Employment Rights Act 2025: Preparing for Change

29th Jan 2026

Author: Mohammed Balal

Over the last year, we published a series of updates on the Employment Rights Bill (ERB), breaking down what changes could be coming and when. That Bill has now received Royal Assent and became the Employment Rights Act 2025 on 18 December 2025. This article updates and supersedes our earlier ERB blogs, as the reforms are now confirmed in law.

Mohammed Balal, Employment Law Specialist, explains what the Employment Rights Act 2025 means for employers and how to prepare for the phased changes due to roll out from April 2026.

Key Changes Under the Employment Rights Act 2025

While the Act is now law, many of its key provisions will be introduced gradually. These include:

Zero-hours workers will have the right to request contracts reflecting their regular working hours.
Fire and rehire practices will be heavily restricted and may be automatically unfair in many cases.
Protection from unfair dismissal will apply after six months instead of two years (from 2027).
The cap on unfair dismissal compensation will be removed, allowing higher tribunal awards.
Redundancy consultation penalties increase, with awards of up to 180 days’ pay.
A new Fair Work Agency will enforce rights like minimum wage, sick pay and holiday pay.
Trade union rights will be expanded, including easier recognition and electronic voting.
Employer responsibility for workplace harassment, including by third parties, will be strengthened.

Implementation is expected to begin from April 2026 onwards, with further detail to be confirmed through secondary legislation and statutory guidance. As a result, employers should be aware that the legal and practical implications will continue to evolve over the coming months.

Employers will also need to prepare for the statutory rate changes, set by the Government each year, to the National Minimum Wage and National Living Wage. This applies across all age groups, and will apply to full-time, part-time, casual and zero-hours workers alike. These changes will require careful review of pay arrangements to ensure compliance across the workforce.

Statutory Sick Pay (SSP) is also set to change and will be payable from day one of absence, with the lower earnings limit being removed as well. This represents a shift in employer responsibilities and may have implications for sickness absence policies, cost management and payroll processes.

In addition, statutory family-related pay rates are set to increase. This includes maternity, paternity, adoption, shared parental and bereavement leave. Employers should ensure that their policies and documentation accurately reflect the updated statutory entitlements as they come into force.

In parallel to all of this, Government payroll changes to National Insurance thresholds will mean that payroll systems will need to be reviewed and updated to ensure calculations remain accurate and compliant.

Taken together, these developments highlight the importance of early preparation. Employers should consider reviewing payroll arrangements, sickness absence procedures, contracts of employment and staff handbooks to ensure they are well placed to respond as the changes are implemented.

How Butcher & Barlow can support your business?

If you are unsure how the Employment Rights Act 2025 and the associated payroll and statutory changes may affect your organisation, our Employment Law Team can provide clear, practical guidance to help you navigate the evolving legal landscape with confidence.

As a practical starting point, we can help you:

review contracts and working arrangements (including zero-hours arrangements) and identify where future updates may be needed
check redundancy and restructuring processes, so consultation is handled correctly
update sickness absence, family leave and harassment policies, ready for phased implementation
assess payroll readiness for National Minimum Wage, National Insurance and statutory payment changes
support Managers with training, so day-to-day decisions reflect the new obligations
plan communications to your workforce, so people understand what is changing and when

We will continue to share updates as commencement dates and official guidance are confirmed. If you would like tailored advice for your organisation, please contact our Employment Law Team.

If you would like to revisit the background, you can read our earlier ERB articles here:

A new era for workers’ rights – an introduction to the Employment Rights Bill: https://www.butcher-barlow.co.uk/news/employment-law-hr/introduction-to-the-employment-rights-bill-butcher-barlow/

What is changing first? Immediate reforms under the Employment Rights Bill: https://www.butcher-barlow.co.uk/news/employment-law-hr/what-changes-first-under-the-employment-rights-bill-butcher-barlow/

What is changing in April 2026 under the Employment Rights Bill?: https://www.butcher-barlow.co.uk/news/employment-law-hr/employment-rights-bill-april-2026-changes-explained-butcher-barlow/

October 2026: New protections and duties for employers under the Employment Rights Bill: https://www.butcher-barlow.co.uk/news/employment-law-hr/october-2026-employment-law-changes-butcher-barlow/

2027 reforms: Final changes under the Employment Rights Bill: https://www.butcher-barlow.co.uk/news/employment-law-hr/employment-rights-bill-what-is-changing-in-2027-butcher-barlow/

Employment Rights Bill – what employers should do now to prepare: https://www.butcher-barlow.co.uk/news/employment-law-hr/employment-rights-bill-what-employers-should-do-now-to-prepare/

Mohammed Balal

The information in this article was correct at the time of publication. The information is for general guidance only. Laws and regulations may change, and the applicability of legal principles can vary based on individual circumstances. Therefore, this content should not be construed as legal advice. We recommend that you consult with a qualified legal professional to obtain advice tailored to your specific situation. For personalised guidance, please contact us directly.