An employer’s guide to the Employment Rights Act 2025

If you run a small business, there’s a raft of employment law changes coming in 2026 and 2027 that could affect how you run your team. If you’re hiring, managing or even just considering taking on your first employee, now’s a good time to get familiar with what’s changing.

From new rights around paternity leave and sick pay, to major updates on strikes, redundancy, harassment and NDAs — here’s what we know so far.

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About the Employment Rights Acts 2025

Changes in February 2026

Changes in April 2026

Changes in October 2026

Changes from 2027

More information

About the Employment Rights Act 2025

The Employment Rights Act became law after clearing Parliament at the very end of 2025. The government says the changes mark the "biggest upgrade to rights at work for a generation".

The Act adds to, and updates existing legislation — most notably the Employment Rights Act 1996 — and its changes are being phased in over two years. Most of the big ones start this year (2026), with more expected in 2027.

Changes from February 2026

Industrial action and trade unions

From February, striking workers will have stronger protection. Dismissing someone for taking part in industrial action will become automatically unfair — no more 12-week limit.

Alongside this, the following restrictions will be lifted from the 2016 Trade Union Act:

• Strike notice periods reduced from 14 to 10 days
• Picket supervisors are no longer required
• Strike mandates are valid for 12 months (not six)

What this means for employers:

If your employees are union members, it’ll be harder to dismiss them for striking from February. You’ll also have less time to prepare for strikes, so internal planning and communication will matter more. Keep an eye on collective issues — and consider reviewing how you engage with unions.

Changes from April 2026

Family-related leave

From April, paternity and ordinary parental leave become day-one rights. This means employees won’t need to wait 26 weeks or a year to be eligible anymore.

Additionally, paternity leave can be taken after shared parental leave — rather than lost if not taken first.

What this means for employers:

New employees will be entitled to these types of leave straight away. You may need to update onboarding materials, adjust internal processes and plan for covering early absences, especially in small teams.

Changes to sick pay

From April 2026, statutory sick pay (SSP) is changing in a few important ways. SSP will be paid from the first day of illness, rather than starting on day four, and no matter what someone earns, they’ll still be entitled to it.

In short, more workers will qualify for sick pay, and they’ll get it sooner. At the same time, the weekly SSP rate will increase to £123.25.

What this means for employers:

You may see more sick leave claims, especially from part-time or lower-paid staff who previously weren’t eligible. Budgeting and payroll systems may need updating.

Whistleblowing protection expands

Disclosing sexual harassment will qualify as whistleblowing from April 2026, giving workers more protection when they speak up.

What this means for employers:

Ensure your anti-harassment policies are clear, up to date and properly communicated. Train managers to handle complaints properly — and protect anyone who speaks up.

National Minimum Wage increases

A new financial year will mean new National Minimum Wage rates for the following employees:

• National Living Wage
• 18–20 year olds
• 16–17 year olds and apprentices

This will bring the rates to:

2026 wage per hour	Category	Increase %	Increase £
£12.71	Employees aged 21 and over	4.1%	£0.50
£10.85	Employees aged 18-20	8.5%	£.085
£8.00	Employees aged under 18	5.96%	£0.45
£8.00	Apprentices	5.96%	£0.45

Want more key business dates for 2026? Read and download our 2026 key business dates guide directly into your Google Calendar.

What this means for employers:

Make sure you update payroll in time and review your pay structure for younger workers. If you’re close to the threshold, it’s worth auditing your pay records to stay compliant.

Fair Work Agency launches

From April 2026, a new enforcement body — the Fair Work Agency (FWA) — will be set up to help workers enforce their rights and support employers to follow the rules. It’ll bring together several existing enforcement bodies under one roof, and be guided by an advisory board of employers, unions and independent experts.

It’ll have powers to inspect workplaces, issue penalties for underpayment and take legal action on behalf of workers. Over time, it’ll expand to cover more areas like holiday pay and statutory sick pay.

While it’s launching in April, we don’t yet know when it’ll be fully operational.

What this means for employers:

Once the FWA is up and running, you’ll need to make sure your contracts, shift patterns and pay records are in good shape. Expect more joined-up enforcement — and possibly more inspections.

Collective redundancy penalties double

From April 2026, if you don’t properly consult staff before making them redundant, the maximum penalty will double — from 90 to 180 days’ pay per person.

The “penalty” is a protective award. It’s money an employment tribunal can order an employer to pay directly to affected employees if they fail to properly consult before making collective redundancies.

Tribunals can still decide a lower amount if there’s a good reason, but this change is designed to stop employers from dodging the rules.

What this means for employers:

If you’re in the challenging process of planning redundancies, get legal advice early and follow the process to the letter.

Further trade union reform

From April, it’ll become easier for unions to gain statutory recognition. They won’t need to prove majority support upfront, and the 40% turnout rule will be dropped.

The government is also considering a lower threshold for union membership — possibly as low as 2%. Plus, electronic voting for industrial action is expected to be introduced.

