Employment Rights Act 2025

Unfair Dismissal / Probationary period

Current law

Employees must have worked for their employer for a minimum of two years before qualifying for the right to claim ‘ordinary’ unfair dismissal.

Employment Rights Act 2025

The government is changing the two-year qualification period for employee protections against unfair dismissal to six months.

Employers will retain the ability to run separate contractual probation periods of any length they choose, but should be mindful of concluding probationary reviews prior to employees achieving 6 months’ service.

Zero hours contracts

Current law

Very little rights for individuals on zero hours contracts.

Employment Rights Act 2025

Employers will have a duty to offer qualifying workers guaranteed hours to reflect the hours they work over a reference period.

‘Short notice’ cancellation payments for withdrawn shifts will not be payable where the shift is cancelled at least 48 hours in advance.

Where agency workers request guaranteed hours at the ‘Host’ (the business using the agency), they may be able to request their (usually higher) agency rate within the guaranteed hours contract. Organisations would be well advised to regularly audit pay and be ready to provide objective justification where lower rates are offered.

Fire and rehire

Current law

Employers may dismiss employees before offering to re-engage them in the same roles, as a means of changing their terms and conditions of employment. Currently, employers can use fire and rehire where they have a sound business reason to change a contract of employment as a last resort, following the statutory code of practice on dismissal and re-engagement, which came into force on 18 July 2024.

Employment Rights Act 2025

There are several proposed amendments which will narrow the scope of the current proposed total ban on fire and rehire. If adopted, the prohibition will apply only to ‘restricted variations’, including pay, working hours, pensions, holiday entitlement, and other elements to be defined in future regulations. A separate amendment will exclude any minor variations not relating to those listed above.

One significant amendment removes the mandatory checklist that tribunals must consider when assessing fairness. Instead, if an employer demonstrates serious financial distress, the tribunal may provide some relief to employers facing genuine solvency risks.

The further amendments will also seemingly allow employers a defence to “fire and rehire” as a last resort if they can demonstrate that the change was essential to avert “calamitous financial distress” or the employer had observed a six-point consultation checklist.

Public Sector Outsourcing (Protection of Workers)

Current law

Currently, there is a ‘two-tier workforce’ in which employees who are ex-public sector and private sector but performing the same tasks are treated differently in respect of their employment terms and conditions, following the transfer of public contracts.

Employment Rights Act 2025

The Act will ensure that specified workers are treated no less favourably than their counterparts on the same contract.

Collective Redundancy

Current law

Employers who propose 20 or more redundancies at a single establishment within a 90-day period or less must collectively consult the appropriate representatives of the employees before making any redundancies. If they don’t, employees can claim a protective award of up to 90 days’ pay.

Employment Rights Act 2025

Collective consultation will be triggered where 20 or more redundancies are proposed at one establishment or a threshold number of employees are proposed to be made redundant across the employer’s organisation. The threshold number will be set in regulations.

The Act allows the Employment Tribunal to award up to 180 days’ pay against the employer, rather than the current 90 days maximum for the protective award.

Statutory sick pay

Current law

Statutory Sick Pay (SSP) is payable from the fourth day of sickness absence. Employees must earn at least £123 per week to qualify.

Employment Rights Act 2025

Statutory Sick Pay will be payable from day one of sickness absence. The requirement to earn at or above the lower earnings limit will be removed, allowing all eligible employees to receive SSP. For those earning below the lower earnings limit, 80% of their average weekly earnings will be paid, or £118.75, whichever is lower.

Paternity leave

Current law

Qualification for paternity leave currently requires 26 weeks of continuous employment.

Currently, when shared parental leave is taken, fathers or partners lose their right to take any paternity leave they have not already taken.

Employment Rights Act 2025

Paternity leave will become a day-one right, removing the qualifying period. The notice period will remain unchanged, requiring 15 weeks’ notice before the expected week of childbirth, or as soon as reasonably practicable.

The Act removes the restriction on taking paternity leave after taking shared parental leave, providing more flexibility for employees.

Parental leave

Current law

Qualification for parental leave requires one year of continuous employment.

If they qualify, the parent can take up to 18 weeks of unpaid parental leave for each child until the child is 18 years old.

Employment Rights Act 2025

Parental leave will become a day-one right, removing the qualifying period. The notice period will remain unchanged, requiring 21 days’ notice or as soon as reasonably practicable.

Bereavement leave

Current law

There is currently no statutory right to bereavement leave, except for parents who lose a child from 24 weeks of completed pregnancy until the age of 18.

