Employment Rights Act 2025 UK: Complete Guide to April 2026 Changes

Updated: July 2026 • Based on UK Law

What Is the Employment Rights Act 2025?

The Employment Rights Act 2025 is the biggest reform to UK employment law in a generation. It received Royal Assent on 18 December 2025 and introduces 28 major changes including day-one statutory sick pay, six-month unfair dismissal protection, zero-hours contract reforms, and removal of the compensation cap — phased across 2026 and 2027.

This guide covers all 28 ERA 2025 changes, April/October/January deadlines, contract updates needed, and HR policy requirements, with a free interactive ERA 2025 compliance checklist.

Which Contracts and Policies Need Updating for the Employment Rights Act 2025?

Every employment and HR document will need updating as each phase takes effect. Here’s which templates are affected and when:

April 2026 Updates — Day-One Rights & SSP:

• Employment Contract Template — day-one SSP, paternity leave, updated notice periods
• Zero-Hours Contract Template — SSP entitlement for all earners, shift notice provisions
• Apprenticeship Agreement Template — day-one SSP for apprentices under the lower earnings limit
• Internship Agreement Template — updated statutory entitlements and SSP provisions
• Employee Handbook Template — revised sick pay, paternity, parental leave and whistleblowing policies
• Grievance Procedure Template — sexual harassment as protected disclosure, updated whistleblowing
• Disciplinary Procedure Template — updated ACAS code references, harassment handling

October 2026 Updates — Harassment & Tribunal Reforms:

• Employee Handbook Template — “all reasonable steps” harassment duty, third-party liability
• Grievance Procedure Template — updated complaint handling for third-party harassment
• Disciplinary Procedure Template — six-month tribunal time limits, enhanced record retention
• Performance Improvement Plan Template — updated timelines reflecting six-month tribunal window

January 2027 Updates — Dismissal Reforms:

• Employment Contract Template — six-month qualifying period, fire-and-rehire restrictions
• Disciplinary Procedure Template — unlimited compensation exposure, fair dismissal procedures
• Performance Improvement Plan Template — rigorous six-month performance management
• Employee Handbook Template — updated probation periods and dismissal policies
• Director Service Agreement Template — updated termination and compensation clauses

2027 Updates — Zero-Hours & Family Protections:

• Zero-Hours Contract Template — guaranteed hours framework, shift notice, cancellation compensation
• Employment Contract Template — bereavement leave, enhanced pregnancy protections, flexible working
• Employee Handbook Template — bereavement policy, pregnancy dismissal protection, flexible working default

Also Affected by Status Reforms (consultation ongoing):

• Freelance Contract Template — potential worker/employee distinction changes
• Consultancy Agreement Template — employment status reclassification risks
• Hot Desk Licence Agreement Template — updated workspace provisions for flexible working rights

What Is the Employment Rights Act 2025?

The Employment Rights Act 2025 is comprehensive employment law reform that received Royal Assent on 18 December 2025, introducing over 28 major changes to UK employment rights including day-one protections, zero-hours contract reforms, and reducing the unfair dismissal qualifying period from two years to six months.

The Act represents the most significant overhaul of UK employment law since the Employment Rights Act 1996.

It fundamentally reshapes the employer-employee relationship by extending protections that previously required months or years of service to day-one rights, while simultaneously removing compensation caps and doubling penalties for non-compliance.

Under the Employment Rights Act 2025, employers must provide statutory sick pay from the first day of absence, offer guaranteed hours to zero-hours workers who regularly work set patterns, and face automatic unfair dismissal claims for fire-and-rehire practices.

The Act also introduces enhanced protections for pregnant workers, strengthens sexual harassment prevention duties, and makes it easier for trade unions to gain recognition.

The legislation builds upon existing frameworks including the Employment Rights Act 1996, the Equality Act 2010, and the Trade Union and Labour Relations (Consolidation) Act 1992.

Critically, the Act removes the Secretary of State’s power to change the unfair dismissal qualifying period by statutory instrument — meaning future governments must use primary legislation to alter the six-month threshold introduced in January 2027.

According to government impact assessments, millions of UK workers will gain new or enhanced employment protections under this legislation.

For employers, the Act creates significant new compliance obligations — particularly for businesses using zero-hours contracts, those with workers earning below the lower earnings limit, and organisations that previously relied on the two-year unfair dismissal threshold during probationary periods.

What New Employee Rights Does the ERA 2025 Create?

The Employment Rights Act 2025 introduces 28 major new rights for UK employees and workers, including day-one statutory sick pay, six-month unfair dismissal protection, guaranteed hours for zero-hours workers, and removal of the £118,223 compensation cap for unfair dismissal claims.

The new rights fall into five main categories: day-one entitlements, family-friendly rights, zero-hours protections, dismissal reforms, and workplace harassment protections.

Each category addresses specific vulnerabilities in the current employment law framework that the government identified as creating insecurity or unfairness for workers.

Day-One Rights (Effective April 2026)

Since 6 April 2026, all employees have had statutory sick pay from the first day of absence, with the three-day waiting period removed. The lower earnings limit (£125 per week) was abolished for SSP purposes, meaning all employees now qualify regardless of earnings.

This means part-time workers, apprentices, and low-paid workers who previously earned below the threshold will now receive SSP from their first day of sickness absence.

For lower-paid workers, SSP is paid at the lower of 80% of average weekly earnings or the full weekly rate (£123.25 for 2026/27).

Paternity leave and unpaid parental leave also became day-one rights in April 2026, removing the former 26-week service requirement.

