The UK’s new Employment Rights Act 2025 represents one of the most significant overhauls of workplace legislation in a generation. As part of the government’s Make Work Pay plan, the bill aims to strengthen workers’ rights, improve fairness and security, and create more modern, sustainable employment practices.
For HR teams, this act marks a turning point – not just in compliance, but in how organisations attract, support, and retain their people. With implementation happening in phases from 2025 to 2027, employers have time to prepare, but only if they start planning now.
In this blog post, we’ll unpack the key changes, when they’re coming into effect, and how HR and payroll professionals can get ahead.
The new Employment Rights Act 2025: what’s changing and when
The Employment Rights Act will be introduced in stages, giving organisations the opportunity to adapt their policies, processes, and systems.
Here’s a snapshot of the current roadmap (please note this could be subject to change):
December 2025
The Strikes (Minimum Service Levels) Act 2023 has been removed. This means there is no longer a legal requirement for specific staffing levels to be maintained during industrial action.
February 2025
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Increased dismissal protection for industrial action, removing the 12-week cap for unfair dismissal
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Repeal of the majority of the Trade Union Act 2016:
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Notice reduced from 14 to 10 days
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Simple majority vote, industrial action and ballot notices simplified
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Picket supervisors not required
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Mandates for action increased to 12 months
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Political fund rules to change
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Paternity leave and unpaid parental leave: eligible employees who are looking to take this after 6 April can give notice from 18 February
April 2026
- Repeal of the levy that trade unions and employer associations pay to the certification officer
- Collective redundancy protective award doubles
- Strengthen protections for whistleblowing on sexual harassment
- Simplifying trade union recognition process
- Parental leave changes
- Action plans for gender pay gap and menopause
- Statutory sick pay (SSP) changes
- Fair Work Agency to be established
- Bereaved partners' paternity leave: a surviving partner can take up to 52 weeks' leave if the mother or primary adopter dies within the child's first year
- The Acas early conciliation window has also extended, from six weeks to up to 12, lengthening the life of any potential dispute
The Fair Work Agency: what it actually means for employers
The Fair Work Agency was established on 7 April 2026, bringing previously fragmented enforcement functions (minimum wage, SSP, and for the first time, holiday pay) into a single body. Its enforcement powers are being phased in over time, with the date still to be confirmed.
Once live, the agency can:
- Enter premises and launch investigations without needing an employee complaint first
- Issue notices of underpayment, requiring employers to repay wage and statutory pay arrears going back up to six years, within 28 days
- Impose fines of up to 200% of the underpayment, alongside public naming and shaming, and recovery of its own inspection costs from the employer
- Provide legal assistance or start civil proceedings on workers' behalf, increasing tribunal risk for non-compliant businesses
The record-keeping requirement that goes with this is easy to miss: from 6 April 2026, employers must keep annual leave and holiday pay records for six years or risk a fine.
August 2026
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Electronic and workplace balloting introduced for trade union actions
October 2026
- Regulations to establish the Fair Pay Agreement Adult Social Care
Negotiating Body in England - Procurement – two-tier code (public sector)
- Tipping laws tightened – subject to three-year renewal of agreements
- Duty to inform workers of their right to join a trade union
- Strengthened trade unions’ right of access
- Employers will be required to take ‘all reasonable steps’ to prevent sexual harassment of their employees
- Introduction of an obligation for employers not to permit the harassment of their employees by third parties
- Introduction of power to enable regulations to specify steps that are to be regarded as ‘reasonable’, to determine whether an employer has taken all reasonable steps to prevent sexual harassment
- Unfair practices in the trade union recognition process
- New rights and protections for trade union representatives
- Extension of protections against detriments for taking industrial action
Tribunal time limits double
From 1 October 2026, the time limit to bring most tribunal claims doubles from three to six months. It covers unfair dismissal, discrimination, whistleblowing, detriment, working time, redundancy pay and more, and applies where the act or dismissal falls on or after 1 October 2026 (earlier events keep the three-month limit).
Acas early conciliation still pauses the clock, and tribunals retain discretion to extend time further.
For HR, this means disputes stay live longer. A quiet issue can resurface up to six months after the event, plus conciliation. It's worth extending document retention on grievance, disciplinary and investigation records, and capturing decisions while they're fresh, since clear notes carry more weight when a hearing lands years later. Resolving grievances early remains the best way to stop a claim before it starts.
2027 and beyond
- Unfair dismissal protection from six months
- Dismissal and rehire on worse T&Cs automatically unfair
- Mandatory gender pay gap and menopause action plans – voluntary reporting opens Spring 2026, publication becomes mandatory Spring 2027, and the first compulsory action plans are enforced from April 2028
- Additional trade union changes – protection from dismissal
- Umbrella companies included with agency legislation
- Pregnancy/maternal rights increased
- Statutory bereavement leave
- Zero hours – guaranteed working hours
- Compensation for cancelled/moved shifts
- Flexible working request rejections must have a reason
- All types of harassment change to be all reasonable steps
Unfair dismissal: qualifying period drops to six months
From 1 January 2027, the qualifying period for ordinary unfair dismissal drops from two years to six months. It's not a day-one right (the original day-one proposal and statutory probation period were dropped at the House of Lords), but anyone with six months' service on 1 January 2027 is protected immediately, meaning it reaches people hired now.
