The Employment Rights Act 2025 is being implemented in stages throughout 2026 and 2027.

It represents the most significant reform of UK employment law in a generation. These new laws strengthen employees’ rights in many areas and will reshape how employers go about hiring, managing and dismissing staff.

This update highlights the key changes already in force and those which are expected to come into force later this year and next year.

1. Changes already in force (from April 2026)

Statutory Sick Pay (SSP)

• SSP is now payable from the first day of absence; there is no longer a three-day waiting period.

• The lower earnings limit has been removed.

• Those earning below the lower earnings limit are entitled to 80% of their average weekly earnings.

Day-One Rights for Family Leave

• Paternity Leave and Unpaid Parental Leave are now available from the first day of employment.

• Employees are no longer prevented from taking paternity leave after taking shared parental leave.

Bereaved Partners

• Bereaved partners may now take up to 52 weeks of unpaid paternity leave if their child’s mother or primary adopter dies.

Sexual Harassment 

• Disclosures of sexual harassment now count as qualifying disclosures under whistleblowing law. Individuals who make these disclosures are protected from detriment and unfair dismissal as whistleblowers.

Collective Redundancy

• The maximum Employment Tribunal protective award for failing to comply with collective consultation obligations has increased from 90 days’ pay to 180 days’ uncapped pay per affected employee. These obligations arise where employers propose to dismiss 20 or more employees as redundant within a period of 90 days or less  

Holiday pay and working time records

• Employers must now keep adequate records of each worker’s annual leave entitlement and the annual leave actually taken.

New Fair Work Agency

• A new enforcement body, the Fair Work Agency, has been established, with the power to take various action, including

• Investigating suspected breaches of employment law

• Issuing penalties

• Taking legal action on behalf of employees

2. Looking Ahead: Key Reforms Still to Come (2026–2027)

Employers should be planning now for further employment law reforms expected over the next 18 months. Many of these changes are confirmed but not yet in force; others remain subject to consultation.

Tips and Tipping Policies (expected from October 2026)

• Employers will be required to consult with workers (or their representatives) before introducing or revising tipping policies. Employers will also be required to review tipping policies periodically.

Tribunal Claims (expected from October 2026)

• Tribunal time limits for most claims are also set to increase from three to six months.

Unfair Dismissal (expected from 1 January 2027)

• The qualifying period for unfair dismissal claims is expected to reduce from two years to six months.

• The statutory compensation cap is expected to be removed (currently it is capped at the lower of £118,223 or 52 weeks’ gross pay), exposing employers to the risk of far greater financial liabilities arising from Tribunal litigation.

Fire and Rehire (expected from January 2027)

• New restrictions on dismissals connected with contractual changes are expected to come into force. Certain dismissals linked to contractual changes (such as pay, pensions and holiday entitlement) may become automatically unfair unless the employer can demonstrate a defence linked to genuine financial difficulty. The relevant thresholds are likely to be high and employers should not assume that they can easily be satisfied. These proposals are still under consultation and may change before implementation.

Zero‑Hours (expected from 2027)

• Employers may be required to offer qualifying workers contracts reflecting their usual working hours based on a reference period (expected to be 12 weeks).

• Workers are also expected to gain the right to reasonable notice of shifts and to compensation if shifts are cancelled, shortened, or changed at short notice. These proposals are still under consultation.

Gender Pay Gap and Menopause Action Plans (expected from 2027)

• From spring 2027, large employers (with 250 or more staff) are expected to be required to publish gender pay gap action plans and menopause action plans.

• Employers can voluntarily publish these action plans now.

3. Key actions for employers

Employers should act promptly to ensure compliance and minimise the risk of disputes, operational disruption, compensation awards and financial penalties. Employers should:

• Review and update all relevant company policies including paternity, parental leave, sick pay, and whistleblowing policies;

• Provide clear guidance to employees on their new rights and entitlements;

• Adjust payroll systems so that SSP is payable from day one and the previous earnings threshold is removed;

• Train HR teams and managers to ensure they understand the new laws and can ensure compliance;

• Review internal procedures to improve consistency, reduce misunderstandings and support legal compliance;

• Begin planning now for reforms due to come into force later in 2026 and 2027

4. How Lodders can help

Lodders’ experienced employment law team provide the full breadth of employment law advice and support. We work with a variety of clients, from SMEs to large corporations helping them update policies, manage risk, and stay compliant with evolving legal requirements.

For tailored advice on how these changes may affect your business, or if you need assistance updating your policies and practices, please contact Lodders’ Employment Law team.