However, statutory paternity pay still requires 26 weeks of continuous employment — meaning fathers gain the right to take leave immediately but won’t receive pay until they’ve worked for over six months.

This mirrors the existing maternity leave structure where leave is a day-one right but pay requires qualifying service.

All employment contracts should reflect day-one SSP and paternity leave, in force since April 2026.

Our contracts are kept current as the law changes — updated versions appear free in your My Templates page.

Unfair Dismissal Reform (Effective January 2027)

The most significant change takes effect in January 2027 when the unfair dismissal qualifying period reduces from two years to six months.

This means employees can claim unfair dismissal after just 26 weeks of employment instead of 104 weeks.

Crucially, the Act removes the government’s power to change this threshold by secondary legislation, requiring any future changes to go through full parliamentary process.

Simultaneously, the compensation cap for unfair dismissal claims will be removed entirely.

Currently capped at one year’s salary or £118,223 (whichever is lower), successful claimants will instead receive compensation reflecting their actual financial losses.

This creates potentially unlimited liability for employers who dismiss unfairly, particularly for high-earning employees or those with long periods of unemployment after dismissal.

Zero-Hours Contract Protections (Effective 2027)

Workers on zero-hours or low-hours contracts gain three major protections expected to take effect in 2027 (exact date pending secondary legislation).

First, the right to a guaranteed hours offer reflecting the hours regularly worked over a reference period (expected to be 12 weeks).

If a worker consistently works 20 hours per week over the reference period, the employer must offer a contract guaranteeing those hours.

Second, workers gain the right to reasonable notice of shifts, shift changes, and shift cancellations. The definition of “reasonable” will be set in regulations, but government consultations suggest at least one week’s notice for standard shifts.

Third, workers receive compensation for short-notice shift cancellations or curtailments — protecting against the practice of calling workers in then sending them home after an hour.

Our zero-hours contract template is kept current as the law changes. Updated versions appear free in your My Templates page at no extra cost.

Family-Friendly Protections (Effective 2027)

The Act introduces a new right to unpaid bereavement leave as a day-one entitlement, extending beyond the current parental bereavement leave to cover loss of any close relative including pregnancy loss before 24 weeks.

Employers must allow reasonable time off to deal with the death, though the exact entitlement will be set in regulations.

Pregnant workers and new mothers gain enhanced dismissal protection from 2027.

It will become automatically unfair to dismiss during pregnancy, maternity leave, or for at least six months after returning to work except in narrowly defined circumstances (likely only genuine redundancy with proper process).

This substantially extends existing protections and shifts the burden of proof onto employers to justify any dismissal during this protected period.

Flexible Working Rights (Effective 2027)

The Act strengthens flexible working by requiring employers to approve requests unless it would be unreasonable to do so.

This reverses the current framework where employers can refuse for specific business reasons.

The change shifts the default position from “no unless there’s a good reason” to “yes unless unreasonable” — making flexible working arrangements the expected norm rather than an exception requiring justification.

What Changes in APRIL 2026?

EFFECTIVE 6 APRIL 2026: Eight major employment law changes take effect this April including day-one statutory sick pay, day-one paternity and parental leave rights, doubled redundancy penalties from 90 to 180 days, sexual harassment reporting as protected disclosure, and expanded trade union recognition rights.

The April 2026 changes represent the first major implementation phase of the Employment Rights Act 2025.

These reforms were prioritised because they address immediate worker vulnerabilities (sick pay, family leave) and employer compliance risks (redundancy consultation, harassment prevention) that the government viewed as requiring urgent attention.

Statutory Sick Pay Reforms

Since April 2026, statutory sick pay has been payable from day one of sickness absence, removing the former three-day waiting period.

Simultaneously, the lower earnings limit (£125 per week) was abolished, meaning all workers now qualify for SSP regardless of earnings.

This particularly benefits part-time workers, apprentices under 21, and casual workers who were previously excluded from SSP entirely.

For lower-paid workers, SSP is paid at the lower of 80% of average weekly earnings or the full weekly rate (£123.25 for 2026/27).

This prevents a situation where low-paid workers receive more in SSP than their normal wages.

Employers must implement new payroll systems to calculate SSP from day one and handle the tapered rate for low earners.

The financial impact on employers varies significantly by sector. Hospitality and retail businesses with high proportions of part-time, low-paid workers face the greatest cost increases.

The government estimates the total direct cost to business at approximately £1 billion per year once the Act is fully implemented, representing around a 0.1% increase in total employment costs.

However, individual businesses with high proportions of part-time, low-paid workers or high sickness absence rates may see substantially higher impacts.

Our employment contracts and apprenticeship agreements reflect the day-one SSP entitlement that took effect in April 2026.

Check your My Templates dashboard for the latest version.

Paternity and Parental Leave as Day-One Rights

Paternity leave and ordinary parental leave became day-one entitlements in April 2026. Previously, employees needed 26 weeks of continuous employment for paternity leave and one year for parental leave. Under the new rules, all employees can take either from their first day of employment.

However, statutory paternity pay still requires 26 weeks of service, creating a two-tier system where the right to take leave exists immediately but payment only follows after qualifying service.

This mirrors maternity leave, where leave has always been a day-one right but statutory maternity pay requires 26 weeks.

Employers can offer enhanced contractual pay from day one, but aren’t legally required to do so.

For HR teams, this means updating leave policies to clarify the distinction between leave entitlement (day one) and pay entitlement (after 26 weeks).

It also requires revising discrimination risk assessments — refusing paternity leave to a new starter could now constitute direct sex discrimination or detriment, whereas previously the employee had no statutory right to the leave.