What this means for employers:

If staff are unionised or considering it, you may face more formal union involvement. Consider proactive engagement — and make sure you know your consultation obligations.

Gender pay gap and menopause action plans

From April 2026, large employers (those with 250 or more staff) will be encouraged to publish action plans showing how they’re supporting employees going through the menopause and what steps they’re taking to close the gender pay gap.

These plans will become mandatory in 2027, including for organisations that outsource workers, with new rules making them accountable for any gaps.

The government will offer guidance on what good plans look like, and regulations will follow to set out what needs to be included, how often plans must be published and who needs to sign them off at a senior level.

What this means for employers:

If you’re a growing business approaching the 250-employee mark, get ahead now. These plans will need senior sign-off, so build internal awareness early.

Changes in October 2026

‘Fire and rehire’ to be classed as unfair dismissal

From October 2026, in most cases, ‘fire and rehire’ will be classed as unfair dismissal. That means you can’t dismiss someone just because they won’t accept changes to key parts of their contract, like pay, working hours, holiday entitlement or pension contributions — and then rehire them on worse terms.

It’ll also count as unfair dismissal if you:

• Try to rely on a flexibility clause in their contract to push through changes
• Replace them with someone doing the same job on worse terms
• Bring in agency or contract workers to do the same work

What this means for employers:

You’ll need to negotiate contract changes, not impose them. The only exception is if your business is in serious financial trouble — and you can prove you’ve explored every alternative. Get legal advice before making any big changes.

Stronger rules around harassment

From October 2026, employers will need to show they’ve taken all reasonable steps to prevent sexual harassment. You’ll also be responsible for harassment by third parties — like customers, clients or suppliers. So, if a customer harasses a member of your team and you’ve not taken action or put safeguards in place, your business could be held liable.

Updated guidance and a refreshed Code of Practice will be rolled out closer to the launch to help employers understand what “all reasonable steps” really looks like.

The Act also includes new limits on non-disclosure agreements (NDAs) that try to stop workers from speaking up about harassment or discrimination. These clauses will be banned — but we’re still waiting on a government consultation before the changes come into force. More detail is expected later in 2026.

What this means for employers:

Review your policies, roll out training and create safe ways for staff to raise concerns about other staff, but also customers, clients and suppliers.

Employment tribunals

From October 2026, workers will have six months to bring most tribunal claims — double the current three-month limit. This applies to things like unfair dismissal and discrimination, but not to breach of contract claims. This last point may be corrected later.

Also worth knowing: the Acas early conciliation period was extended from six to twelve weeks in late 2025. That change is due for review this October.

What this means for employers:

You could face claims long after an issue has ended. Keep clear records and ensure leavers get proper documentation.

Tipping policies

In industries where tipping is common practice, new rules will be implemented to regulate what happens when customers leave a tip. From October 2026, employers will need to:

• Create a written tipping policy
• Consult staff before doing so
• Review the policy every three years

What this means for employers:

If you operate in hospitality or any tipping-based business, you’ll need to formalise how tips are handled. Get ahead by reviewing your processes now.

Continued trade union reforms

In October, employers will need to tell staff about their right to join a union. On top of this, union reps will get access to workplaces and stronger legal protection from unfair treatment.

A new role — union equality rep — will be introduced, with the right to paid time off. Employers will also need to offer reasonable facilities for union reps.

Additionally, workers who take part in industrial action will be protected not just from being sacked, but also from being treated unfairly in other ways — known legally as “detriment”. That could include things like being overlooked for shifts, pay rises or promotions because they took part in a strike.

What this means for employers:

More obligations to support union activity — and stricter rules around how you treat employees who take part in strikes. Even subtle forms of punishment may breach the law.

TUPE and public outsourcing

From October 2026, new regulations will aim to stop unfair differences in pay and conditions between former public sector staff and private sector workers doing the same job after outsourcing.

The goal is to ensure that all workers are treated equally, no matter who originally employed them.

What this means for employers:

If you take over a public sector contract, you’ll need to match terms for staff — even if they’re from different employers. Review contracts and workforce planning.

Coming up from 2027

Not every reform has a date, as some changes are still in consultation, including:

Unfair dismissal

Currently, employees will need two years' service to claim unfair dismissal, but the new reforms will cut that down to six months' service.

There’s also talk of the compensation cap being removed, but that’s still up in the air.

When will this take effect? Expected to be January 2027.

What this means for employers:
You’ll need to tighten up performance management and consider your probation timelines and processes.

Stronger protections for pregnant workers

From 2027, it will become unlawful to dismiss someone during pregnancy, maternity leave or for at least six months after returning to work — except in very limited circumstances.

The government is in a consultation period, understanding how best to roll this out. The consultation includes exactly when the protection should begin and end, who else it should cover (such as other new parents) and how to make sure employees are aware of their rights.

The consultation is also looking at how to support businesses through the change and avoid unintended knock-on effects.

