The Employment Rights Bill 2025 received Royal Assent on 18 December 2025, thus becoming the Employment Rights Act 2025. While much of the practical detail will be outlined in future regulations and guidance, the granting of Royal Assent provides employers with the much-needed certainty about the direction and scale of reform.
The Act represents the most substantial overhaul of UK employment law in a generation. It introduces wide-ranging changes to worker protections, with key reforms scheduled to be introduced in phases starting from April 2026. These changes include a new unfair dismissal regime, guaranteed hours for casual workers, expanded family rights and increased liabilities for workplace harassment. The Act signals a decisive shift in how employers engage with their workforce.
As we begin the New Year, we summarise the 7 key reforms along with their anticipated implementation dates.
1. Unfair Dismissal
Currently, employees must have two years’ continuous service to lodge an unfair dismissal claim. Compensation is capped at the lower of 52 weeks’ gross pay or the statutory maximum (currently £118,223), which contrasts with claims relating to discrimination and whistleblowing, where compensation is uncapped.
Although Labour initially proposed ‘day one’ unfair dismissal rights, the government accepted a House of Lords amendment to the new Act, which introduced a six-month qualifying period instead.
Importantly, the Act also abolishes both the 52-week limit and the statutory cap on compensatory awards. The basic award and statutory redundancy pay remain unchanged and will continue to be calculated using the existing statutory formula. This reform significantly changes the financial risk associated with unfair dismissal claims.
The government plans to introduce these changes on 1 January 2027, meaning employees with six months’ service on or after that date will be eligible to bring an unfair dismissal claim with uncapped compensation.
2. Enhanced Family Rights
Starting from April 2026, paternity leave and unpaid parental leave will be established as day one rights, removing the current service requirements and enabling employees to give notice of leave from the first day of employment.
The Act also enhances protections for pregnant workers and new parents. It gives the government powers to extend existing redundancy protections to cover non-redundancy dismissals during pregnancy, maternity leave and for a period following return to work. These proposals are currently subject to consultation and are expected to be implemented in 2027.
Furthermore, a new statutory day one right to unpaid bereavement leave will be introduced in 2027, covering a range of family losses, including pregnancy loss before 24 weeks.
Flexible working rights will also be strengthened. Employers will be required to justify refusals and engage in a consultation with employees before rejecting a request. These modifications are expected to come into force in 2027, following consultation in 2026.
3. New Rights for Zero-Hours Workers
While the Act stops short of banning zero-hours contracts, it implements substantial reforms aimed at reducing insecurity and exploitation.
Employers will be required to offer qualifying workers a contract reflecting the hours they regularly work over a reference period (for example, 12 weeks), therefore providing greater predictability. Workers will also gain rights to reasonable notice of shift alterations or cancellations, and employers will be required to pay compensation where shifts are cancelled or reduced at short notice.
These reforms are anticipated to be implemented in 2027.
4. Statutory Sick Pay
The Act removes the existing three-day waiting period for statutory sick pay (SSP) and abolishes the lower earnings limit (currently £125 per week).
SSP will be paid at 80% of average weekly earnings or the flat statutory rate (currently £188.75), whichever is lower. These changes are scheduled to be implemented in April 2026.
5. Employment Tribunal Time Limits
Currently, most employment tribunal claims must be brought within three months minus one day of the relevant act.
The Act extends this period to six months minus one day for most claims, including unfair dismissal and discrimination. Breach of contract claims will continue to be subject to the three-month limit. These changes are expected to take effect in October 2026.
6. Fire and Rehire
The Act imposes significant restrictions on the practice of ‘fire and rehire.’ Dismissals used to impose detrimental contractual changes, such as changes to pay, working hours or annual leave, will be deemed automatically unfair, unless the employer can demonstrate:
- severe financial hardship
- unavoidable necessity, and
- genuine and meaningful consultation
These reforms are expected to come into force in October 2026. Employers need to think about how these changes will affect them now to make sure they stay compliant in the future.
7. Harassment and Whistleblowing
The Act introduces a stronger duty on employers to prevent all types of harassment covered by the Equality Act 2010 (not just sexual harassment), including harassment by third parties such as customers or clients. Employers will be liable for third-party harassment unless they can demonstrate that they took all reasonable steps to prevent it.
In addition, reporting sexual harassment will become a protected disclosure, bringing it within the scope of whistleblowing legislation and providing enhanced protection from detriment or dismissal.
These changes are set to take effect in April 2026.
Next Steps for Employers
Although implementation will be phased, employers should begin planning now. Those who treat the reforms as a long-term change programme, rather than a last-minute compliance exercise, will be best placed to manage risk and minimise disruption.
Key steps include:
- Reviewing and future-proofing contracts, including variation clauses and probationary provisions
- Updating policies on harassment, flexible working, and family leave
- Training managers on new obligations
- Auditing payroll and systems in anticipation of SSP reforms
It will also be vital to monitor developments as further regulations and guidance are issued. Our specialist employment law team at Witan Solicitors will continue to provide updates as the Act is implemented in stages, outlining what your business needs to know, when changes take effect, and what action to take.
For tailored advice, please contact us on 0300 303 2071 or email us.