Collective Redundancy Penalty Doubled

The maximum protective award for failure to properly consult on collective redundancies doubles from 90 days’ gross pay to 180 days’ gross pay per affected employee.

This applies where an employer proposes to dismiss 20 or more employees as redundant within a 90-day period and fails to collectively consult with appropriate employee representatives.

For a business dismissing 50 employees with average salaries of £30,000, the maximum penalty increases from £369,863 to £739,726.

This makes non-compliance with collective consultation requirements significantly more expensive and increases the cost of “buying out” consultation obligations through the protective award route.

The change takes effect for consultation processes starting on or after April 2026.

Employers who begin redundancy consultations in March 2026 remain subject to the 90-day cap even if the consultation continues into April.

However, any new redundancy process initiated from 1 April 2026 onwards faces the 180-day penalty for non-compliance.

Sexual Harassment Reporting as Protected Disclosure

Since April 2026, reporting sexual harassment has been a protected disclosure under the whistleblowing framework in the Employment Rights Act 1996.

This means employees who report sexual harassment (whether as a victim or witness) gain automatic protection against dismissal and detriment, even if the report turns out to be unfounded, provided it was made in good faith.

This change closes a significant protection gap.

Previously, employees could face victimisation claims under the Equality Act 2010 if treated badly for reporting harassment, but weren’t protected under whistleblowing law.

Whistleblowing protection is stronger because it covers workers (not just employees), has no qualifying service requirement, no compensation cap, and allows claims even after employment ends.

Employers must update whistleblowing policies to explicitly include sexual harassment as a protected disclosure category.

This also affects non-disclosure agreements (NDAs) — the Act renders void any confidentiality clause that prevents workers from making protected disclosures about harassment or discrimination.

Trade Union Recognition Threshold Reduced

The membership threshold for trade unions to apply for statutory recognition reduced in April 2026.

Currently, a union needs at least 10% membership to apply for recognition and win a majority in a recognition ballot.

The Act reduces this threshold (exact figure to be set in regulations) to make it easier for unions to organise in workplaces where collective representation has historically been difficult.

The Act also introduces a new obligation on employers to inform workers of their right to join a trade union at the start of employment.

Employers must provide written information about trade union membership rights and protections. This is expected to require including union membership information in written statements of employment particulars.

Employment Tribunal Time Limit Extension

From no earlier than October 2026, the time limit for bringing most employment tribunal claims extends from three months to six months.

This applies to claims including unfair dismissal, discrimination, unlawful deduction of wages, breach of contract, and most statutory employment rights.

Wrongful dismissal claims remain at three months.

This change gives employees more time to seek legal advice and gather evidence before filing claims.

For employers, it extends the period during which they face potential litigation after an employment decision — and means preserving evidence and documents for longer periods to defend potential claims.

Official Source: GOV.UK Employment Rights Act roadmap confirms April 2026 implementation dates. Check for any updates to these timelines before finalising HR policies.

What Are the New Rules for Zero Hour Contracts?

Zero-hours contracts aren’t banned but face three major restrictions from 2027: guaranteed hours offers reflecting regular work patterns over a 12-week reference period, reasonable notice requirements for shifts and changes, and compensation for short-notice shift cancellations or curtailments.

The Employment Rights Act 2025 stops short of prohibiting zero-hours contracts but introduces what the government calls an end to “one-sided flexibility” — where employers gain all the benefits of flexible staffing while workers bear all the insecurity.

The reforms apply to zero-hours workers (no guaranteed hours) and low-hours workers (guaranteed hours below a threshold to be set in regulations).

If you use zero-hours contracts, our zero-hours contract template is kept current as the law changes. Updated versions appear free in your My Templates page.

Guaranteed Hours Offers

The core reform requires employers to make a guaranteed hours offer to qualifying workers at the end of every reference period (expected to be 12 weeks).

The offer must reflect the hours the worker “regularly” worked during that period.

If a worker consistently worked 25 hours per week over the reference period, the employer must offer a contract guaranteeing those hours.

The guaranteed hours offer can be a contract variation or a new contract, but must be no less favourable overall than the worker’s existing terms.

Crucially, the obligation continues after each subsequent reference period — employers must keep making offers as working patterns change.

A worker who accepts guaranteed hours of 25 per week but then regularly works 30 hours over the next reference period must be offered a new guarantee reflecting those 30 hours.

Workers aren’t obliged to accept guaranteed hours offers.

However, employers cannot require workers to remain on zero-hours contracts as a condition of continued employment or subject workers to detriments for accepting guaranteed hours.

The Act includes extensive anti-avoidance provisions preventing employers from artificially restricting hours to avoid triggering guaranteed hours obligations.

What Counts as “Regular” Hours

The legislation deliberately avoids defining “regular” hours, leaving this to be determined by case law and secondary legislation.

The government consultation suggests “regular” doesn’t necessarily mean identical hours every week.

A worker who works 20-30 hours varying week by week would still have a regular pattern that should be reflected in the guaranteed hours offer.

Seasonal variations present particular challenges. A worker employed in retail who works 40 hours per week during the Christmas period but 10 hours per week outside peak season hasn’t established a regular pattern of 40 hours.

The Act allows employers to offer fixed-term contracts for genuine temporary increases in work, avoiding permanent hour increases for seasonal peaks.

However, using fixed-term contracts to avoid guaranteed hours faces strict tests.

The Act presumes fixed-term contracts are not reasonable where another worker is engaged on a permanent contract to perform work of the same or similar nature.

This prevents employers from routinely using fixed-term contracts to avoid the guaranteed hours regime while maintaining a permanent workforce doing similar work.

