Employment Rights Act 2025: What It Changes and Why It Matters
Employment Rights Act 2025: What It Changes and Why It Matters
The Employment Rights Act 2025 (ERA) is now law, marking the most substantial overhaul of UK employment law in decades. A central pillar of the government’s ‘Plan to Make Work Pay’, the Act is designed to curb insecure work, strengthen workplace protections, and reset the balance between flexibility and fairness.
While some provisions took effect immediately following Royal Assent on 18 December 2025, most reforms will be implemented in phases through 2026 and 2027. The changes are wide-ranging and materially alter risk, responsibility, and employer exposure.
Ending One-Sided Flexibility
At the heart of the ERA is a rejection of what the government describes as ‘one-sided flexibility’. Employers using zero or low-hours arrangements will be required to offer guaranteed hours after a reference period (expected to be 12 weeks), give reasonable notice of shifts, and compensate workers for late cancellations. These rights extend to agency workers, closing long-standing loopholes.
Flexibility remains possible but it now comes at a legal and financial cost.
Fire and Rehire: A High-Risk Strategy
Dismissals used to force acceptance of contractual changes (“fire and rehire” or “fire and replace”) will generally be automatically unfair. A narrow exception applies only where employers can show severe financial distress and no viable alternative. The burden of proof has shifted decisively, turning a once-common tactic into a significant legal risk.
Unfair Dismissal and Redundancy
The qualifying period for unfair dismissal claims will reduce from two years to six months, and the cap on compensatory awards will be removed. Collective redundancy obligations will also expand, with protective awards doubling to a maximum of 180 days’ pay where consultation duties are breached.
Pay, Sick Leave and Fairness
Statutory Sick Pay will be payable from day one, with the lower earnings limit and waiting period removed. The Act also introduces new sectoral pay-setting mechanisms, strengthens tipping transparency, and reinstates protections for outsourced public sector workers.
Family-Friendly and Flexible Working Rights
Paternity leave, unpaid parental leave and statutory sick pay become day-one rights. A new right to unpaid bereavement leave is introduced, including for pregnancy loss before 24 weeks. Protections against dismissal for pregnant employees and new mothers are extended, and employers face clearer obligations to reasonably justify refusals of flexible working requests.
Harassment, Whistleblowing and Equality
Employers will be under a statutory duty to take ‘all reasonable steps’ to prevent sexual harassment, including harassment by third parties. Whistleblowing protections are strengthened to cover disclosures about sexual harassment, NDAs preventing disclosure of harassment or discrimination are rendered unenforceable, and large employers must publish gender pay gap action plans and menopause support measures.
Enforcement with Real Teeth
A new Fair Work Agency will launch in April 2026, consolidating enforcement of minimum wage, agency work, holiday pay and labour exploitation. It will have enhanced investigatory powers, the ability to issue penalties and bring tribunal claims, and powers to share information with other regulators. Tribunal time limits will also extend from three to six months, and umbrella companies will be brought into scope of regulation.
What Employers Should Do Now
The ERA establishes a new baseline for employment rights. Employers should begin reviewing policies on flexible working, family leave, harassment and dismissal practices; reassess the use of zero-hours and agency workers; and ensure payroll and record-keeping systems are compliant. Training for HR teams and managers will be critical as further regulations and guidance emerge.
How We Can Help
Our specialist employment solicitors are closely tracking the implementation of the Employment Rights Act 2025. We can help you understand how the reforms affect your workforce, review contracts and procedures, and ensure your business is compliant as the new regime is rolled out.
Contact us now on (01271) 340676 or (01271) 340668 for a free initial discussion to talk through the impact of the Act on your organisation and the practical steps you should be taking now.