The Employment Rights Act 2025Â is set to introduce the most significant updates to employment law in England and Wales for many years.
The Act received Royal Assent in December 2025 and introduces changes that will be gradually introduced throughout 2026 and 2027, starting in April 2026.
These changes will impact how businesses across England and Wales manage hiring, workplace protections, contracts, and the rights of and employees.
While the legislation is still moving through the final stages of implementation, many organisations have already started preparing for the upcoming changes. Understanding the new framework early will enable businesses to remain compliant and reduce any legal risks.
In this guide, we explain what the Employment Rights Act 2025Â is, the key changes expected under the legislation, and what steps businesses can proactively take now to prepare.
If you have any queries relating to the contents of this article, or require specialist legal advice or assistance relating to any area of employment law, get in touch today by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
This article is written by Philip Luff, an experienced Solicitor regulated by the Solicitors Regulation Authority. Philip qualified as a solicitor in 2010 after completing his Legal Practice Course at the University of Law, London. He specialises in Employment Law, with extensive experience in Employment Tribunal Claims.
What is the Employment Rights Act 2025?
The Employment Rights Act 2025 is expected to modernise and strengthen existing employment protections across the UK. It forms part of wider labour market reforms aimed at increasing job security, improving working conditions, and creating clearer rights for employees.
For businesses, the legislation will likely introduce stricter requirements around employment contracts, job security, working arrangements, and enforcement of workers’ rights.
The purpose of the Act is not simply to expand employee protections but also to create a more transparent and fair labour market. However, this means employers must review internal processes to ensure their practices align with the new legal framework.
Key themes within the legislation include:
- Improved rights from the first day of employment
- Enhanced workplace protections
- Clearer rules around flexible and predictable working arrangements
- Greater protection for workers in insecure employment
- Stronger enforcement mechanisms
Why the Employment Rights Act 2025 matters for businesses
Many employment law reforms are designed primarily to protect employees, but the Employment Rights Act 2025 will also significantly impact how businesses operate.
Employers who fail to adapt could face the following consequences:
- Increased risk of employment tribunal claims
- Financial penalties being imposed
- Damage to employer reputation
- Reduced workforce trust and engagement
Conversely, businesses that proactively adapt to the new legislation can benefit from:
- Improved employee retention
- Better workplace transparency
- Reduced legal disputes
- Stronger employer branding
Early preparation is therefore not just about compliance; it is also about maintaining a competitive and responsible workplace.
The main changes being introduced by the Employment Rights Act 2025 are set out below:
April 2026 changes under the Employment Rights Act 2025
Paternity leave and parental leave
Currently these periods of leave are subject to a qualifying period of service of 26 weeks for Paternity Leave and 1 year for Parental Leave.
The changes introduced by the Employment Rights Act 2025 will provide employees with the right to take these types of leave from day one of employment, but there will still be a length of service requirement to receive pay during Paternity Leave. Parental leave will remain unpaid.
Employers should be looking to ensure managers are appropriately trained and that any policies are updated to reflect these changes.
SSP paid from first day of sickness
Currently SSP is only payable from day four of sickness, but this will change to being paid from the first day of sickness and the current earnings threshold for eligibility will be removed. While many employers will already offer more advantageous arrangements over and above SSP, this change could potentially increase costs for businesses and will require changes to policies and contracts of employment to reflect these new rules.
Whistleblowing
Currently when making a protected disclosure an employee must show that a ‘relevant failure’ has occurred such as a breach of health and safety legislation or a breach of a legal obligation.
The Employment Rights Act 2025 will introduce a new relevant failure of ‘sexual harassment that has occurred, is occurring or is likely to occur’.
Employers should look to check whether their whistleblowing policies require updating in light of these changes although the practical effect of this may be limited due to sexual harassment likely already being covered as a ‘breach of a legal obligations’.
Fair Work Agency
This new regulatory and enforcement body will be established in April and will be responsible for the enforcement and compliance with various matters such national minimum wage, statutory sick pay, holiday pay. It is not yet completely understood how this will work in practice, but it is likely to help employees enforce claims for the above matters outside of the employment tribunal.
Autumn 2026 changes under the Employment Rights Act 2025
Protection from third party harassment
Currently employers are not liable for harassment by third parties (customers, suppliers etc.), with employers required to take reasonable steps to prevent sexual harassment.