Reasonable Notice of Shifts

Workers gain the right to reasonable notice of shifts, shift changes, and shift cancellations. The definition of “reasonable” will be set in regulations following government consultation, but employment law specialists expect a minimum of one week’s notice for scheduled shifts and at least 48 hours for changes to confirmed shifts.

This addresses the practice of employers texting workers hours before a shift asking them to come in, or confirming shifts at very short notice.

It also protects against employers cancelling shifts with insufficient notice for workers to arrange alternative work.

The notice requirement applies even to workers who haven’t accepted guaranteed hours, providing baseline protection for all zero-hours and low-hours workers.

Employers can deviate from notice requirements in genuine emergency situations (such as unexpected staff sickness, emergency maintenance, or sudden changes in customer demand), but cannot rely on poor planning or normal business variations as emergencies.

Workers can agree to shorter notice periods for specific shifts if they freely consent, but cannot be required to accept short notice as a condition of employment.

Compensation for Cancelled or Curtailed Shifts

Workers receive compensation when employers cancel shifts without reasonable notice or send workers home early (curtailment). The compensation amount will be set in regulations but is expected to be a percentage of the shift payment, likely 50-100% depending on how short the notice period was.

This tackles the exploitative practice of calling workers into work then immediately sending them home because demand is lower than expected, leaving workers with travel costs but no earnings. It also protects workers who turn down alternative work opportunities in reliance on a confirmed shift that’s subsequently cancelled at short notice.

For employers, this creates a financial cost to poor scheduling and demand forecasting. Businesses that historically operated on a “call workers in as needed” model must develop more accurate workforce planning and either accept the compensation costs or move workers onto guaranteed hours contracts reflecting actual work patterns.

Agency Workers

The guaranteed hours and shift notice protections extend to agency workers, with the end-client (not the employment agency) bearing responsibility for making guaranteed hours offers.

The government’s rationale is that end-clients are best placed to forecast work demand and manage staffing needs, while agencies have little control over how many hours end-clients will offer.

When an agency worker accepts a guaranteed hours offer from an end-client, they enter a direct contractual relationship with the end-client from the day after acceptance.

This doesn’t automatically terminate the agency relationship, so workers could maintain both contracts.

However, for most workers, accepting a direct contract with the end-client means they cease working through the agency for that client.

Enforcement and Penalties

Workers can bring employment tribunal claims where employers fail to make guaranteed hours offers, provide required notice, or pay compensation for cancelled shifts.

The time limit for these claims is six months from when the offer or notice should have been provided.

Workers also have protection against dismissal or detriment for requesting or accepting guaranteed hours, with such dismissals automatically unfair regardless of service.

Employers face tribunal claims for every breach — an employer who fails to make guaranteed hours offers to 20 workers faces 20 separate claims.

Compensation details will be set out in regulations (expected before implementation in 2027), but tribunals are likely to award compensation reflecting financial losses plus injury to feelings based on individual circumstances.

Official Source: GOV.UK roadmap and ACAS guidance will be updated with detailed regulations as they’re finalised. Some implementation dates and specific requirements are still pending secondary legislation consultation.

Has the 2 Year Dismissal Law Changed in the UK?

Yes — from January 2027, the qualifying period for unfair dismissal claims reduces from two years to six months. Simultaneously, the compensation cap (currently £118,223) will be completely removed, meaning employees can claim unlimited compensation for unfair dismissal based on actual financial losses.

This represents the most significant change to unfair dismissal law since the qualifying period was extended from one year to two years in 2012.

The reduction to six months brings the UK more in line with other European countries and addresses long-standing criticism that the two-year threshold left employees vulnerable to arbitrary dismissal during what should be a probationary period.

The Six-Month Qualifying Period

Under the new rules, employees with six months of continuous employment can claim unfair dismissal.

This means an employee starting work on 1 January 2027 could claim unfair dismissal if dismissed on or after 1 July 2027.

The qualifying period still requires continuous employment, so breaks in service could reset the clock depending on their length and circumstances.

Importantly, the Act removes the Secretary of State’s power to change the qualifying period by statutory instrument.

Previously, governments could adjust the threshold through secondary legislation — this is how the increase from one to two years happened in 2012.

Now, any future change requires primary legislation to be passed through full parliamentary process, making it significantly harder for future governments to extend the qualifying period.

The six-month threshold applies to employees who reach six months’ service on or after 1 January 2027.

An employee with five months’ service on 31 December 2026 will gain protection once they reach six months in early January 2027.

However, employees dismissed before 1 January 2027 who had less than two years’ service cannot bring unfair dismissal claims even if the reforms have been announced.

Removal of the Compensation Cap

Currently, unfair dismissal compensation consists of a basic award (calculated like statutory redundancy pay) plus a compensatory award for financial losses, capped at one year’s gross pay or £118,223 (as of April 2025), whichever is lower. From January 2027, this cap is removed entirely.

Successful claimants can now recover all provable financial losses including lost wages, lost pension contributions, loss of company benefits, damage to career progression, and costs of finding alternative employment.

For high earners or employees who experience prolonged unemployment after unfair dismissal, compensation could reach six figures or more.

A senior manager earning £100,000 who is unfairly dismissed and remains unemployed for 18 months could claim approximately £150,000 in lost earnings alone, plus pension contributions (typically 10-15% of salary adding £15,000-£22,500), lost bonuses, and other benefits.

Previously, their compensatory award would have been capped at £100,000 maximum.

The removal of the cap creates potentially unlimited liability for employers who dismiss unfairly.

