What is the Employment Rights Act 2025?

The Employment Rights Act 2025 (sometimes called the ERA 2025) received Royal Assent on 18 December 2025. It is the most significant overhaul of UK employment law in over a generation, introducing 28 major reforms that will reshape the relationship between workers and employers over the next two years, implemented in phases from February 2026 through to 2027.

The Act was introduced by the Labour government as part of its 'Plan to Make Work Pay', a package of commitments designed to strengthen workers' rights, reduce one-sided flexibility, and create a fairer workplace. It builds on and amends the existing Employment Rights Act 1996.

Not everything in the Act is in force yet. The government is rolling out the changes in waves, with most of the major reforms taking effect across 2026 and 2027. It covers unfair dismissal, sick pay, family leave, zero-hours contracts, fire and rehire, harassment, trade unions, and more, and has been described by legal experts as the biggest employment law change in a generation.

What has already changed?

The first two waves of ERA 2025 changes are already in force. Industrial action reforms took effect in February 2026, followed in April 2026 by day-one paternity leave and unpaid parental leave, Statutory Sick Pay from the first day of absence, removal of the SSP lower earnings limit, and the formal establishment of the Fair Work Agency on 7 April 2026.

Industrial action reforms (February 2026)

• Strike notice reduced from 14 days to 10 days.
• The requirement to appoint a dedicated picket supervisor has been removed.
• Industrial action ballot mandates now last 12 months (up from 6).
• Dismissal for taking part in protected industrial action is now automatically unfair, with no 12-week time limit on that protection.

Family leave and sick pay (April 2026)

• Paternity leave is now a day-one right; you no longer need 26 weeks' service to be eligible (you still need 26 weeks' service for paternity pay).
• Unpaid parental leave is now a day-one right; it previously required one year's service.
• Statutory Sick Pay (SSP) is now payable from day one of absence; the previous three-day waiting period has been abolished.
• The lower earnings limit for SSP has been removed, so lower-paid and part-time workers now qualify.
• SSP is paid at £123.25 per week or 80% of normal weekly earnings, whichever is lower.
• The maximum protective award for failure to collectively consult on redundancies has doubled, to up to 180 days' pay.
• Bereaved partners can now take up to 52 weeks of unpaid paternity leave if the mother or primary adopter dies within the child's first year.
• The Fair Work Agency (FWA) was formally established on 7 April 2026 to enforce employment rights.

What does the Fair Work Agency do?

The Fair Work Agency is the new body responsible for enforcing workers' rights, including minimum wage, holiday pay, and statutory sick pay. It brings together enforcement functions previously spread across several government bodies. If you think your employer is not paying you correctly, the FWA is where to report it.

What reforms are still to come?

The bigger changes are still ahead. Employment Tribunal time limits are expected to extend from three months to six months from October 2026 or later; on 1 January 2027 the unfair dismissal qualifying period drops to six months, the compensation cap is abolished and fire and rehire becomes automatically unfair; and further reforms follow throughout 2027.

Extended Employment Tribunal time limits (October 2026 or later)

• The time limit to bring most Employment Tribunal claims will increase from three months to six months.
• This gives workers more time to decide whether to make a claim after being dismissed or treated unfairly.
• Wrongful dismissal claims will keep the existing three-month limit.

Unfair dismissal: qualifying period and compensation cap (1 January 2027)

• The qualifying period for ordinary unfair dismissal will reduce from two years to six months.
• Any employee with six months' continuous service on 1 January 2027 will gain protection from that date, even if they started before the law changed.
• The statutory cap on unfair dismissal compensation will be abolished entirely. Currently the cap is £118,223 or 52 weeks' gross pay, whichever is lower.
• This is the single most significant change in the Act for most workers.

Fire and rehire restrictions (1 January 2027)

• Dismissing an employee and rehiring them on worse terms and conditions will become automatically unfair dismissal in most cases.
• Employers will only be able to use the practice in very limited circumstances, essentially where the business faces genuine financial crisis.

