Employment Rights Act 2025: What businesses need to know about the upcoming changes

The Employment Rights Act (ERA) 2025 introduces some of the most significant changes to UK employment law in recent years. Although the Act received Royal Assent in late 2025, its reforms will come into effect throughout 2026 and 2027. For employers, understanding what is changing, and when, is crucial. ERA will bring earlier access to rights for workers, stronger protections during employment, and significant changes to common practices such as dismissal, contract variation and the use of casual labour.

Below is a summary of the main updates and how they may impact employers

A major change: unfair dismissal claims after six months

From January 2027, the qualifying period for bringing an unfair dismissal claim will reduce from two years to six months. This means that many more employees gain access to unfair dismissal protection earlier in their employment. At the same time, the compensatory award cap for unfair dismissal claims will be removed, meaning compensation will be uncapped – aligning unfair dismissal with discrimination and whistleblowing claims.

For employers, this combination significantly increases the risks associated with dismissals. Robust probation periods, consistent performance management, and clear record keeping will become even more essential, particularly during the first few months of employment.

Family‑related rights

From 6 April 2026, paternity leave and unpaid parental leave will become day‑one rights, removing the current 26‑week and one‑year qualifying periods. Employees will also be able to take paternity leave even if they have taken shared parental leave.

More extensive reforms follow in 2027, when it will become unlawful to dismiss an employee during pregnancy, while on maternity, adoption or shared parental leave, or within six months of their return, subject to limited exceptions. This widens the protected period and will require employers to take additional care when managing redundancy or performance situations involving new or expectant parents.

A new statutory bereavement leave right will also be introduced in 2027, covering a wider range of family bereavements and pregnancy loss. Employers without a compassionate‑leave policy should put one in place ahead of implementation

Harassment and whistleblowing

From 6 April 2026, a complaint of sexual harassment will be treated as a protected whistleblowing disclosure, giving complainants protection from detriment and unfair dismissal.

In October 2026, an employer’s duty to prevent sexual harassment will increase to taking “all reasonable steps”, a higher standard than at present. Liability for third‑party harassment, (e.g. by customers or clients) will also be reinstated.

Reforms to confidentiality clauses (including NDAs) are expected so that such clauses cannot prevent workers from discussing or reporting allegations of discrimination or harassment; the implementation date is to be confirmed, so watch‑this‑space for development.

Employers should review their anti‑harassment policies, ensuring they, along with reporting and training procedures are fit for purpose.

Contract changes and “fire‑and‑rehire”

From October 2026, it will become automatically unfair to dismiss an employee for refusing changes to key contractual terms (such as pay, hours, pension or holiday)

It will also be automatically unfair to dismiss and re‑engage an employee (or replace them) on new terms in these areas. Only limited exceptions will apply for genuine financial difficulties that threaten a business’s ability to continue trading.

This reform will likely make contractual change exercises more complex and will make early consultation and communication more important.

Zero‑hours and casual workers

From January 2027, workers on zero‑hours or low‑hours contracts will gain the right to be offered guaranteed hours that reflect their regular working pattern over a 12-week reference period. Employers will also need to provide reasonable notice of shifts, and workers will be entitled to compensation for cancellations made at short notice. These rights will extend to agency workers.

Businesses that rely on casual labour, particularly in hospitality, retail and care sectors, will need to assess how these changes will affect their staffing models.

How we can help

The ERA 2025 introduces wide-ranging changes, and for many businesses the new requirements may feel daunting. If you would like support reviewing your policies, preparing for implementation or understanding how the reforms may affect you, our Employment team at Cripps would be happy to help.