Probationary Periods Under the New Rules

Many employers operated 12-24 month probationary periods on the understanding that employees couldn’t claim unfair dismissal during this time.

With the reduction to six months, probationary periods effectively become meaningless after the first six months as employees gain full unfair dismissal protection.

Employers must now make performance decisions within the first six months or accept that dismissing for capability or conduct after six months requires following full disciplinary procedures and demonstrating the dismissal was fair.

This necessitates more active performance management during months 1-6 — setting clear objectives, providing regular feedback, and documenting performance issues contemporaneously.

The government originally proposed a statutory “initial period of employment” with lighter-touch dismissal procedures, but this was dropped during parliamentary passage. The final Act simply reduces the qualifying period to six months with no special probation regime — meaning standard unfair dismissal protections apply in full from six months.

However, even during statutory probation, dismissals must be for fair reasons (capability, conduct, redundancy, statutory restriction, or some other substantial reason) and follow a basic fair procedure — including informing the employee of concerns and giving them opportunity to respond.

Impact on Existing Employment Contracts

Employment contracts stating that probationary periods are 12-24 months should be reviewed and likely shortened to six months. Contracts stating employees have no unfair dismissal rights until completing two years’ service are now incorrect and should be updated to reflect the six-month period.

However, employers should note that some automatic unfair dismissal protections already applied from day one regardless of service — including dismissals for pregnancy, whistleblowing, asserting statutory rights, trade union membership or activities, and certain health and safety reasons.

The six-month rule applies only to ordinary unfair dismissal claims where the employee must prove the reason for dismissal was not one of the five fair reasons (capability, conduct, redundancy, statutory restriction, some other substantial reason).

Employer Obligations and Risk Management

The six-month threshold requires employers to implement more robust early performance management.

Key steps include conducting thorough induction programmes with clear objective-setting, holding regular review meetings (ideally weekly or fortnightly) during the first six months, documenting all performance discussions in writing, and addressing performance or conduct concerns immediately rather than allowing them to drift.

For existing employees approaching six months’ service in January 2027, employers should review performance now and decide whether to extend employment beyond the six-month mark.

If performance issues exist, they should be raised and addressed (or the employee exited) before the employee reaches protected status.

However, dismissing employees solely to avoid them gaining six-month protection could constitute automatic unfair dismissal under the Act’s anti-avoidance provisions.

Tribunal System Impact

Employment law specialists predict a significant increase in unfair dismissal claims when the six-month rule takes effect.

The government estimates the six-month qualifying period will generate an additional 9,000 ACAS early conciliation referrals annually, with around 3,000 progressing to tribunal claims — placing substantial additional burden on an already stretched tribunal system.

To address this, the government extended the early ACAS conciliation period from six weeks to twelve weeks (effective 1 December 2025) to encourage more settlements before tribunal claims are filed.

However, legal experts remain sceptical that this will offset the additional claims volume generated by the lower qualifying threshold.

Official Source: ACAS unfair dismissal guidance and legislation.gov.uk for the exact statutory text. This is a critical change — verify current implementation status before making dismissal decisions.

What Are the Main Points of the Employment Rights Act?

The Employment Rights Act 2025 contains 28 major reforms organised into eight key areas: day-one rights (SSP, leave), unfair dismissal reforms (six months, no cap), zero-hours protections (guaranteed hours, shift notice), family protections (pregnancy, bereavement), harassment prevention (enhanced duty, third-party liability), fire-and-rehire restrictions (automatic unfairness), trade union rights (easier recognition, ballot changes), and tribunal reforms (six-month time limits).

Each reform area addresses specific problems the government identified in the UK employment system — insecurity for low-paid workers, inadequate family support, insufficient harassment prevention, exploitative use of zero-hours contracts, and unfair dismissal practices.

The reforms balance increased protection for workers with implementation timescales giving employers time to adapt.

Day-One Rights Package

The day-one rights package removes qualifying periods for statutory sick pay (currently three days waiting period plus earnings threshold), paternity leave (currently 26 weeks), and ordinary parental leave (currently one year).

These changes take effect in April 2026 and mean all employees can access these rights from their first day of employment.

However, statutory pay for paternity leave still requires 26 weeks’ service — creating a two-tier system where leave is available immediately but pay requires qualifying service.

This mirrors maternity leave where the right to time off has always been day-one but statutory maternity pay requires 26 weeks.

Employers can choose to offer contractual pay from day one but aren’t legally obliged to do so.

Our employment contract, apprenticeship agreement, and internship agreement templates are kept current for the April 2026 changes.

Check your My Templates dashboard for the latest versions.

Unfair Dismissal Reforms

The unfair dismissal reforms are two-fold.

First, the qualifying period reduces from two years to six months effective January 2027. Employees with 26 weeks of continuous service can claim unfair dismissal if dismissed without fair reason and procedure.

Second, the compensation cap (one year’s salary or £118,223 as of April 2025, whichever lower) is completely removed — meaning tribunals can award unlimited compensation based on actual financial losses.

The government originally proposed day-one unfair dismissal protection but revised this to six months following business consultation.

However, the Act removes the Secretary of State’s power to change the qualifying period by statutory instrument — making it significantly harder for future governments to extend the threshold back to two years.

Our disciplinary procedure, performance improvement plan, and employee handbook templates are kept current for the January 2027 changes.

Check your My Templates dashboard for the latest versions.

Zero-Hours Contract Protections

Zero-hours workers gain three major protections expected to take effect in 2027.

