What Businesses Need to Know About the Employment Rights Act

By Amy Daniels, Employment Solicitor at rradar

The Employment Rights Act 2025 marks one of the most significant developments in UK employment law in decades. The legislation received Royal Assent on 18 December 2025, introducing a wide range of reforms designed to strengthen worker protections and modernise workplace rights.

In total, the Act introduces around 28 major reforms, which will be implemented gradually between 2026 and 2027 and possibly beyond. Therefore, the next few years should be viewed as a window for employers to review policies, train managers and update documentation so that organisations are ready when the new rules take effect.

Changes expected from 2026

A number of reforms will begin to take effect this year, with some changes expected from 6 April 2026 onwards.

These include measures relating to:

• Expanded day-one rights, including paternity leave and unpaid parental leave
• Expanded statutory sick pay eligibility
• Strengthened workplace protections, including new duties around preventing harassment
• The establishment of the Fair Work Agency, designed to strengthen the enforcement of employment rights
• Changes affecting trade union law and workplace access.

For example, the statutory sick pay reforms alone could affect millions of workers. Around 4.7 million women are expected to benefit from expanded sick pay eligibility, including more than 830,000 low-paid women who previously did not qualify.

These changes may also be particularly relevant for employees experiencing menopause symptoms, where flexible absence management and supportive workplace policies play an important role in supporting employees to remain in work.

Day-one rights and family leave reforms

The Act also expands several “day-one rights”, meaning employees will be able to access certain workplace protections from the start of their employment.

These reforms include:

• Day-one rights to paternity leave and unpaid parental leave
• Expanded access to statutory sick pay
• Improvements to flexible working rights.

For employers, this means HR policies and absence management procedures may need to be reviewed to ensure compliance with the new framework.

Trade union rights and workplace access

The legislation also represents a shift in industrial relations policy, strengthening the ability of trade unions to organise and represent workers, with early changes expected from April 2026.

Among the changes are:

• easier access for unions to workplaces
• simplified processes for statutory recognition
• a requirement for employers to inform workers of their right to join a trade union.

For employers, this could lead to increased engagement with union representatives and greater emphasis on consultation and employee voice.

Ensuring managers understand how union engagement works in practice will be an important part of preparing for these reforms.

Changes expected from 2027

Some of the most significant structural reforms are expected to take effect from 2027.

These include:

• Reducing the qualifying period for unfair dismissal claims from two years to six months
• New restrictions on “fire and rehire” practices
• Reforms aimed at improving security for workers in insecure or irregular employment arrangements.

These changes are likely to have a direct impact on how organisations manage recruitment, probation and performance processes.

Earlier access to unfair dismissal protection

One of the most significant reforms concerns unfair dismissal rights.

Under current law, employees generally need two years’ service before they can bring an ordinary unfair dismissal claim. Under the new framework, employees will gain this protection after six months of employment.

This is a substantial change and may increase the number of employees able to challenge dismissal decisions.

The cap on compensation for unfair dismissal is set to change to £123,543 as of 6th April 2026,  potentially increasing the financial exposure for employers in high-value disputes.

Employers should consider:

• Reviewing probation procedures
• Ensuring performance concerns are documented clearly
• Holding regular review meetings during early employment
• Training managers to address issues promptly and fairly.

Restrictions on “fire and rehire”

The Act also introduces tighter restrictions on the controversial practice commonly referred to as “fire and rehire”, where employees are dismissed and re-engaged on new contractual terms.

Under the new framework, dismissals connected to certain contractual changes may be automatically unfair unless the employer can demonstrate significant financial necessity.

This means employers will need to demonstrate that they have:

• Explored alternatives
• Consulted properly with employees
• Acted reasonably and transparently throughout the process.

Organisations planning contractual changes should ensure that consultation processes are robust and well-documented.

New protections for insecure work

Another major focus of the legislation is improving security for workers in insecure or irregular employment arrangements.

The Act includes reforms designed to address concerns around zero-hours contracts, including rights to:

• Guaranteed hours after a qualifying period
• Reasonable notice of shifts
• Compensation for shifts cancelled at short notice.

For employers who rely on flexible workforces, reviewing workforce planning and shift-scheduling systems will be important ahead of implementation.

Equality action plans and menopause support

Another important area covered by the Act is workplace equality.

Companies with more than 250 employees will be required to introduce equality action plans alongside gender pay gap reporting, outlining the steps organisations are taking to address workplace inequality.

From April 2027, it will become mandatory for employers to publish an action plan alongside their gender pay gap data to document what steps they are taking to address any noted issues, with employers being actively encouraged to produce such a plan on a voluntary basis from April 2026.

These action plans will be published on the gender pay gap portal, which is already in place. Employers with under 250 employees are also being encouraged to participate in the process voluntarily.

Some employers already publish action plans, but the announcements will mean that employers should review existing action plans with renewed vigour, or be ready to produce one. Producing an action plan on a voluntary basis from April 2026 will allow employers to trial their mechanisms for change and have data ready by 2027, in which to inform the mandatory plan.

The Act also includes specific reference to menopause, bringing the issue more clearly into the legal framework for workplace equality.

Menopause can significantly impact employee well-being, yet many workplaces are still developing their approaches to supporting employees through this stage of life.

Practical steps employers can take include:

• Introducing menopause guidance or policies
• Training managers to support employees sensitively
• Considering workplace adjustments such as flexible working
• Incorporating menopause support into wider wellbeing and equality initiatives.

Taking action early can help organisations build more inclusive workplaces while also preparing for this to become mandatory in 2027, subject to final secondary legislation.

Preparing now rather than later

Although the reforms are taking place in stages across 2026 and 2027, employers should not assume preparation can wait. With 28 major reforms expected between 2026 and 2027, the direction of travel is clear: stronger protections for workers and greater expectations on employers.

Employers may therefore wish to begin by:

• Reviewing employee handbooks and HR policies
• Auditing employment contracts and documentation
• Planning training for managers and HR teams
• Reviewing equality and wellbeing initiatives.

By reviewing policies, strengthening processes and investing in manager training now, employers can ensure they are not only ready for the legal changes ahead, but also building workplaces that are transparent, supportive and resilient for the future.