The Employment Rights Act 2025 received Royal Assent on 18 December 2025, marking the biggest overhaul of UK employment law in more than a generation. For HR professionals, this isn’t just another set of policy updates to file away. It’s a fundamental shift in how organisations will need to manage recruitment, dismissals, flexible working, and employee rights.
The changes will be introduced gradually through 2026 and 2027, giving organisations time to prepare. But that preparation needs to start now. Here’s what HR teams need to understand about the Act and what it means for day-to-day practice.
What is the Employment Rights Act 2025
The Act started life as the Employment Rights Bill, introduced to Parliament in October 2024 as part of the Government’s Plan to Make Work Pay. It represents the most significant package of employment law reforms since the Employment Rights Act 1996.
The legislation aims to improve job security, boost living standards, and modernise the relationship between employers and employees. For HR teams, it introduces new compliance obligations across dismissals, working patterns, leave entitlements, and workplace protections.
Most changes will come into force on common commencement dates of 6 April and 1 October in 2026 and 2027. The Government has published a roadmap and factsheets to help organisations prepare (GOV.UK, 2026).
The key changes HR teams need to know
The Act covers a wide range of employment matters. Here are the changes most likely to affect HR practice.
Source: Acas and GOV.UK, 2026
Unfair dismissal and the six-month qualifying period
One of the most significant changes for HR is the reduction in the qualifying period for unfair dismissal claims. Currently, employees need two years of continuous service before they can bring an unfair dismissal claim. From January 2027, this drops to six months.
The Government originally proposed making unfair dismissal a day-one right, but following consultation and industry feedback, the six-month qualifying period was agreed as a compromise. CIPD welcomed this decision as a more workable approach for employers (CIPD, 2025).
What this means in practice is that your recruitment and onboarding processes become even more critical. Getting hiring decisions right first time, having robust probationary period procedures, and documenting performance concerns early will all be essential.
The Act also removes the cap on unfair dismissal compensation, which currently stands at the lower of 52 weeks’ pay or a statutory maximum. This increases the financial risk associated with dismissals and makes it more important than ever to follow fair processes.
Fire and rehire restrictions
The practice of dismissing employees and rehiring them on worse terms and conditions, commonly known as fire and rehire, will become automatically unfair dismissal for “restricted variations” from January 2027. Restricted variations cover changes to certain core terms including pay, hours, and location.
This doesn’t mean organisations can never change employment terms. But it does mean that using dismissal as a mechanism to force through changes will carry much greater legal risk. HR teams will need to focus on genuine consultation and negotiation when contractual changes are needed.
Day-one rights for leave
From 6 April 2026, paternity leave and unpaid parental leave become day-one rights for employees. Previously, employees needed 26 weeks of continuous service to qualify for paternity leave.
Employees who will gain these rights on or after 6 April 2026 can give notice of their intention to take leave from 18 February 2026. HR teams should update their policies now and communicate the changes to managers.
The Act also introduces a new statutory right to bereavement leave for employees who experience pregnancy loss before 24 weeks. Losses after 24 weeks already qualify for maternity and paternity leave.
Statutory Sick Pay changes
From 6 April 2026, the three-day waiting period for Statutory Sick Pay will be removed, meaning SSP will be paid from the first day of sickness absence. The lower earnings limit will also be removed.
Under the new system, employees earning below the lower earnings limit will receive either 80% of their normal weekly earnings or the current SSP rate, whichever is lower. This extends SSP coverage to lower-paid workers who were previously excluded.
HR and payroll teams will need to update their systems and processes to accommodate these changes. It’s worth reviewing absence management policies more broadly to ensure they align with the new framework.
Zero hours contracts and guaranteed hours
The Act introduces new protections for workers on zero hours and low hours contracts, expected to come into force in 2027.
Workers will have the right to a contract that reflects the hours they actually work. If someone regularly works more hours than their contract states, they can request a contract that guarantees those hours.
Employers will also need to provide reasonable notice of shifts and shift changes. Workers will have the right to compensation if shifts are cancelled, moved, or cut short at short notice.
Organisations that rely heavily on flexible staffing arrangements will need to review their workforce planning and consider how these changes affect their operating model.
Flexible working and employer obligations
The Act strengthens existing flexible working rights, building on changes introduced in April 2024 that made flexible working a day-one right.
From 2027, when an employer rejects a flexible working request, they will need to state their reasons from a list of eight acceptable grounds and explain why they believe their refusal is reasonable. While this is already good practice, it will become a legal requirement.
HR teams should ensure managers are trained on handling flexible working requests properly and that the organisation’s approach is consistent and well-documented.
Sexual harassment and workplace protections
The Act specifies what “reasonable steps” means when determining whether an employer has taken appropriate action to prevent sexual harassment. This builds on the Worker Protection Act 2023, which came into force in October 2024.
New provisions also restrict the use of non-disclosure agreements in harassment and discrimination cases. Any agreement that prevents a worker from making allegations or disclosures about harassment or discrimination will be void.
Organisations should review their harassment policies, training programmes, and settlement agreement templates to ensure compliance.
The Fair Work Agency
The Act establishes the Fair Work Agency, a new enforcement body that will bring together existing agencies and take on responsibility for enforcing employment rights including holiday pay and statutory sick pay. The Agency will be established in April 2026, though the full extent of its enforcement powers is still being determined.
For HR teams, this signals a move towards more active enforcement of employment rights. Conducting a compliance review ahead of the Agency becoming operational would be prudent.
How HR teams can prepare
The staggered implementation gives organisations time to prepare, but that time will pass quickly. Here’s where to start.
Review your policies
Parental leave, flexible working, absence management, dismissal procedures, and harassment policies will all need updating. Start with the changes coming in April 2026.
Update employment contracts
Ensure contracts clearly reflect working hours, particularly for staff on variable hours arrangements. Review any fire and rehire provisions.
Train your managers
Many of these changes will affect how line managers handle day-to-day situations. Flexible working requests, performance concerns during probation, and absence management will all require updated guidance.
Strengthen recruitment processes
With the reduced qualifying period for unfair dismissal, getting hiring decisions right becomes more important. Review your selection, onboarding, and probation procedures.
Conduct a compliance audit
With the Fair Work Agency taking on enforcement responsibilities, it’s worth checking your organisation’s compliance with existing employment law, particularly around holiday pay and national minimum wage.
Staying up to date
The Government is still consulting on aspects of the Act, which means some details may change before implementation. CIPD is tracking the progress of all measures and providing updated guidance for HR professionals.
For HR teams, this is an area where formal professional development can make a real difference. CIPD qualifications cover employment law in depth, with the Level 5 Associate Diploma in People Management in particular providing the strategic knowledge needed to navigate complex legislative changes like this.
If you’d like to discuss how CIPD qualifications could help your HR team build the employment law expertise they need, we’d be happy to talk it through.
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