First, the right to guaranteed hours offers reflecting regular working patterns over a reference period (expected to be 12 weeks). If a worker regularly works 30 hours per week, the employer must offer a contract guaranteeing those hours.

Second, the right to reasonable notice of shifts and shift changes (definition of “reasonable” to be set in regulations, likely minimum one week).

Third, compensation for cancelled or curtailed shifts when reasonable notice isn’t provided.

These protections extend to low-hours workers (those with guaranteed hours below a threshold to be set in regulations) and agency workers, with end-clients bearing responsibility for guaranteed hours offers.

The reforms include extensive anti-avoidance provisions preventing employers from artificially restricting hours or using fixed-term contracts to evade guaranteed hours obligations.

Family Protection Enhancements

Pregnant workers and new mothers gain enhanced protection from 2027, making it automatically unfair to dismiss during pregnancy, maternity leave, or for at least six months after returning to work except in narrowly defined circumstances (likely limited to genuine redundancy situations).

This shifts the burden onto employers to justify any dismissal during this extended protected period.

A new day-one right to unpaid bereavement leave covers loss of any close relative including pregnancy loss before 24 weeks.

This extends beyond the current parental bereavement leave which applies only to loss of a child under 18. The exact entitlement will be set in regulations following consultation.

Our employment contract and employee handbook templates are kept current for the April 2026 changes.

Check your My Templates dashboard for the latest versions.

Sexual Harassment Prevention

The duty to prevent sexual harassment (introduced in October 2024) is strengthened from October 2026 by changing “reasonable steps” to “all reasonable steps.”

Regulations will specify what constitutes “all reasonable steps” to provide clearer guidance than the current EHRC technical guidance.

This creates a higher compliance bar for employers in preventing workplace harassment.

Third-party harassment protection is reintroduced from October 2026, making employers liable for harassment by customers, clients, or other third parties unless they’ve taken all reasonable steps to prevent it.

This extends to all forms of harassment, not just sexual harassment.

Additionally, since April 2026 reporting sexual harassment has been a protected disclosure under whistleblowing law, providing enhanced protection for those who report harassment.

Our employee handbook template, grievance procedure, and disciplinary procedure are kept current as each change takes effect. Updated versions appear free in your My Templates page.

Fire-and-Rehire Restrictions

Dismissing employees to impose changes to core employment terms becomes automatically unfair from January 2027 unless the employer can demonstrate the business’s financial viability was at stake.

Core terms include pay, hours, place of work, and pension contributions, with regulations to define the complete list.

This doesn’t completely ban fire-and-rehire but restricts it to genuine business rescue situations.

Employers seeking to make contract changes must follow collective or individual consultation processes and demonstrate they’ve exhausted alternatives before resorting to dismissal and reengagement.

Breaching the statutory code on dismissal and reengagement can increase tribunal compensation by up to 25%. An updated code of practice is expected in 2027.

Our disciplinary procedure template and employee handbook are kept current as each implementation phase takes effect. Updated versions appear free in your My Templates page.

Trade Union Rights Expansion

Multiple reforms make it easier for trade unions to organise and represent workers.

Since April 2026, membership thresholds for statutory recognition applications have reduced (making it easier to trigger recognition ballots), and the 40% support threshold for industrial action ballots in important public services has been removed.

The 50% turnout threshold remains until at least August 2026, after which only a simple majority of those voting will be required.

Employers must inform new workers of their right to join unions and explain union membership protections.

Dismissal for taking part in official industrial action becomes automatically unfair with no service requirement, removing the current 12-week protection limit.

The notice period for industrial action reduced from 14 days to 10 days on 18 February 2026.

Electronic and workplace balloting for union ballots will be introduced to make voting easier and increase participation.

Tribunal Reforms

The time limit for bringing most employment tribunal claims extends from three months to six months from October 2026.

This gives employees more time to seek legal advice and gather evidence before filing claims.

The early ACAS conciliation period also extended from six to twelve weeks (effective 1 December 2025) to encourage more pre-claim settlements.

The maximum protective award for failure to collectively consult on redundancies doubled from 90 to 180 days’ pay per affected employee in April 2026.

For businesses making 20+ workers redundant, this significantly increases the financial penalty for non-compliance with collective consultation requirements.

---

When Does the Employment Rights Act Come Into Force?

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. Most changes are not yet active — they take effect in three phases across 2026 and 2027.

Employers must track multiple implementation dates and update policies in stages.

Phase 1: Immediate and Early 2026 (December 2025 – February 2026)

Effective December 2025: Repeal of the Strikes (Minimum Service Levels) Act 2023. This took effect on Royal Assent.

Effective 18 February 2026:

• Industrial action notice period reduced from 14 days to 10 days
• 40% support threshold for important public services removed
• Automatic unfair dismissal protection for official industrial action
• Most of the Trade Union Act 2016 repealed

Phase 2: April-October 2026

April 2026 Changes:

• Statutory sick pay from day one with no lower earnings limit
• Paternity leave and unpaid parental leave as day-one rights (statutory pay still requires 26 weeks)
• Collective redundancy protective award doubles from 90 to 180 days’ pay
• Sexual harassment reporting becomes protected disclosure under whistleblowing law
• Trade union recognition thresholds reduced
• Fair Work Agency established (7 April 2026)
• Duty to inform workers of right to join trade union

October 2026 Changes:

• Sexual harassment prevention duty strengthened to “all reasonable steps”
• Third-party harassment liability reintroduced
• Employment tribunal time limits extend from three to six months
• NDA restrictions on harassment disclosures (date to be confirmed)
• Trade union workplace access and recruitment rights

