Employers across the UK are being urged to begin preparing now for the wide-ranging reforms introduced by the Employment Rights Act 2025, following the Bill’s passage through Parliament in December 2025. The legislation represents the most significant overhaul of employment rights in more than a decade and will reshape expectations around job security, employee protections and workplace processes.

Kathryn Gilbert, Head of HR Services, and Lorna Thorley, HR Advisor, at Sheffield-based Bhayani HR & Employment Law say that, although much of the detailed framework will be set out in secondary legislation during 2026, the direction of travel is already clear. With Royal Assent granted, they warn that employers should move quickly to review contracts, policies and management practices.

Professional services firms and other employers with flexible or hybrid working models are expected to face particular challenges, as the Act places greater emphasis on contractual certainty, employee voice and fair process from an earlier stage of employment.

Statutory Sick Pay reforms

One of the most immediate changes for employers will be the expansion of Statutory Sick Pay from April 2026. Under the new rules, waiting days will be removed so that SSP is payable from the first day of sickness rather than after day three. The lower earnings threshold will also be abolished, bringing more workers into scope.

Kathryn Gilbert said the changes will make employment status a more critical issue for businesses. “Employment status will therefore become even more important. Where individuals work on a genuinely casual basis, SSP may not apply. However, individuals who work regular or guaranteed hours are likely to qualify, regardless of labels such as ‘zero-hours’ or ‘casual’,” she said.

She added that employers should not rely on contractual wording alone. “Employers should review contracts and working arrangements to ensure they reflect the reality of the working relationship, as labels alone will not determine entitlement.”

Unfair dismissal thresholds reduced

The Act also significantly lowers the threshold for bringing an ordinary unfair dismissal claim. The qualifying period will reduce from two years to six months, alongside the removal of the statutory compensation cap, subject to an impact assessment. Automatic unfair dismissal claims, including those linked to discrimination, whistleblowing or pregnancy, will remain day-one rights.

This change means decisions taken during the early months of employment will carry greater legal risk. Lorna Thorley said employers will need to rethink how they manage probationary periods.

“Poorly documented probationary dismissals will carry significantly higher risk, meaning employers will need to strengthen early-performance processes, train managers on fair decision-making and ensure dismissal decisions are evidence-based and procedurally sound,” she said.

The reduction in the qualifying period is expected to place more emphasis on record keeping, clear objectives and consistent feedback during the first six months of employment.

Day-one family leave rights

Family-related rights are also being expanded under the Act. Statutory Paternity Leave and Unpaid Parental Leave will become day-one rights, with the continuity of service requirement removed. Statutory Paternity Pay will continue to require 26 weeks’ service.

Lorna Thorley said employers should ensure managers understand how unpaid parental leave can be used in practice. “Unpaid parental leave allows parents to take up to 18 weeks’ leave per child, capped at four weeks per year, and may be used, for example, as an alternative to annual leave during school holidays,” she said.

While these changes increase flexibility for employees, employers will need to plan carefully to manage resourcing and ensure consistent application across teams.

Sexual harassment and whistleblowing protections

Since October 2024, employers have been required to take reasonable steps to prevent sexual harassment in the workplace. From April 2026, complaints relating to sexual harassment will also attract whistleblowing protection, increasing the potential legal consequences of poor handling.

Kathryn Gilbert warned that businesses that have not already reviewed their approach could face significant exposure. “Employers that have not yet considered what steps they need to take to prevent sexual harassment, or that lack robust whistleblowing, disciplinary and grievance policies, risk significant legal exposure,” she said.

The change reinforces the importance of clear reporting routes, manager training and prompt, fair investigation processes.

Creation of the Fair Work Agency

The Employment Rights Act also provides for the establishment of a Fair Work Agency, designed to support compliance with Statutory Sick Pay and holiday pay requirements. Where workers are unwilling or unable to bring claims themselves, the Agency will have powers to pursue underpayments on their behalf.

The Agency will be able to look back up to six years to recover unpaid SSP and holiday pay, increasing the financial risk for non-compliant employers.

Kathryn Gilbert said early action is essential. “We strongly advise employers to prepare their businesses now and ensure compliance, rather than risk costly claims and financial penalties,” she said.

Trade union activity and industrial action

Changes affecting trade union activity will take effect from February 2026. These include reduced notice periods for industrial action, lower voting thresholds, extended mandates of up to 12 months and making dismissal for lawful industrial action automatically unfair.

Kathryn Gilbert said these reforms could lead to increased union engagement in sectors that have previously seen limited activity. “Lower thresholds and longer mandates may encourage increased union activity in sectors that have traditionally seen limited engagement,” she said.

She added that employers should review how they engage with their workforce. “Employers should consider whether consultation and communication channels are effective and ensure managers are appropriately trained to handle collective concerns before they escalate.”

Preparing for implementation

While many of the detailed regulations will follow during 2026, Bhayani HR & Employment Law says employers should already be assessing how the Act will affect their organisations. Reviewing employment status, updating policies, improving documentation and investing in manager training are expected to be key priorities.

With enforcement mechanisms being strengthened and employee rights expanding from earlier in the employment relationship, the Act marks a clear shift in the balance between flexibility and protection. Employers that act early are likely to be better placed to manage risk and adapt to the new legal landscape as the reforms come into force.