The Employment Rights Act 2025 received Royal Assent on 18 December 2025. It’s a major package of reforms, but it’s being rolled out in stages, and plenty of the detail still depends on consultations, regulations and guidance. Here’s a look at what’s coming up, how it might affect small businesses, and what you should be doing.
What’s already happened
Some trade union/industrial action changes start immediately or soon after the Act became law, including repeal of the Strikes (Minimum Service Levels) Act 2023 and repeal of major parts of the Trade Union Act 2016.
February 2026: industrial action reforms (for relevant sectors)
A first set of industrial action reforms will take effect on 18 February 2026, including simplified balloting/notice processes and strengthened protections around industrial action (including dismissal protection).
April 2026: the first big “everyone needs to act” tranche
SSP becomes day-one (and the Lower Earnings Limit goes)
SSP will be payable from day one, rather than after the fourth day of absence, and the Lower Earnings Limit will be removed, so more staff qualify.
What you should be doing now: If your contracts or policies refer to waiting days, or earnings requirements, they will need updating. Also make sure whoever does your payroll is clear on how SSP needs to be calculated and administered.
You should also be thinking about how to reduce the financial impact of these changes for your business. Check your absence rates currently to see how much the additional sick pay will cost you, if you haven’t already, and look at measures to reduce absence rates. Think about tightening reporting rules (is it too easy for someone to text or email rather than speak to someone, for example), consider return-to-work meetings, and monitoring absence more closely so that managers can act sooner if there is an issue.
Paternity leave + unpaid parental leave become day-one rights, plus bereaved partners leave
Paternity leave and unpaid parental leave will become day-one rights (service requirements removed). The “paternity leave after shared parental leave” restriction is also removed. There will be no change in the service requirement for paternity pay, only for time off.
In addition (separate to the Employment Rights Act 2025) new Bereaved Partners’ Paternity Leave comes into effect. It is a rare but important statutory entitlement that allows a father or partner to take protected leave if the child’s mother or primary caregiver dies in childbirth or within the first year after birth or adoption. The rules expand in April to allow up to 52 weeks of leave from day one of employment for eligible bereaved partners. While statutory paternity pay still applies only to the usual 1–2 weeks for those meeting eligibility, employment protections continue throughout the leave, including job security, continuity of terms, and protection from detriment.
What you should be doing now: refresh your family leave policies, and make sure managers know that new starters may qualify for leave much earlier than they’re used to.
Collective redundancy: protective award doubles to 180 days’ pay
The maximum protective award for failing to comply with collective consultation requirements is expected to increase from 90 to 180 days’ pay per affected employee. For most small businesses, collective consultation requirements for redundancy haven’t usually been relevant. However, the threshold for this requirement is changing in 2027, so this cost for any mistakes in process will also soon be relevant.
What you should be doing now: it’s unlikely you have any policies or contracts referring to this, so it’s just a “be aware” item at the moment.
Whistleblowing: sexual harassment disclosures become protected disclosures
Disclosures relating to sexual harassment will be treated as protected disclosures for whistleblowing purposes.
What you should be doing now: any policies you have on whistleblowing and/or harassment may need a refresh to reflect this change, which increases the legal risk of not responding appropriately to these kinds of concerns being raised. Any sexual harassment concern should be triaged as both a conduct issue and a potential protected disclosure.
Trade union recognition reforms and e-balloting
There will be simplification of trade union recognition and electronic/workplace balloting.
What you should be doing now: If you think unionisation is a realistic risk, consider whether your current employee engagement is strong, and watch for the relevant Code of Practice/guidance, which is currently in consultation.
Fair Work Agency begins (new enforcement landscape)
The new Fair Work Agency will be established, consolidating/enhancing enforcement in areas such as minimum wage and SSP (and over time, wider rights including holiday pay).
What you should be doing now: treat “compliance housekeeping” (records, policies, payroll settings) as more important than ever, because enforcement is expected to become more joined-up and proactive. Running an audit on how you currently keep this information might be sensible, so you can plug any potential gaps.
