The Employment Rights Act 2025 represents one of the most significant overhauls of UK employment law in a generation. Rather than introducing a single headline reform, the Act brings in a series of interconnected changes rolling out across 2026 and into 2027.

For employers, the impact will be felt across multiple areas, including:

• Pay and statutory entitlements
• Absence management and sick pay
• Family leave and day-one employment rights
• Dismissal and contractual change practices
• Trade union relations and industrial action
• Workplace culture, harassment and whistleblowing
• Compliance, enforcement and tribunal risk

Crucially, the Act also signals a shift in how employment law is enforced, with greater scrutiny of employer practices and less reliance on individuals bringing claims on their own.

For HR teams and business leaders, this means preparation cannot be left until implementation dates arrive. Policies, processes and management capability will all need to evolve to keep pace with the new legal landscape.

What the Employment Rights Act 2025 Is Designed to Do

The Employment Rights Act 2025 forms part of the government’s wider ambition to modernise employment protections and improve fairness at work. While the detail is complex, the direction of travel is clear.

The Act is designed to:

• Expand employment rights from day one, reducing or removing qualifying service periods
• Increase employer accountability, particularly in high-risk areas such as dismissal, harassment and pay
• Reduce reliance on individual enforcement, through stronger oversight and intervention
• Address insecure work, including zero-hours arrangements and short-notice cancellations

For employers, this means a shift away from minimum-compliance thinking towards a greater emphasis on consistency, evidence and good practice.

In practical terms, it will no longer be enough to simply have policies in place. Employers will need to be able to show that those policies are:

• Up to date
• Clearly communicated
• Applied consistently
• Understood by managers

Employment Law Changes Employers Must Prepare for in 2026

One of the biggest challenges posed by the Employment Rights Act 2025 is timing. The changes are not introduced on a single date but are phased across multiple points in 2026, with some reforms extending into 2027.

This creates a more complex compliance environment, where employers must manage:

• Multiple policy updates across the year
• Changes to payroll and HR systems
• New manager responsibilities
• Increased employee awareness of rights

From a planning perspective, it helps to focus less on individual dates and more on the key areas of risk introduced by the Act.

The most significant areas employers need to prepare for include:

• Trade union law and industrial action
• Statutory sick pay and absence management
• Family leave and day-one employment rights
• Enforcement and compliance scrutiny
• Dismissal practices and contractual change
• Workplace culture, harassment and whistleblowing

Each of these areas is summarised below, with links to more detailed guidance where appropriate.

Trade Union Law Changes and Industrial Action Reforms

The Employment Rights Act 2025 introduces wide-ranging reforms to trade union law, reshaping how unions organise, access workplaces and take industrial action.

Key changes employers should be aware of include:

• Lower thresholds for industrial action ballots, making lawful strike action easier to achieve
• Longer ballot mandates, increasing the potential duration of industrial action
• Expanded protections for workers taking part in industrial action, including protection from detriment and dismissal
• Simplified trade union recognition processes
• Enhanced rights of access for trade union representatives
• A new duty to inform workers of their right to join a trade union, including written notification on commencement of employment

For employers, these reforms increase the importance of:

• Clear and lawful communication during disputes
• Manager awareness of trade union rights
• Proactive employee relations strategies

Poor handling of trade union issues will carry greater legal and operational risk under the new framework. Source: Repeal of the Trade Union Act

Statutory Sick Pay Reform and Day-One SSP

Statutory Sick Pay (SSP) is undergoing one of its most significant reforms in decades. From April 2026, SSP will become a day-one right for all employees, with fundamental changes to eligibility and payment rules.

Under the new system:

• The three-day waiting period for SSP will be removed
• The lower earnings limit will no longer apply
• All eligible employees will be entitled to SSP from their first day of sickness absence
• Employees earning below the standard flat rate will receive SSP at 80% of their normal weekly earnings

Transitional arrangements will apply for some employees already receiving SSP when the changes take effect, adding further complexity for employers.

Beyond payroll implications, these changes will require employers to review:

• Sickness absence policies
• Reporting and certification processes
• Manager training on absence conversations
• Payroll systems and calculations

Without preparation, SSP reform has the potential to create both compliance risks and employee relations issues.

Source: Statutory Sick Pay (SSP)

Fair Work Agency and Employment Law Enforcement

One of the most important and often overlooked – changes introduced by the Employment Rights Act 2025 is the move towards more proactive enforcement of employment law.

From April 2026, the new Fair Work Agency (FWA) will bring together enforcement powers that were previously spread across multiple bodies. This marks a shift away from a system that relied heavily on individuals bringing claims.

The Fair Work Agency will be able to:

• Raise employment tribunal claims on behalf of workers
• Provide legal support or representation in tribunal cases
• Issue notices of underpayment for statutory entitlements such as pay and sick pay
• Require employers to produce evidence of compliance with employment law

For employers, this significantly raises the stakes. Compliance failures that might previously have gone unnoticed could now be identified through inspections or investigations, even where no individual complaint has been raised.

This makes record-keeping, consistency and evidence critical, particularly in areas such as pay, sick leave, family leave and working time.

Source: The Fair Work Agency

Sexual Harassment, Whistleblowing and Workplace Culture Risk

The Act also strengthens protections around workplace harassment, particularly sexual harassment, and how allegations are raised and handled.

Two changes are especially important for employers.

