The Employment Rights Bill has completed its passage through Parliament and has now received Royal Assent, becoming the Employment Rights Act 2025.
While the Act is now on the statute book, many of the headline reforms will be phased in and supported by further regulations, consultations and guidance, meaning employers should treat this as the start of a transition period rather than a single “switch-on” date.
When will changes take effect?
Government’s published implementation roadmap indicates that some measures take effect at Royal Assent or soon afterwards, with further significant commencement points from April 2026, October 2026 and into 2027.
In practical terms, this gives employers time to prepare, but not time to ignore it. Several changes are expected to land from April 2026 onwards, and many employers will need to update contracts, policies, and management practices well in advance.
What does the Employment Rights Act 2025 cover?
The Act is wide-ranging. Below are some of the key themes and what they mean in practice.
1) Predictable work and tackling one-sided flexibility
The Act introduces reforms aimed at reducing insecurity for workers, including new rights linked to guaranteed hours, reasonable notice of shifts, and payments for short-notice cancellations, with corresponding provisions expected to apply to agency workers. This is not expected until 2027.
Employer impact: businesses that rely on variable staffing (hospitality, retail, care, logistics, seasonal operations) should expect more emphasis on tracking hours, shift planning, and documenting working patterns.
2) Unfair dismissal: earlier access and higher potential exposure
One of the most significant late changes is that the “day one” unfair dismissal proposal has been dropped in favour of a six-month qualifying period (down from two years), with the government signalling this is intended to apply to employees who have six months qualifying service on 1 January 2027, with regulations to be issued early 2026
At the same time, the Act includes measures to remove the cap on unfair dismissal compensation, which could materially change litigation and settlement strategy, and increase the cost of dismissals, particularly for higher earners and senior exits.
Employer impact: probation management, performance documentation, and decision-making around early employment exits will become even more important, and the financial risk profile of unfair dismissal claims may increase.
3) “Fire and rehire” and contractual change
The Act contains reforms intended to curb “fire and rehire” / “fire and replace” practices, including changes around when dismissals linked to contract changes may be treated as unfair. The changes will take effect from October 2026.
Employer impact: employers contemplating contractual changes (hours, pay, location, duties) should plan earlier, consult properly, and take advice before moving into higher-risk territory.
4) Statutory Sick Pay and family-friendly rights
Key reforms include strengthening Statutory Sick Pay (including removing the Lower Earnings Limit and the waiting period) and making paternity leave and unpaid parental leave available from day one (with the roadmap indicating April 2026 for these day-one family rights).
The Act also introduces bereavement leave reforms (including pregnancy loss, as highlighted in commentary on the final Act).
Employer impact: review absence policies, payroll practices, family leave policies, manager guidance and employee handbooks, especially where your current approach goes beyond statutory minimums and may need aligning.
5) Harassment, whistleblowing and workplace culture
The Act strengthens employer obligations around preventing sexual harassment (moving to “all reasonable steps”) and introduces obligations connected to third-party harassment. It also strengthens whistleblowing protections, including making clear that sexual harassment may be the basis of a protected disclosure. The changes will come into force in October 2026.
Employer impact: training, reporting routes, investigation processes and event risk management (including client-facing or third-party environments) should be reviewed.
6) Restrictions on NDAs in harassment and discrimination cases
The government has pushed to curb the use of NDAs that silence allegations of workplace harassment and abuse, and the final Act includes new restrictions on NDAs connected to harassment and discrimination (with further detail expected via regulations).
Employer impact: template settlement agreements, confidentiality clauses, and HR processes should be reviewed now to avoid using wording that may later be unenforceable.
7) Trade unions, industrial action and enforcement
The roadmap indicates reforms including repeals and updates to parts of the trade union/industrial action framework, plus changes such as electronic/workplace balloting and union access.
The Act also establishes a Fair Work Agency, intended to strengthen labour market enforcement, alongside changes to employment tribunal time limits.
Employer impact: businesses may see increased scrutiny and a higher expectation of compliance readiness, particularly where they use agency labour, complex supply chains, or lower-paid workforces.
What should employers do now?
Even with phased commencement, employers can take practical steps now to reduce risk:
- Audit your workforce: identify where you rely on zero/low-hours, casual staff, agency workers, seasonal patterns, and outsourced service provision.
- Review contracts and policies: sickness absence, family leave, flexible working, disciplinary and dismissal, redundancy, harassment, whistleblowing, and settlement agreements/NDAs.
- Strengthen probation and early performance management ahead of unfair dismissal changes and potential uncapped exposure.
- Check scheduling and payroll systems can support notice/cancellation requirements and enhanced SSP rules.
- Train managers: the success (or failure) of compliance often sits with day-to-day line management decisions.
- Track consultation and commencement updates: many details will be set in secondary legislation and codes of practice.
How DTM Legal can help
The Employment Rights Act 2025 marks a significant shift in the employment law landscape, and preparation will be key. If you would like support reviewing contracts, updating policies, training managers, or planning for phased implementation, please speak with the DTM Legal Employment Law team or email employment@dtmlegal.com.
This article is for general information only and does not constitute legal advice.