When will this take effect? The change is expected to be implemented from 2027, with details expected later in 2026.

What this means for employers:
Avoid dismissals involving new parents unless you’ve got clear, justifiable grounds and a well-documented process. Review return-to-work policies and make sure line managers are briefed.

Bereavement leave becomes a legal right

A new right to statutory bereavement leave will be introduced. It’s not yet clear whether this will be paid or unpaid, but the right to take time off will apply from day one of employment.

Under the new rules, all employees will be able to take time off if a dependent dies. That includes the death of:

• A partner
• A child
• A parent
• Someone they live with (not tenants or lodgers)
• Someone who relies on them for care, like an elderly neighbour

More details on how this will work in practice are expected closer to the rollout.

When will this take effect? Expected to be in 2027, with further details expected later in 2026.

What this means for employers:
Update your policies and be ready to support grieving employees — even new hires. Compassionate leave should already be good practice, but it’s becoming law.

Zero-hours workers can ask for guaranteed hours

In 2027, workers on zero-hours contracts will have the right to ask for guaranteed hours, based on what they’ve regularly worked over a 12-week period. Employers will need to offer these contracts — they won’t be optional. But if someone prefers to stay on a zero-hours arrangement, they can still choose to do so.

Alongside this, employers will need to give reasonable notice for shifts, and zero-hours workers will be entitled to compensation if a shift is cancelled or cut short without proper notice. The aim is to give casual workers more predictability — without taking away flexibility from those who want it.

When will this take effect? Expected to be in 2027. More detail is expected later in 2026.

What this means for employers:
If you rely on casual workers, you’ll need to plan better and formalise shift patterns as you won’t be able to cancel shifts without consequences.

Flexible working becomes the default

Flexible working is set to become the default option from 2027. Employees already have the right to request it from day one, but the new law will go further. Once implemented, employers will be required to say yes unless they can prove there's a clear business reason not to.

If a request is refused, employers will need to explain why and show that the reason is reasonable. Grounds for refusal could include things like added cost, difficulty meeting demand, or not being able to reorganise workloads — these won’t change. But being transparent about decisions will become a legal requirement, not just good practice.

When will this take effect? Expected to be in 2027. More detail is expected later in 2026.

What this means for employers:
You’ll need a clear, fair and documented process for handling flexible working requests. Refusals must be justifiable, not just convenient.

Non-compete clauses revamped

The government is looking to change the rules around non-compete clauses — the part of a contract that stops someone from working for a competitor or starting a similar business after they leave a job.

A public consultation is underway, so we’re waiting to see what the government decides to do next. The changes could make non-competes shorter, less restrictive or even ban them in some cases — but nothing’s confirmed yet.

When will this take effect? Expected to be in 2027. More detail is expected later in 2026.

What this means for employers:
If your contracts contain non-compete clauses, keep an eye out for changes and review them with legal input when the new rules land.

Two-tier employment status could become one

The government is considering simplifying employment status by reducing the current three categories — employee, worker and self-employed — to just two.

A consultation is expected later this year, but if the change goes ahead, it could affect rights like holiday pay, sick pay and unfair dismissal, depending on how the new categories are defined.

The two categories most likely being considered are:

• Employee: A broader category that would include people with full employment rights, such as sick pay, holiday pay, protection from unfair dismissal and redundancy rights.
• Self-employed: Individuals who run their own business and don’t have employment rights (except in some limited areas, like health and safety or discrimination).

In this model, the current “worker” category (which covers people like zero-hours workers or gig economy roles, who have limited rights like holiday pay and minimum wage but not full employment protection) would be merged into the employee category, giving more people access to stronger legal protections.

When will this take effect? Expected to be in 2027. More detail is expected later in 2026.

What this means for employers:
You may need to reclassify contractors, freelancers or gig workers in your business. This could affect payroll, contracts and benefits.

More changes for trade unions

Looking ahead to 2027, trade union members will get extra protection from discrimination and blacklisting. A new industrial relations framework is also expected, designed to support better working relationships between unions and employers. Further details will follow after consultation.

When will this take effect? Expected to be in 2027. More detail is expected later in 2026.

What this means for employers:
This is part of the broader shift towards stronger collective rights. It’s worth building good working relationships with unions and staying informed on your obligations.

Equal pay and ethnicity/disability reporting

A new Equality (Race and Disability) Bill is expected, covering:

• Pay gap reporting for ethnicity and disability
• Equal pay protections
• Possible ban on dual discrimination
• Potential new pay transparency rules

When will this take effect? Unknown, we’re still waiting for the draft bill.

What this means for employers:
If you’re growing or already have a diverse team, make sure your pay data is structured and review how salaries are decided. These changes may not apply to microbusinesses, but transparency is trending.

Need more support?

If you’re unsure about any of the upcoming changes and what they mean for your business, be sure to speak with a professional. Don’t forget that Acas and Gov.uk are also available.