Phase 3: January 2027 and Throughout 2027

January 2027 Changes:

• Unfair dismissal qualifying period reduces from two years to six months
• Unfair dismissal compensation cap removed entirely
• Fire-and-rehire restrictions (automatically unfair except where business viability at stake)

2027 Changes (exact dates to be confirmed):

• Zero-hours guaranteed hours offers
• Reasonable notice requirements for shifts, changes, and cancellations
• Compensation for short-notice shift cancellations
• Right to request predictable working pattern
• Unpaid bereavement leave as day-one right
• Enhanced pregnancy and maternity dismissal protection
• Flexible working default (employers can refuse only if unreasonable)
• Mandatory gender pay gap and menopause action plans (250+ employees)
• Fair Pay Agreement for adult social care
• School Support Staff Negotiating Body reinstated

Further Consultations Required

Several provisions require additional consultation before final regulations are issued. Implementation dates may shift.

Areas still pending detailed regulations:

• Zero-hours contracts: definition of “low hours,” reference period length, what constitutes “regular” hours
• Pregnant worker protections: scope of exceptions to automatic unfairness
• Collective redundancy: potential extension of consultation period from 45 to 90 days for 100+ redundancies
• Fire-and-rehire code: detail of statutory code and 25% compensation uplift for breaches

The government has also committed to a major consultation on employment status reform — potentially moving to a two-tier system that removes the distinction between “workers” and “employees.”

This would significantly impact freelance contracts and consultancy agreements by potentially giving all workers full employment rights. The timing remains uncertain.

Transitional Provisions

Six-month unfair dismissal: The new threshold applies to employees who reach six months’ service on or after 1 January 2027.

An employee starting work on 1 July 2026 gains protection on 1 January 2027.

Employees dismissed before 1 January 2027 cannot claim unfair dismissal unless they had two years’ service, even if the Act has already passed.

Zero-hours protections: The guaranteed hours regime applies to reference periods beginning on or after the implementation date.

Workers won’t gain guaranteed hours immediately — they must complete a full reference period (likely 12 weeks) after implementation before receiving their first offer.

Implementation Guidance

ACAS will publish updated codes of practice and guidance for each implementation phase.

Further reforms expected (separate legislation):

• Employment status reform: moving to two-tier system removing worker/employee distinction
• Unpaid internship ban: definition and scope
• Collective grievance procedures: new rights for workers to collectively raise grievances
• Pay gap reporting: ethnicity and disability pay gap reporting for employers with 250+ employees

Verify Against Official Sources: GOV.UK Employment Rights Act implementation roadmap shows the most current phased timetable. Subscribe to updates from ACAS for guidance changes as provisions take effect. Some dates may shift as secondary legislation is finalised.

Frequently Asked Questions: Employment Rights Act 2025

What is the Employment Rights Act 2025?

The Employment Rights Act 2025 is comprehensive employment law reform that received Royal Assent on 18 December 2025 and introduces over 28 major changes to UK employment rights including day-one protections, zero-hours contract reforms, and reducing the unfair dismissal qualifying period from two years to six months effective January 2027.

What are the 5 fair reasons for dismissal under the Employment Rights Act?

The five potentially fair reasons under section 98 of the Employment Rights Act 1996 are: capability, conduct, redundancy, statutory restriction, and some other substantial reason.

The Employment Rights Act 2025 doesn’t change these reasons but makes it automatically unfair to dismiss for pregnancy, fire-and-rehire, or industrial action.

Do the changes apply in Northern Ireland?

No — the Employment Rights Act 2025 does not apply in Northern Ireland. Employment law is devolved to the Northern Ireland Assembly.

Northern Ireland has indicated it will introduce its own legislation in early 2026. Employers operating across GB and NI must track two separate frameworks.

Can employers still use zero-hours contracts after the Act?

Yes — zero-hours contracts remain legal but face significant restrictions from 2027.

Employers must offer guaranteed hours reflecting regular work patterns, provide reasonable notice for shifts, and pay compensation for short-notice cancellations.

The practical effect is that zero-hours contracts become viable only for genuinely irregular work, not as a default staffing model.

What happens to existing employment contracts?

Existing contracts remain valid but become non-compliant unless updated.

Key updates needed: six-month unfair dismissal (January 2027), day-one SSP (April 2026), day-one paternity and parental leave (April 2026), and guaranteed hours for zero-hours workers (2027).

Failure to update doesn’t invalidate contracts but creates legal exposure and potential tribunal claims.

How do I know which changes apply to my business?

All UK employers (except Northern Ireland) must comply. However, specific provisions affect different businesses differently:

• Zero-hours reforms: hospitality, retail, care sectors
• Unfair dismissal: all employers with employees
• SSP reforms: businesses with part-time or low-paid workers
• Trade union reforms: unionised sectors

Review your workforce against each implementation phase to identify which reforms need action.

Will there be further changes to employment law after this Act?

Yes — additional reforms not in the Act include:

• Employment status reform (two-tier system)
• Ethnicity and disability pay gap reporting (250+ employees)
• Unpaid internship ban
• Parental leave system review

These require separate legislation and are unlikely before 2027-2028.

What are the penalties for non-compliance?

Penalties vary by provision:

• Collective redundancy failure: up to 180 days’ pay per employee (April 2026)
• Unfair dismissal: unlimited compensation (January 2027)
• Zero-hours breaches: tribunal claims per affected worker (details pending regulations)
• Harassment prevention failure: 25% compensation uplift (October 2026)

How should employers prepare for these changes?

April 2026: Update payroll for day-one SSP. Revise leave policies. Enhance redundancy consultation procedures.

