Employment Rights Act 2025 — Key Changes Every Employer Must Know

The Employment Rights Act 2025 is the UK government’s flagship employment reform. It’s the most significant expansion of workers’ rights since 1999, and it’s rolling out across four distinct phases between April 2026 and January 2027. By January 2027, the fundamental employment relationship will have shifted dramatically — and most UK employers haven’t started preparing.

The changes affect every employer, from sole traders to large corporations. There’s no small-business exemption. Understanding what’s coming, when it lands, and what you need to do now is essential. Waiting until April to react will be too late.

Phase 1 — April 2026: Day-One Rights

Unfair Dismissal Protection from Day One

The headline change: unfair dismissal protection shifts from requiring two years of continuous employment to a new model. From April 2026, employees have immediate unfair dismissal rights, but this is constrained by a statutory probation period. The details of that probation period are still being finalised in secondary legislation (expected April 2027), but the broad framework is clear: employers can use a lighter-touch dismissal process during probation, but it still needs to be “fair and transparent.”

What this means: you can still dismiss employees during probation, but you need a fair reason and a fair process from day one. You can’t rely on the old “two-year buffer” to manage underperformers informally.

Statutory Sick Pay (SSP) from Day One

The waiting days are removed. The lower earnings limit (£123/week in 2025/26) is removed. Every employee — regardless of earnings or how new they are — gets SSP from their first day of sickness, with no waiting period.

What this means: if someone is sick on their first day, you pay SSP. If someone works one day per week at £50/week, they still get SSP. This changes the cost calculation for every small team, particularly in hospitality, retail, and care sectors.

Paternity Leave from Day One

Paternity leave is no longer restricted to employees with 26 weeks of service. It’s available immediately and can be taken flexibly within the first year rather than in fixed blocks.

Doubled Protective Awards

If you make 20 or more redundancies in a 90-day period and fail to consult properly, the protective award (compensation to affected employees) doubles. This isn’t a day-one right, but it’s part of Phase 1 and significantly increases the financial penalty for procedural failures in collective redundancy.

Phase 2 — October 2026: Harassment Prevention and Extended Timelines

“All Reasonable Steps” Harassment Prevention Duty

Employers must now take “all reasonable steps” to prevent harassment of employees by third parties (customers, suppliers, members of the public). This is a proactive duty — not just “respond if someone complains,” but “prevent it from happening in the first place.”

What this means: you need a documented harassment policy, staff training, a risk assessment for harassment relevant to your workplace, reporting mechanisms, and monitoring. For customer-facing roles, this is particularly important. The duty is hard to defend if you don’t have documented prevention measures.

Extended Tribunal Time Limits

The time limit for bringing most employment tribunal claims extends from three months to six months. This gives employees twice as long to bring claims — and it significantly extends your exposure window.

What this means: if you dismiss someone unfairly, they have six months (not three) to bring a claim. You need to retain documentation (performance notes, disciplinary records, meeting minutes) for much longer.

Tipping Law Reforms

New regulations around tipping (gratuities) are introduced. Employers can’t withhold tips or treat tips as part of minimum wage. This primarily affects hospitality and leisure.

Phase 3 — January 2027: Unfair Dismissal Qualifying Period and Zero-Hours Reforms

Unfair Dismissal Qualifying Period Drops to Six Months

The statutory probation period (details pending) is introduced, and the full unfair dismissal qualifying period drops from two years to six months. After six months of employment (subject to probation provisions), an employee has full unfair dismissal rights.

What this means: you need fair processes in place much sooner. An employee who’s been with you for six months (plus any probation period) has the same unfair dismissal rights as a two-year employee under the old system.

Zero-Hours Contract Guaranteed-Hours Provisions

Workers on zero-hours or variable-hours contracts gain the right to a contract reflecting their regular hours after a qualifying period. If someone works an average of 15 hours per week over the last 12 weeks, they can request a contract reflecting that 15-hour minimum.

What this means: if you use zero-hours contracts extensively, you’ll likely see requests for guaranteed-hours contracts. Model the financial impact now. For hospitality, retail, and care businesses, this is significant.

