After months of anticipation and debate, the Employment Rights Bill has now cleared its final parliamentary hurdle. Following long-awaited sign-off from the House of Lords, the Bill received Royal Assent this week, becoming the Employment Rights Act 2025 and formally confirming one of the most significant updates to UK employment law in a generation.
In this article, we take a brief look at the reforms it brings for employers.
Changes to unfair dismissal protections following a U-turn
The qualifying period for unfair dismissal protection will be reduced from two years to six months as well as lifting the existing compensation cap. This was a last-minute change from the planned day-one right.
Understanding the timing of the Employment Rights Act
The Employment Rights Act will be implemented in phases, with key changes expected from now through to January 2027. This phased approach gives employers time to prepare, but the sheer scale of change means early planning is essential to not impact business continuity.
Day-one leave rights will mean changes to policies and HR systems
Eligible employees will gain immediate access to paternity leave and unpaid parental leave, removing previous service requirements of at least 26 weeks’ continuous employment by the end of the 15th week before the expected week of childbirth for paternity leave, and 12 months’ service for unpaid parental leave.
Statutory Sick Pay reforms will require payroll and policy changes
The removal of the lower earnings limit and waiting period for Statutory Sick Pay marks a major change under the Employment Rights Act. More workers will become eligible, payments will start sooner, causing many employers concern that this opens the door for abuse by lower paid employees, who could receive 80% of pay due whether they attend work or not.
Harassment protections will place greater responsibility on employers
The Employment Rights Act significantly strengthens sexual and other discriminatory harassment protection, introducing a legal duty for employers to take “all reasonable steps” to prevent sexual harassment, as well as any form of harassment by third parties. Sexual harassment claims will also be added to the list of protected whistleblowing activities.
Employment tribunal changes may increase legal exposure
Under the Employment Rights Act, employment tribunal time limits will increase from three months to six months. While this gives employees more time to bring claims, it also extends employers’ period of legal exposure.
Fire and rehire practices will be more tightly restricted
The Act introduces measures to limit fire and rehire practices, reflecting increased scrutiny on how some employers manage contractual change.
Trade union and industrial relations frameworks will be modernised
The Employment Rights Act introduces a wide range of reforms to trade union rights and industrial relations. These include simplifying union recognition, introducing electronic and workplace balloting, expanding protections for union representatives, and strengthening unions’ rights of access.
In addition, employers will have a new duty to inform workers of their right to join a trade union.
Changes to redundancy and zero-hours contracts will reshape workforce planning
Several measures within the Employment Rights Act will directly impact how employers manage workforce risk. These include doubling the maximum protective award for collective redundancy to 180 days pay, and introducing a range of measures to combat abuse of zero and minimum hours contracts.
New rights around flexibility, maternity protection, and bereavement leave
The Act enhances access to flexible working, requiring refusals to be reasonable and clearly explained. It also introduces stronger dismissal protections for pregnant women and new mothers, alongside a new statutory right to one week of unpaid bereavement leave.
Increased enforcement and regulation will demand stronger compliance frameworks
The creation of a Fair Work Agency and the regulation of umbrella companies signal a tougher enforcement environment under the Employment Rights Act. Plus, regulations will be implemented to establish the Fair Pay Agreement Adult Social Care Negotiating Body.
Tipping laws to be tightened resulting in staff consultations
The Act brings with it a change in tipping law. Employers will need to consult with workers or their representatives before creating a tipping policy and update that policy every three years.
How employers can prepare now for the Employment Rights Act
Although much of the detail is expected to come in regulations, employers should not wait to take action. Early preparation allows businesses to spread costs, reduce disruption, and approach change strategically rather than reactively.
The Omny Law team will be running a webinar in the new year to cover the Employment Rights Act in more detail, including what it means for employers in practice.
In the meantime, you can reach out to us here for more information on how we can help you prepare and prioritise changes to implement within your business.