October 2026: Strengthen harassment prevention. Extend document retention for six-month tribunal limits.

January 2027: Shorten probation to six months. Update dismissal procedures. Recognise unlimited compensation exposure.

2027: Audit zero-hours workforce. Plan guaranteed hours transitions.

Where can I get updated employment contract templates?

Templates UK offers professionally drafted employment contracts structured following UK employment law. All templates include free lifetime updates — when we update a template, the new version is made available in your My Templates dashboard at no extra cost.

---

The Truth About “Free” Legal Template Sites (What You’re Really Signing Up For)

Most websites offering a “free legal template” follow the same pattern:

• You click because it’s advertised as free
• You spend 10–15 minutes answering questions
• At the very end, you must create an account or start a “free trial”
• Your card is required upfront
• The subscription auto-renews at £29–£39 per month

This isn’t a free template — it’s a subscription funnel. Many people only realise after being charged £300–£400 over the year.

Why These “Free” Templates Are a Legal Risk

• Outdated wording: not aligned with current UK law
• Missing mandatory clauses: required for legal validity
• No compliance guidance: leaving users without legal context
• No structured checklist: no way to verify the document works
• Not kept updated: often unchanged when legislation changes

One incorrect clause can weaken or invalidate the entire document.

Hidden Problem: Many “Free Template” Sites Aren’t Even UK-Based

Another major issue is that many free or auto-subscription template sites operate outside the UK and use documents originally drafted for the US legal system.

These are then loosely adapted for “international use,” which creates serious problems:

• Incorrect terminology: US legal terms like “at-will employment,” “severance,” “PTO” (Paid Time Off), “401k,” “W-2/1099 forms”
• Missing UK statutory references: No mention of Employment Rights Act 1996, ACAS Code, ERA 2025, or proper UK legislation
• Non-applicable clauses: References to US state laws, federal regulations, EEOC, OSHA, FMLA that don’t exist in UK law
• Wrong legal concepts: “Employment at will” (doesn’t exist in UK), “right to work states,” US-style arbitration clauses
• Legal conflicts: Clauses that breach UK employment law, GDPR, consumer protections, or statutory rights

Real Example: US templates often include “at-will employment” clauses stating “employment can be terminated at any time by either party without notice or reason.” This is standard in the US but completely illegal in the UK where employees have statutory notice periods, unfair dismissal protection (six months from January 2027), and must be dismissed for fair reasons with proper procedures.

This is one of the most common reasons UK businesses face employment tribunal claims, regulatory issues, or find their contracts unenforceable when using generic US-style templates.

The Employment Rights Act 2025 Problem

With the Employment Rights Act 2025 introducing 28 major changes throughout 2026 and 2027, employment documents drafted before these reforms may no longer reflect current UK law.

Some never update at all.

Even worse: US-based sites claiming “UK compliance” often just add a disclaimer saying “adapted for UK law” without actually understanding UK employment legislation. They miss critical provisions like:

• Day-one SSP from April 2026 (they still reference US “sick leave” policies)
• Six-month unfair dismissal from January 2027 (they keep US “at-will” language)
• Guaranteed hours for zero-hours workers (concept doesn’t exist in US law)
• ACAS procedures and UK tribunal processes (replaced with US arbitration clauses)

This leaves employers with non-compliant contracts creating significant legal exposure and potential tribunal claims worth tens or hundreds of thousands of pounds.

Why Templates UK Does the Opposite

• Based on UK law: Drafted exclusively by UK business template specialists who understand UK employment legislation
• No US crossover: Zero American legal terminology, no “at-will,” no “PTO,” no state-specific clauses
• Proper UK statutory references: Correct citations to Employment Rights Act 1996, ERA 2025, ACAS Code, UK tribunal procedures
• British legal terminology: “Notice periods” not “severance,” “Holiday” not “PTO,” “Statutory Sick Pay” not “sick leave”
• One-time price from £10.00: No subscriptions, no renewals, no hidden monthly charges
• Full preview before purchase: See the exact document before buying in our online editor
• Free lifetime updates: Updated versions for April 2026, October 2026, and 2027 changes are made available in your My Templates dashboard

No tricks. No trials. No hidden fees. Just the exact UK-specific legal document you came for — at the price we told you upfront.

Not ready to buy? Use our free interactive checklists to guide your own document — no payment required.

Build your own bespoke employment documents with our Employment & HR Pack. Preview every template before buying — only pay when you’re happy with it.

---

Explore the Master Legal Templates Pillar Guide

The complete overview of 37 essential UK business templates and all legal categories:

UK Business Legal Templates – Complete Master Guide

---

Explore All Templates UK Pillar Guides

• Employment Documents Guide UK
• How to Set Up a Business in the UK – Legal Guide
• Website Legal Documents UK – Compliance Guide
• Financial & Commercial Contracts UK – Protection Guide
• Commercial Office Lease Guide UK
• Digital & IP Agreements Guide UK
• Wills & Estate Planning Guide UK
• The “Free Template Scam” Guide

---

Related Guides

• Employment Contract Guide UK
• Zero-Hours Contract Guide UK
• Disciplinary Procedure Guide UK
• Performance Improvement Plan Guide UK
• Grievance Procedure Guide UK
• Written Statement of Terms Guide UK
• Employee Handbook Guide UK

---

Free Legal Templates & Interactive Checklists

Access all our free UK legal templates, checklists and downloadable PDFs.

Browse Free Templates →

Last updated: July 2026

Disclaimer: This guide provides general UK legal information, not legal advice. Laws are current as of July 2026.