Phase 4 — Timeline Uncertainty

Additional provisions related to trade union recognition and further harassment prevention duties are scheduled, but dates are not yet finalised. The statutory probation period secondary legislation is expected in April 2027 — this will define exactly how the lighter-touch dismissal process works during probation.

The Cascade Effect

These phases don’t arrive in isolation. April 2026 hits, you’re still implementing Phase 1, and October brings Phase 2 before you’ve bedded in the first changes. Then January 2027 lands with Phase 3. For six months, there’s constant regulatory change — and the financial exposure increases with each phase.

What to Do Now

1. Audit Your Employment Contracts

Every employment contract written before April 2026 needs reviewing. Check:

• Do probation clauses accurately reflect the incoming statutory framework?
• Does your SSP clause reference waiting days or the lower earnings limit? (Both are removed.)
• Do any references to the two-year unfair dismissal qualifying period need updating by January 2027?
• Are paternity leave terms current?

Flag contracts that need changes and prioritise by employee start date. You don’t need to rewrite every contract immediately, but employees hired or promoted from April 2026 onwards should have contracts reflecting the new framework.

2. Update Your Harassment Policy

Move from reactive (“if harassment happens, report it”) to proactive (“here’s how we prevent it”). Document:

• Clear definition of workplace harassment relevant to your sector
• Prevention measures (training, reporting channels, investigation procedures)
• Risk assessment for harassment types relevant to your workplace
• Monitoring mechanisms
• What “all reasonable steps” means in your context

This is where most SMEs fall short. You need to be able to demonstrate what steps you’ve taken to prevent harassment — documented training, policy communication, risk assessment — not just that you respond to complaints.

3. Train Your Managers

Day-one rights and the probation framework mean fair process is essential from hire. Run manager training on:

• Fair reasons for dismissal (capability, conduct, redundancy, statutory restriction, other substantial reason)
• Fair dismissal procedures (fair warning, investigation, opportunity to respond)
• The importance of documented performance management
• Harassment prevention — recognising and responding to harassment
• The extended tribunal timeline — document everything

4. Review Payroll for SSP Changes

SSP from day one with no lower earnings limit changes how you calculate SSP for every employee. Check:

• Your payroll system — can it calculate SSP from day one for all employees?
• Your payroll provider — will they handle the change automatically? Confirm rather than assume.
• Your sickness absence process — does it need updating?

5. Audit Zero-Hours Arrangements

If you use zero-hours or variable-hours contracts, identify which workers might qualify for guaranteed-hours contracts under the new provisions. Model the financial impact. Plan how you’ll respond to requests and what the guaranteed-hours structure will look like.

6. Prepare for Fair Work Agency Scrutiny

The Fair Work Agency launches in April 2026 with proactive investigation powers for employment rights, NMW, and SSP. Be ready:

• Document your policies and procedures
• Keep records of payroll, absences, and disciplinary actions
• Respond promptly to any FWA inquiries
• Monitor FWA guidance for enforcement priorities

7. Extend Document Retention

The six-month tribunal time limit (from October 2026) means claims can arrive much later. Retain documentation (disciplinary records, performance notes, meeting minutes, absence records) for at least 18 months after any employment event.

8. Create an Implementation Timeline

Document which of the four phases affects your business most and map the key dates against your business calendar:

• April 2026: Day-one rights, SSP, paternity leave, protective awards
• October 2026: Harassment duty, tribunal extension, tipping law
• January 2027: Six-month qualifying period, zero-hours reforms
• April 2027: Secondary legislation on probation period (expected)

Assign responsibility for implementation. This is not a one-off compliance event — it’s a rolling programme of changes over nine months.

What’s Next

Monitor updates from ACAS (Advisory, Conciliation and Arbitration Service) and GOV.UK for clarification on the statutory probation framework and any changes to the timeline. The Fair Work Agency will start publishing enforcement guidance as April 2026 approaches — watch for that.

If your business has complex employment practices (high turnover, zero-hours contracts, customer-facing roles with harassment risk), Bartram HR screens your contracts, policies, and practices against all four phases and delivers a prioritised action plan with timelines aligned to each phase.

The businesses that start now will navigate these changes smoothly. Those that wait will scramble.