The changes in the Employment Rights Act 2025 will introduce liability for employers if a third party either harasses or sexually harasses their employees and the employer failed to take ‘all’ reasonable steps to prevent this harassment. The addition of the word ‘all’ increases the obligations on employers.
Employers will now face closer scrutiny over the actions they have taken and should consider reviewing risk assessments, training requirements and monitoring processes to ensure they are able to show ‘all’ reasonable steps have been taken.
Extension of the limitation period
A significant change being introduced (from no earlier than October 2026), is the extension of the limitation period in which an employee is able to bring an employment tribunal claim. This is currently set at three months but will be extended to six months. This will extend the period of uncertainty for employers following the termination of employment and likely mean less claims can be argued to be ‘out of time’.
2027 changes under the Employment Rights Act 2025
By far the most significant change introduced by the Employment Rights Act 2025, is the extension of Unfair Dismissal rights for employees and the removal of the current compensation cap.
Currently, employees must have been employed for 2 years or more to be eligible to bring a claim for Unfair Dismissal before the employment tribunal. As of January 2027, this period will be reduced to 6 months with no cap on the compensation that could be awarded.
This will require employers to be more aware of when new employees are about to obtain Unfair Dismissal rights and to review their probationary processes to ensure that any issues are dealt with in time. This will increase the focus on performance management processes and policies / contracts should be updated to reflect these changes. The removal of the compensation cap will also bring higher risk for employers when exiting senior executives.
‘Fire and Rehire’
Currently, it is not against the law for employers to dismiss employees and then re-engage them on less favourable terms if they refuse to agree.
The proposed changes will make it automatically unfair to dismiss employees for refusing to agree to specific contractual changes including changes to pay, holiday entitlements, pensions and hours of work.
There may be limited exceptions to this, but employers should ensure their contracts and policies permit as much flexibility as possible and that any situations where changes to contracts are going to be required are carefully handled.
Other changes under the Employment Rights Act 2025
In addition to the changes outlined above, the Employment Rights Act 2025 introduces increased rights for employees in relation to trade unions, new parent rights, bereavement leave, flexible working and zero hours contracts, amongst other changes.
How businesses can prepare for the Employment Rights Act 2025
Although some details may still evolve before full implementation, businesses should start preparing now.
Key preparation steps include:
Conduct an Employment Law audit
Businesses should take steps to review and update existing employment practices, including:
- Contracts
- Employee  handbook/ HR policies (disciplinary, flexible working, harassment prevention, etc)
An audit can help identify areas that may require updates once the legislation comes into force.
Train HR Teams and Managers
Managers often make day-to-day employment decisions. Providing training to HR Teams and Managers on new legal obligations will help ensure consistent and lawful management practices.
Monitor legislative developments
The implementation timeline and specific provisions may evolve. Businesses should stay informed through legal updates and professional advice.
The future of Employment Law in England and Wales
The Employment Rights Act 2025 reflects a broader shift in the labour market towards stronger worker protections and increased employer accountability.
For businesses, adapting to these changes will be essential to remain compliant and competitive. While the reforms may require operational adjustments, they also present an opportunity to create more transparent, fair, and productive workplaces.
Employers who begin preparing now will be better positioned to navigate the transition smoothly.
Conclusion: Preparing for the Employment Rights Act 2025
The Employment Rights Act 2025 is set to reshape the employment landscape in England and Wales. From expanded day-one rights and stronger dismissal protections to increased workplace transparency and flexible working expectations, businesses must prepare for a new regulatory environment.
The key to managing these changes successfully is proactive preparation. Reviewing employment practices, updating policies, and training staff now will help organisations stay compliant and minimise future legal risks.
As the legislation moves closer to full implementation, it is clear that businesses that remain informed and adaptable will be best placed to thrive under the new employment law framework.
If you have any queries relating to the contents of this article, or require specialist legal advice or assistance relating to any area of employment law, get in touch today by calling 0800 086 2929, emailing info@elitelawsolicitors.co.uk or by completing our Free Online Enquiry Form.
The content of this article is for general information only. The information in this article is not legal or professional advice. If you require legal or professional advice you should obtain independent expert advice from qualified employment solicitors such as those within our firm.
