who may not be aware, a tribunal is a specialised judicial body that resolves certain areas of law, such as employment. They are seen as a quicker, easier alternative to taking a case to court, and allow a person to challenge decisions made by government bodies or organisations.

Employers will now be required to consult known trade union representatives. Where no representatives are available, employers will be expected to consult workers on tipping policies, as well as reviewing those policies every three years at minimum.

This change will mostly affect hospitality businesses, which should prepare for more structured procedures around service charges and gratuities.

The focus here is on workers’ voices, in line with proper consultation and transparency. Workers will be required to submit an anonymous summary of the views expressed during the consultation. These changes will not overrule the current 2023 Tipping Act, which requires employers to distribute 100% of tips fairly.

If employers fail to consult, workers can take a complaint to the tribunal, where they could potentially win a fee of up to £5,000 for financial loss.

This reform is likely to make the biggest splash, being one of the most significant changes introduced by the Employment Rights Act 2025: qualifying service for unfair dismissal reduces from 24 months to just 6 months, and the compensation cap will be removed from 2027.

This marks one of the most significant shifts yet, increasing risk exposure for employers while also requiring stronger performance management and record-keeping.

Employers will benefit greatly from more robust onboarding and early-stage performance management, better documentation early in the employment relationship, and clearer probation frameworks, as a dismissal within the first six months may invite greater scrutiny.