04 February 2026
The Employment Rights Act 2025, received Royal Assent in December after extensive parliamentary scrutiny. The Act represents one of the most substantial updates to workplace rights in recent decades and will have wide-ranging implications for employers.
Although many of the reforms will be introduced gradually over the next two years, the direction of travel is clear. Employers should take early steps to understand the changes and assess how existing practices will need to adapt.
Phased implementation of the new framework
While the Employment Rights Act is now in force, most provisions will be implemented on a phased basis, with commencement dates expected to fall in April or October.
Certain measures took effect shortly after Royal Assent, including the repeal of the Strikes (Minimum Service Levels) Act 2023 and elements of the Trade Union Act 2016. Other changes, expected from April 2026, include day-one entitlement to statutory sick pay, day-one paternity leave, and the establishment of the Fair Work Agency.
One of the most significant reforms will take effect on 1st January 2027, when the qualifying period for unfair dismissal claims will be reduced from two years to six months. The government has also confirmed that the existing cap on unfair dismissal compensation will be removed.
Unfair dismissal: increased exposure for employers
The reduction in the qualifying period for unfair dismissal claims represents a material change in employer risk. While unfair dismissal has not become a day-one right, a six-month threshold significantly limits the period during which employers can dismiss employees without potential exposure to claims.
This change is accompanied by an extension of the time limit for bringing Employment Tribunal claims from three months to six months. When combined with the removal of the compensation cap, employers may see both an increase in claims and greater financial exposure.
For employers, this reinforces the importance of clear probationary procedures, consistent performance management, and careful documentation from the outset of employment.
Trade union rights and redundancy consultation
The Act also strengthens trade union engagement and collective consultation obligations. Barriers to union access will be lowered, and protections for union activity expanded, requiring employers to manage communications and engagement with greater care.
In addition, reforms to collective redundancy consultation will introduce tighter requirements, increasing the importance of early planning and compliance. Employers should ensure that managers understand the revised framework and apply consultation processes consistently.
Zero-hours contracts and workforce flexibility
New protections are being introduced for workers engaged on zero-hours contracts and for agency workers. These include rights to guaranteed hours, reasonable notice of shifts, and compensation for short-notice cancellations.
Employers operating in sectors that rely on flexible staffing models, including hospitality, retail and logistics, which are prominent across the local economy will need to review workforce arrangements to ensure compliance while maintaining operational flexibility.
Family-friendly rights and workplace protections
The Employment Rights Act introduces a number of changes aimed at expanding family-friendly rights and strengthening workplace protections. These include the removal of the Lower Earnings Limit and waiting period for Statutory Sick Pay, day-one rights to paternity leave and unpaid parental leave, and a new entitlement to unpaid bereavement leave, including in cases of pregnancy loss before 24 weeks.
Additional safeguards will apply to employees who are pregnant, on maternity leave, or returning to work, with dismissal restricted except in defined circumstances for at least six months following return.
Large employers will also be required to produce action plans addressing gender pay gaps and workplace support during menopause, signalling a more structured approach to equality and inclusion.
In relation to harassment, employers will now be required to take “all reasonable steps” to prevent sexual harassment, including harassment by third parties. This change is likely to increase expectations around policies, training and workplace culture.
Enforcement and the Fair Work Agency
The creation of the Fair Work Agency represents a notable shift in enforcement. The Agency will bring together oversight of the National Minimum Wage, holiday pay, agency worker protections and labour exploitation, with enhanced powers to impose civil penalties and bring claims on behalf of workers.
For employers, this points to a more proactive enforcement environment and highlights the importance of compliance across pay, contractual arrangements and working time.
Preparing for change
The Employment Rights Act 2025 introduces a package of reforms that will reshape employment practices over the coming years. While the phased implementation provides time for preparation, employers who delay reviewing their arrangements may find themselves exposed to avoidable risk.
As 2026 begins, employers should focus on understanding which changes apply to their organisation, when those changes will take effect, and how existing policies, procedures and management practices should be updated.
We advise employers across Dorset, Bournemouth, Christchurch and Poole on employment law. Our team can provide practical guidance on the implications of the Employment Rights Act 2025 and support businesses in preparing for the changes ahead. Contact us on 01202 294411 or via online: Contact Us AB Solicitors For Your Legal Needs
