Employment Rights Act 2025 Overview

• Qualifying period for unfair dismissal claims will move from the current two years to six months.
• The 52 week gross pay cap and the compensatory award cap (currently £118,223) are due to be abolished entirely.
• No impact to the basic award and statutory redundancy pay, which will continue to be calculated on a formula based on age, length of service and gross weekly pay

• Reviewing recruitment and onboarding processes for robustness, clarity and consistency
• Ensuring probation reviews are regular, documented, and well-managed before month 6
• Training managers on dismissal risks, legal compliance and early intervention to avoid crossing 6 month threshold without action
• Keeping thorough records and evidence to support dismissal decisions
• Budgeting for higher compensatory exposure

1 January 2027, for dismissals on or after that date, which means a number of staff engaged prior to this date will have reached, or be very close to the 6 month service point.

• The existing trigger will remain unchanged.
• A new second threshold for triggering collective consultation, will be introduced.  It is anticipated that this will be a % of the total workforce.
• Protective award for failures to comply doubled from 90 to 180 days’ gross pay

• Tracking of redundancies across the entire business, not just by site
• Improve forecasting to avoid unintentional breaches of the new thresholds
• Assess the impact for group structures or multiple employing entities

• Changes to protective awards from April 2026
• Changes to collective consultation threshold in 2027

• The restricted variations will be contractual terms relating to pay, pension, time off, the number of hours and/or the shift pattern, and, other changes to be defined in regulations, which may include benefits
• The ban extends to dismissals aimed at imposing new flexibility clauses covering these protected terms
• There will be an exception if the change was necessary for reasons of financial distress
• Protective award for failures to comply doubled from 90 to 180 days’ gross pay

• Review existing contracts and make necessary changes ahead of October 2026
• Review existing contracts to assess if certain provisions could be more broadly drafted, or flexibility clauses inserted, to enable amendments in the future that would not need employee consent

• Changes to protective awards from April 2026
• Changes to dismissal and re-engagement from October 2026

• A right to guaranteed hours based on a 12 week reference period
• A right to reasonable notice for shifts and cancellations or changes
• Protections apply to agency workers

• Review use of zero/low hours workers and agency staff, and assess reliance and terms
• Where workers regularly exceed their contracted hours, consider updating contracts ahead of the changes
• Review and update contracts with agencies to ensure clarity around:
  • Transfer fees
  • Obligations regarding shift changes
• Consider alternative models such as fixed-term or limited-term contracts

2027

Union Access:

• Trade unions will have a statutory right of access to workplaces for recruitment, organising, and collective bargaining (including digital access)
• Employers will be required to inform workers of their right to join a trade union in their contracts of employment
• Introduction of equality representatives

Union Recognition:

• The process for statutory union recognition will be simplified, requiring a:
  • Lower threshold of union membership within the bargaining unit; and
  • Simple majority of those voting in a recognition ballot.

Industrial Action:

• Strike mandates extended from 6 to 12 months
• Increased protection for employees participating in lawful industrial action
• Reduced requirements for lawful industrial action to a simple majority of members who respond to a ballot voting in favour

• Assess trade union activity among your workforce
• Explore establishing or enhancing workplace forums
• Prepare a trained HR/management group to handle union contact professionally
• Review the practicality of digital access arrangements for unions

These changes will be staggered:

• Simplification of industrial action notices and increased protection against dismissal for taking industrial action will be effective on Royal Assent
• Simplification of trade union recognition and electronic balloting from April 2026
• Duty to tell employees of their right to join a trade union and extended protections for detriments arising from industrial action from October 2026
• The broader industrial relations framework from 2027

• Mandatory publication of equality and menopause action plans for employers with 250+ employees
• Obligation to take “all reasonable steps” to prevent sexual harassment
• Employer liability for harassment by third parties
• The restriction of confidentiality provisions which prevent employees disclosing information relating to harassment or discrimination

• Narrative reports to explain existing gender pay gaps
• Assess third party harassment risks and existing protections
• Consider contractual clauses or indemnities with suppliers and clients
• Review policies on confidentiality clauses in settlement agreements

• Harassment:
  • October 2026.
  • Regulations to specify steps that are regarded as “reasonable” to follow, in 2027.
• Equality Reporting
  • 2027

• Stronger protections against dismissal (other than redundancy dismissals) for employees during the first 6 months following their return from maternity leave
• Introduction of a day one right to:
  • Extended right to parental bereavement leave , including for pregnancy loss before 24 weeks (paid at statutory rate)
  • Unpaid parental leave
  • Paternity leave (paid at statutory rate)
• Employers must ensure flexible working rejections are “reasonable”

• Audit flexible working request processes to ensure rejections meet the new “reasonable” threshold
• Updating policies
• Prepare for operational impacts where dismissals of returning employees become more restricted

• Paternity and Unpaid Parental Leave changes:
  • April 2026
• Bereavement Leave, flexible working and protections against dismissal for new mothers:
  • 2027