A fair reason and fair process are still required, and the five fair reasons remain unchanged. Written reasons for dismissal also become a right at six months.
Around 6.3 million employees move into scope, and early dismissals could face far more challenges. Worth reviewing probation periods now, keeping them under six months with a clear extension option, and training line managers to handle probation and conduct with clearly recorded decisions.
The unfair dismissal compensation cap is removed
From 1 January 2027, the cap on the unfair dismissal compensatory award is removed entirely, both the 52-weeks'-gross-pay limit and the statutory maximum (just over £123,543). There's no consultation on this; the Act is clear the cap goes. Compensation will instead reflect actual financial loss, in line with discrimination claims, though the basic award is unchanged and tribunals still weigh mitigation, contributory fault and the chance of a fair dismissal.
The biggest impact falls on higher earners and high-loss cases, where the old cap kept exposure in check. Expect bolder settlement demands and longer remedy hearings, particularly on pension loss. Worth reassessing financial risk and insurance cover now, since documentation remains the best protection against a larger award.
Fire and rehire, defined
Dismissing someone to force through a "restricted variation" to their terms becomes automatically unfair in most cases from January 2027. This covers pay, pension, hours, shifts and holidays, but not place of work or duties.
Redundancy threshold and NDA restrictions
Two further changes are taking shape for 2027:
- A company-wide headcount test (likely somewhere between 250 and 1,000 employees) joins the collective redundancy consultation threshold
- Non-disclosure agreements used to gag harassment or discrimination complaints will be void
Consultations to watch
Several consultations are open now, giving employers a chance to shape the detail before it's finalised:
- TUPE reform – call for evidence, closed 1 July
- Misuse of NDAs – closed 8 July
- Seafarer protections – closed 17 July
- Zero and low hours contracts – closes 25 August
- Unpaid carers and parents of seriously ill children – closes 1 September
- Time off for public duties – closes 4 September
A response is also still awaited on 2025's parental leave consultation, worth keeping an eye on.
Northern Ireland
- Northern Ireland (NI) Good Jobs Employment Rights Bill – the NI assembly has published their review, which aims to align legislation between NI and the UK. There’s potential for additional variations from the UK, including setting their own national minimum wage. The bill is expected to be introduced in 2026, but no details or dates are available just yet
- Catching up with the wider UK – this could include introducing workplace postcode reporting, bereavement leave and neonatal pay and leave
These changes are wide-ranging, touching almost every part of the employee lifecycle – from recruitment and onboarding to pay, performance, and wellbeing.
The new Employment Rights Act 2025’s SSP changes and their impact
One of the most significant reforms introduced by the new Employment Rights Act 2025 will be changes to Statutory Sick Pay (SSP), set to take effect from April 2026. These updates aim to make sick pay more accessible and equitable – but they’ll also bring new financial and administrative implications for employers.
What’s changing
From April 2026, two key SSP reforms will come into force:
- Removal of waiting days – employees will be paid SSP from day one of sickness absence
- Removal of the Lower Earnings Limit (LEL) – around 1.3 million low-income workers who previously didn’t qualify for SSP will now be eligible
These changes are designed to ensure more people have access to income when unwell, while working to fix a system that has often been criticised for excluding many part-time and lower-paid workers.
Why SSP is changing
The government’s goal is to improve fairness and productivity. Currently, around 25% of employees receive only SSP. With 148.9 million working days lost to sickness or injury in 2024, policymakers argue that supporting people to recover financially and return to work sooner benefits both individuals and the wider economy.
While the total cost of these reforms is estimated at £450 million per year, equivalent to roughly £15 per employee, it’s expected that employers will gain from reduced presenteeism and improved workforce wellbeing.
What it means for employees
- SSP will be paid from day one of absence, rather than day four
- Employees earning below the current LEL (previously £123 per week) will now receive sick pay
- For those below the LEL, SSP will be paid at 80% of average weekly earnings (AWE) or the statutory rate (currently £118.75 per week), whichever is lower
This will provide financial support for many workers who previously received nothing for short-term sickness.