First, allegations that sexual harassment has occurred or is likely to occur, where this is in the public interest, will qualify as a protected disclosure. This means individuals raising such concerns will be protected under whistleblowing law from dismissal or detriment.

Second, the duty on employers to prevent sexual harassment is being raised. Employers will now be required to take “all reasonable steps”, rather than simply “reasonable steps”, to prevent harassment in the workplace.

In addition:

• Employers will become liable for harassment by third parties, such as customers or clients, where reasonable preventative steps were not taken
• The government will have powers to specify what steps employers must take to demonstrate compliance

In practice, this means employers will need to go beyond policy statements. Expectations will increasingly focus on:

• Training for managers and employees
• Clear reporting and escalation routes
• Effective investigations
• Evidence that risks have been assessed and addressed

Workplace culture and legal compliance are now much more closely linked.

Source: Preventing workplace sexual harassment, Strengthening
protections for whistleblowers

Fire and Rehire Restrictions and Contract Change Risk

The Employment Rights Act 2025 significantly tightens the rules around so-called “fire and rehire” practices.

Under the new framework, dismissing an employee for refusing to agree to changes to certain contractual terms will be automatically unfair, unless very strict conditions are met.

Employers will only be able to rely on this approach where they can demonstrate that:

• The business is facing financial difficulties that threaten its viability
• The proposed contractual changes are necessary to address those difficulties
• The need to make the changes is unavoidable, not merely desirable

This is a much higher threshold than many employers are currently used to.

As a result, employers will need to:

• Reconsider how they approach organisational change
• Explore alternative consultation and agreement strategies
• Carefully document financial rationale and decision-making

Poorly handled contractual changes will carry a much higher risk of tribunal claims once these provisions take effect.

Source: Fire and Rehire

Employment Tribunal Risk and Time Limit Changes

Another important change for employers is the extension of the time limit for bringing most employment tribunal claims.

Under the new rules, employees will generally have six months, rather than three, to bring a claim.

This has several implications:

• Employers face a longer period of exposure following dismissals or disputes
• Managers may need to recall decisions and events many months later
• Poor documentation becomes more risky over time

In addition, the Act increases the maximum protective award in collective consultation cases from 90 days’ pay to 180 days’ pay, significantly increasing the potential cost of non-compliance.

Together, these changes reinforce the importance of:

• Accurate records
• Clear processes
• Consistent decision-making

Source: Collective Redundancy

Right to Work Checks and Employer Compliance Evidence

While Right to Work checks are not new, their importance increases significantly in the context of stronger enforcement and compliance scrutiny.

Employers will need to ensure that:

• Right to Work checks are carried out correctly and on time
• Appropriate records are retained
• Processes are applied consistently, including for remote and hybrid workers

In a system where enforcement bodies can request evidence of compliance, gaps in Right to Work documentation present a clear and avoidable risk.

Unfair Dismissal Reform and Probation Risk

From January 2027, the qualifying period for bringing an unfair dismissal claim will be reduced from two years to six months.

Importantly, this change will apply retrospectively, meaning any employee with six months’ service at that point will gain the right to bring a claim.

For employers, this significantly alters how probation periods and early-stage performance issues should be managed. There will be much less margin for error in:

• Dismissal decisions
• Performance management
• Capability and conduct processes

Early employment decisions will need to be better documented and more defensible.

Explore: New Dismissal Protections for Pregnant Women and New Mothers: Guide for HR

Source: Unfair Dismissal

Policies Employers Will Need to Update Before 2026

Taken together, the changes introduced by the Employment Rights Act 2025 will require a wide-ranging review of HR policies and documentation.

Most employers will need to update:

• Sickness absence and Statutory Sick Pay policies
• Family leave and parental leave policies
• Harassment and whistleblowing policies
• Trade union communications
• Tips and reward policies
• Right to Work procedures

Leaving policy updates until implementation dates approach is likely to increase risk and disruption.

Explore: Budget 2025 and Beyond: Why HR Must Step Up to Build Workforce Resilience

How Employers Can Reduce Non-Compliance Risk

To prepare effectively, employers should focus on three priorities:

• Audit existing policies, pay practices and records
• Train managers, not just HR teams, on the practical impact of the changes
• Build internal confidence in employment law decision-making

Early preparation will reduce the likelihood of disputes, enforcement action and costly tribunal claims as the new framework comes into force.

What This Means for HR Professionals

For HR professionals, the Employment Rights Act 2025 raises expectations significantly.

HR will increasingly be expected to:

• Act as a source of employment law expertise
• Anticipate risk, rather than react to it
• Support managers through complex decisions
• Demonstrate compliance through evidence

Building strong employment law knowledge and confidence will be critical as the legal environment becomes more demanding.

Preparing Early Is the Best Risk Management Strategy

The Employment Rights Act 2025 is now law, and its impact will be felt across every stage of the employment relationship. While the changes are extensive, employers who take a structured and proactive approach will be best placed to adapt.

By reviewing policies early, strengthening management capability and understanding where the greatest risks lie, organisations can protect both their people and their business as the new rules come into force.

How Avado can help

At Avado, we help HR professionals build the employment law knowledge needed to navigate change with confidence. Our CIPD HR courses cover the latest employment law developments, equipping HR teams to manage risk, support managers and stay compliant as the Employment Rights Act 2025 comes into force.

Explore our CIPD courses and prepare for the employment law changes ahead!