October 2026
Harassment: “all reasonable steps” + third-party harassment liability
The duty to prevent sexual harassment will strengthen to “all reasonable steps”, and employers will also face liability for third-party harassment (e.g. customers/clients) unless they can show they took all reasonable steps to prevent it.
What you should be doing now: updating harassment risk assessments, training, policies, reporting routes, and customer-facing controls will all be sensible things to look at over the coming few months, and keeping evidence of what you’ve done.
Tribunal limitation periods extend to six months
The time limit for most tribunal claims will increase from three months to six months, increasing the period of exposure after an event/dismissal.
What you should be doing now: Claims may arrive later, so you should be making sure you keep documentation long enough, but prevention is better than cure – the increased time limit is expected to lead to more claims. Look at how well you manage people, and which element of management have exposed you to risk previously (performance, conduct, absence, discrimination). Think about additional training in these areas particularly.
Trade union information/access rights
Employers will face new duties around informing workers of their right to join a union, and enhanced union access/information rights.
What you should be doing now: plan how you’ll provide the required information (including in onboarding) and who internally will manage any formal union access requests.
Changes to tipping law
Employers will be required to consult with workers (or recognised trade union/worker representatives) before establishing or revising a tipping policy, review it at least once every three years, and consult again with workers at each review. There is a consultation underway on the detail for this.
What you should be doing now: If you are in an industry where tipping is part of the business model, start reviewing and documenting tipping policies, and set up a process to consult staff.
1 January 2027
Unfair dismissal qualifying period reduces to six months
Ordinary unfair dismissal rights will apply after six months’ service (down from two years).
What you should be doing now: tighten recruitment, onboarding, probation reviews and early performance management, and ensure managers are trained in handling these things well, because decisions made (or delayed) in the first six months will carry much more legal risk. You may also want to consider timing of probationary periods to ensure decisions are made well before the six month period.
“Fire and rehire” restrictions (automatic unfair dismissal for core changes)
Dismissals linked to forcing through certain core contractual changes (“restricted variations” such as pay, hours, time off, pensions) will become automatically unfair, with a narrow financial difficulty/viability exception.
What you should be doing now: If you have contract terms you know you want to change and have been putting it off or not prioritising it, it would be sensible to implement those in the coming months. You’ll still need to consult and get consent as a default position, but at least if you can’t achieve consent, have a good business case and consult properly, fire and rehire is still an option. If your contracts don’t currently have a variation clause, you may want to insert one of these.
Unfair dismissal compensation cap removed
The Act provides for removal of the compensatory award cap for unfair dismissal, currently set at a year’s pay or £118,223. This will make unfair dismissal claims for high earners potentially much more expensive, although may reduce the risk of claimants trying to shoehorn a discrimination element into their claim.
What you should be doing now: Again prevention is better than cure, so reducing the chances of any unfair dismissal claims is your best defence against the impact of this change.
2027
A number of other reforms are expected later in 2027, with detail dependent on consultation and secondary legislation.
Key areas include: –
- Zero/low-hours and agency work: a right to be offered guaranteed hours reflecting actual patterns, plus shift notice and compensation for short-notice cancellations/changes. –
- Collective redundancy thresholds: an additional trigger based on redundancies across the employing entity/business, with the threshold to be set in regulations (not lower than 20). –
- Flexible working: refusals must be reasonable and explained (while the statutory grounds remain). –
- Pregnancy/returner dismissal protections: enhanced protection expected (details to come via regulations). –
- Bereavement leave: a new statutory unpaid bereavement leave right (including pregnancy loss before 24 weeks) is expected in 2027.
What you should be doing now: No need to rush to make specific changes, but a sensible step this year would be to do some research into your current practices to establish the potential impact. For example, if you use a lot of zero or low-hours workers, what impact might a requirement to offer guaranteed hours have? If it would be significant, then moving to more fixed hour worker or contracts with a number of guaranteed hours plus a bit of flexibility (rather than literally zero) might reduce how much this will affect your business.
If you need any further advice on what you need to do with regards to the upcoming changes, do get in touch.