The UK Government has officially enacted the Employment Rights Act 2025 (ERA 2025), marking a pivotal shift in employment law that will affect all organisations with staff in the UK. The reforms, which received Royal Assent recently, introduce significant changes designed to enhance workers’ rights and reshape employer obligations. This new legislation will require adjustments to various employment documentation, policies, and processes over the coming months.
Key Changes and Practical Implications for Employers
One of the most impactful reforms is the reduction of the qualifying period for unfair dismissal from two years to just six months. This change will compel employers to reassess their approaches to probationary periods, performance management, and notice periods, particularly for newer employees. Additionally, the current cap on unfair dismissal compensation will be removed, potentially increasing financial exposure for employers, especially those with senior or high-earning staff.
The ERA 2025 also introduces new “day one” rights for employees. New provisions will allow for paternity leave and unpaid parental leave from the start of employment, alongside expanded bereavement leave. Statutory sick pay will now be available from the first day of absence, removing the previous lower earnings limit. These adjustments are expected to broaden eligibility, particularly benefiting junior and support staff.
Strengthened protections for pregnant workers and individuals returning from maternity leave are also part of the reforms. Employers must now carefully evaluate their redundancy selection processes to avoid discrimination claims, as the overlap between redundancy and maternity rights has been explicitly addressed.
Changes to Contractual Obligations and Collective Consultations
The Act introduces new statutory restrictions on the use of “fire and rehire” practices, which employers have previously used to enforce contractual changes. This shift increases the risk associated with altering compensation structures, bonus terms, and employee benefits. Consequently, employers will be required to provide longer lead times and clear business justifications for any changes, along with more structured consultation processes.
Regarding collective redundancies, the trigger for consultation has been revised to apply only to the employing entity rather than individual establishments. This means that if an entity proposes to make 20 or more redundancies within a 90-day period, a collective consultation process will be necessary, regardless of how redundancies are distributed across various locations. Reflecting this change, the maximum protective award for failure to consult will double from 90 days to 180 days’ pay.
Additionally, employers will now need to provide valid reasons when rejecting flexible working requests. Although the maximum compensation for failing to adhere to statutory procedures remains capped at eight weeks’ pay, this requirement aims to promote transparent decision-making.
Focus on Workplace Culture and Enforcement
The ERA 2025 imposes a proactive duty on employers to take all reasonable steps to prevent sexual harassment, including by third parties. This new responsibility is expected to enhance workplace culture and accountability. Furthermore, disclosures related to sexual harassment will receive protection under whistleblowing laws, strengthening the safeguards for employees who speak out against misconduct.
To oversee the enforcement of these rights, the government will establish a new Fair Work Agency. This agency will coordinate the enforcement of key employment rights, such as the National Minimum Wage and holiday pay, and will be empowered to conduct investigations.
The time limits for lodging claims in the Employment Tribunal will also extend from three months to six months, providing employees with additional time to seek redress.
The implementation of these reforms will occur in phases from 2025 through 2027, with many significant changes anticipated to take effect in the third quarter of 2026. The alterations to unfair dismissal regulations are scheduled to begin in January 2027. Employers are urged to prepare for these changes by reviewing and updating their employment contracts, handbooks, and key HR policies, including those related to sickness, family leave, flexible working, harassment, and whistleblowing.
As the details of the ERA 2025 become clearer through further legislation and guidance, proactive planning will be essential for organisations aiming to comply with the new requirements. Early identification and adjustment of internal processes will facilitate a smoother transition and ensure readiness ahead of the relevant implementation dates.