Further reforms (throughout 2027)

• Zero-hours and low-hours workers: right to be offered guaranteed hours after a 12-week reference period, reasonable notice of shifts, and compensation for short-notice cancellations.
• Enhanced protection against dismissal during and after pregnancy and maternity leave.
• New statutory right to bereavement leave (unpaid) covering a wider range of family bereavements.
• Flexible working: strengthened rights and procedures.
• Sexual harassment: further duties on employers, including third-party harassment protections.
• Collective redundancy: changes to thresholds and notification obligations.

How is unfair dismissal changing?

From 1 January 2027 the qualifying period for ordinary unfair dismissal drops from two years to six months, and the statutory compensation cap, currently £118,223 or 52 weeks' gross pay, whichever is lower, is abolished entirely. Until then, the existing two-year threshold continues to apply to anyone dismissed before that date.

Right now (as at June 2026), you generally need two years' continuous service with your employer before you can bring an ordinary unfair dismissal claim to the Employment Tribunal. If you are dismissed before reaching two years, you cannot use unfair dismissal, although other routes (wrongful dismissal, discrimination) may still be available.

From 1 January 2027:

• If you have worked for your employer for six months or more, you will be protected against unfair dismissal.
• If you are already employed on 1 January 2027 and have at least six months' service, you gain protection from that date automatically.
• If you start a new job from around July 2026 onwards, you will reach six months' service by January 2027 and gain protection then.

What about probationary periods?

The ERA 2025 does not create a statutory concept of a probationary period. However, the practical effect of the six-month qualifying period is that employers will treat the first six months as a probationary window. If you are dismissed during this period, the same routes that exist now, wrongful dismissal and discrimination, will still apply.

How has Statutory Sick Pay changed?

Since 6 April 2026, Statutory Sick Pay is payable from your first day of absence, abolishing the previous three-day waiting period, and the lower earnings limit has been removed so lower-paid, part-time and casual workers now qualify. SSP is currently paid at £123.25 per week or 80% of your normal weekly earnings, whichever is lower.

• No more waiting days. Previously, you had to be off sick for three days before SSP kicked in. From 6 April 2026, SSP is payable from your first day of absence, for all eligible employees regardless of length of service.
• Lower earnings limit removed. Previously, you had to earn at least £123 to £129 per week to qualify for SSP. That requirement has been abolished, so lower-paid workers, part-time workers, and casual workers who previously earned too little can now receive SSP.

What is changing for zero-hours contracts?

The ERA 2025 does not ban zero-hours contracts, but it will significantly restrict how they work. Once a zero-hours or low-hours worker completes a 12-week reference period, the employer must offer guaranteed hours reflecting the hours actually worked, give reasonable notice of shifts, and pay compensation for short-notice cancellations. These changes are expected during 2027.

A zero-hours contract is one where your employer does not guarantee you any minimum number of hours. You are available to work when they need you, but they are not obliged to offer you work and you are not obliged to accept it.

Under the ERA 2025, after the 12-week reference period the employer will be required to:

• Offer guaranteed hours reflecting the hours actually worked during the reference period, if the worker wants them.
• Give reasonable advance notice of shifts.
• Pay compensation if shifts are cancelled at short notice.

These rights will also extend to agency workers. Workers will be able to stay on a zero-hours contract if they prefer the flexibility: the right is to be offered guaranteed hours, not to be forced onto them. The government is still consulting on the detail, and the provisions are expected to come into force during 2027.

What is changing for fire and rehire?

From 1 January 2027, dismissing an employee and offering to rehire them on worse terms will be treated as automatically unfair dismissal in most cases. The only exception is where the employer can show genuine financial difficulties that threatened the business's survival, and the burden of proof on the employer will be high.

Fire and rehire, also called dismissal and re-engagement, has been used by some employers to force through pay cuts or changes to working conditions. In practice, from January 2027:

• Employers will not be able to use the threat of dismissal to pressure you into accepting a pay cut or worse terms.
• If you are dismissed and the reason is to rehire you on worse terms, you will be able to bring an automatically unfair dismissal claim.