What it means for employers
For employers, these reforms mean:
- Increased costs, including SSP payments, National Insurance and pension contributions
- A need to review sick pay and absence policies, including triggers, reporting processes and return-to-work interviews
- Budget planning for additional payroll costs
- Reviewing occupational sick pay (OSP) schemes
- Manager training to ensure consistent application and awareness of the new entitlements
How to prepare
To stay ahead, HR and payroll teams should:
- Tighten absence management and reporting processes
- Review sick pay policies and ensure alignment with the new SSP structure
- Consider how these changes affect contract terms, budgets, and the configuration of your absence management software
- Ensure your HR and payroll software can process SSP from day one and handle eligibility tracking for low earners
These changes may appear minor, but their ripple effects across budgets, policy, and culture are significant. Start planning now, so your organisation can absorb the additional costs smoothly – and support employee wellbeing in a way that boosts trust and productivity.
How to get ahead for the new Employment Rights Act 2025
Preparing for the new Employment Rights Act 2025 isn’t just about staying compliant – it’s about building resilience and agility into your HR strategy. Act now to reduce risk, protect your people, and ensure a smooth transition as new reforms roll out.
- Understand the timeline
Map out the key implementation dates from 2025 through to 2027 and assign clear ownership for tracking legislation updates and consultations. Having a central point of contact ensures changes are monitored and acted upon promptly.
- Audit your current policies and procedures
Review your existing frameworks to identify any gaps or inconsistencies with the upcoming reforms. Focus on high-impact areas such as:
- Sick pay eligibility
- Parental leave
- Dismissal procedures
- Flexible working
- Sexual harassment prevention
- Whistleblowing protocols
Consider whether any employee terms and conditions need to be updated to reflect these changes.
- Stay agile
Build flexibility into your HR strategy to respond quickly as new guidance or secondary legislation emerges. Regularly review your policies and communications to ensure they evolve alongside regulatory updates.
- Plan for strategic impact
Think beyond compliance – assess how these reforms may influence broader areas such as:
- Recruitment and onboarding
- Performance management
- Organisational goals and budgets
- Prepare to train line managers
Managers play a critical role in applying new workplace rights fairly and consistently. Plan targeted training around:
- Day-one employment rights
- Probation and dismissal changes
- Sexual harassment prevention duties
- Union access and consultation requirements
- Update payroll and HR systems
Your HR and payroll software must be ready to handle new requirements. Ensure your systems can:
- Process statutory sick pay (SSP) from day one
- Track hours for zero-hours and agency workers
- Flag eligibility for new leave entitlements
- Engage with legal and operations teams
Collaboration is key. Work with legal, payroll, and operational teams to complete risk assessments, review redundancy procedures, and strengthen consultation processes to stay ahead of potential challenges.
Expert tips: how to stay ahead of the curve
According to Gwenan West, our head of people operations, the HR teams who’ll handle these reforms best are those who don’t wait until the last minute:
“The new Employment Rights Act 2025 brings big changes – but none of them should come as a surprise. HR and payroll teams who start auditing now will be in a far stronger position when the deadlines hit. A lot of this comes down to preparation: having systems ready, contracts updated, and managers trained before the new rules come into force.”
Gwenan also notes that data visibility will play a crucial role:
“Understanding how your policies are applied – for example, who’s using flexible working or accessing sick pay – will be vital for compliance and fairness. Having reliable, reportable HR data makes those insights possible.”
How we can help you prepare for the new Employment Rights Act 2025
Our HR software and payroll solutions are designed to help organisations stay compliant, agile, and people-focused as new legislation takes effect. We can help you:
- Roll out contract and policy updates quickly and track policy acceptance
- Track and report on entitlements such as leave, sick pay, and parental provisions
- Automate compliance tasks using configurable templates and audit trails
- Integrate HR and payroll data for a single source of truth on workforce changes
- Stay secure and compliant with GDPR and industry standards
- Get ahead with eLearning courses that’ll help you prepare for the new Employment Rights Act 2025, like our sexual harassment course and our bullying and harassment course – both of which we offer free trials for
With configurable features and proactive support, Ciphr helps ensure you’re ready for every phase of the new Employment Rights Act 2025 rollout.
You can also watch our July 2026 update on the Employment Rights Act 2025 on-demand:
The new Employment Rights Act 2025 is a defining moment for HR and payroll professionals. By acting early – reviewing policies, updating systems, and building awareness – you’ll not only stay compliant but also strengthen your organisation’s employee experience and reputation.
The countdown to implementation has already begun. Start preparing today.
Want help preparing for 2026 and beyond? Download our brochure or request a free, no-strings attached demo to explore how Ciphr can help your organisation stay compliant and future-ready.
About the author
Claire Warner FCIPP is Ciphr’s regulatory analyst, and one of our team of payroll experts. She says: “Having ‘fallen’ into payroll like so many others, I’ve worked in the profession for over 40 years in multiple roles. This includes running payrolls in various industry sectors and working with software houses to develop software and implement systems for clients. I’ve also designed and delivered professional training and qualifications, and sessions, conferences and webinars on various payroll-related subjects. I now use this knowledge and love of payroll and the legislation that impacts it to help guide, inform and support others within the profession.”