Employment Rights Act 2025

The Act establishes an entitlement to bereavement leave. This will be a day one right for employees following the death of a close relative or other person (to be defined). Secondary legislation will provide details of who will be eligible to take bereavement leave through the relationship to the deceased and how the leave can be taken.

Flexible working

Current law

Employees have the right to request a flexible working arrangement from their first day in a job. They can ask their employer for a flexible working arrangement twice in every twelve months, and their employer must give their decision within two months. Requests can only be turned down on the basis of one of the 8 specified business reasons. There is currently no requirement for employers to explain their decision.

Employment Rights Act 2025

The Act will require that employers must explain why it was reasonable to turn down a request on the basis of the ground/s selected from the eight specified business reasons.

Right to switch off

Current law

Currently, there is no explicit right to disconnect in UK law.

Employment Rights Act 2025

The government previously indicated that it would deliver a right to switch off through a statutory Code of Practice. However, recent press reports have suggested that the government is now unlikely to move forward with this proposal.

Harassment

Current law

Employers must take reasonable steps to prevent sexual harassment of employees and workers during employment.

Employment Rights Act 2025

The Act introduces a wider scope where employers are required to take “all” reasonable steps to prevent sexual harassment in the workplace.

Under the new proposals, any attempt to use a confidentiality clause (whether in an employment contract or settlement agreement) to prevent workers from making disclosures or allegations relating to harassment or discrimination will be void. This includes disclosures about the underlying conduct as well as how the employer responded.

The provision would apply to current and former employees and could, through future regulations, extend to contractors, interns, and others in non-standard roles (partners, volunteers, etc).

The new provisions exclude disclosures about a failure to make reasonable adjustments, which, if these provisions are introduced, can still be subject to confidentiality terms.

Any attempt to silence such disclosures will not only be unenforceable but may give rise to further litigation risks, particularly where workers feel they are being pressured into silence or feel strongly about the treatment they believe they have been subjected to. These provisions will likely require further reforms due to the omission of confirmation as to how these provisions would operate if the allegations are spurious, for example.

Equality action plans

Current law

Employers with 250 or more employees must publish specific gender pay gap data annually on a publicly available government website.

Employment Rights Act 2025

In addition to gender pay gap reporting, employers with 250 or more employees will be required to publish equality action plans and identify the providers or employers of any contract workers they engage.

Menopause action plans

Current law

There are no proactive obligations for employers to take steps relating to employees with menopause.

Employment Rights Act 2025

New regulations will require employers with 250+ employees to produce and publish menopause action plans as part of an Equality Action Plan. The regulations will include specific penalties for not doing so.

Enhanced dismissal protections for pregnant women and new mothers

Current law

Pregnant women and new mothers have enhanced protections against redundancy dismissal. These protections give women the right to be offered suitable alternative roles if available, and place them ahead of other employees also at risk of redundancy during the protected period (from informing the employer of pregnancy to 18 months after the expected date of childbirth).

Employment Rights Act 2025

The Act will add an ‘additional layer’ of protection, making it unlawful to dismiss pregnant women, and mothers on maternity leave, or in the six months after they return to work (except in specific circumstances).

The government will have the power to introduce further regulations to cover other dismissals during pregnancy, maternity leave or following return to work.

These protections will apply to other types of family-related leave.

Trade Unions

Current law

There are strict rules for Trade Unions.

Trade Unions have no general right to access workplaces for recruitment and organisation of members.

Written statements must include information about any terms incorporated in their contracts which are subject to collective bargaining with a recognised Union, or the absence of these.

Employers must provide certain facilities in their workplaces to Union Representatives to enable them to meet with and communicate with staff.

Employment Rights Act 2025

The Act will enhance workplace access for recruitment, organisation of members and collective bargaining purposes.

The Act will require employers to tell their staff that they have a right to join a Trade Union when they start work (via the s1 statement or contract of employment) and at other ‘prescribed times’ (not yet defined) throughout their employment.

The Act will require employers to give Union Reps sufficient facility time and create new rights and protections for Trade Union equality reps. This will include a statutory right to take time off during working hours for specified purposes (not defined) related to equality in the workplace.

Current law

The Trade Union Act 2016 made it more difficult for trade unions to take industrial action by imposing higher ballot thresholds for certain important public services, requiring unions to re-ballot members after six months, and restricting picketing. Ballots have to be done via post.

Employment Rights Act 2025

The Act will introduce electronic balloting for industrial action and repeal most of the Trade Union Act 2016, rolling back almost all of the restrictions on calling strike action introduced by Conservative-led governments since 2010.

For a lawful strike or other industrial action, Trade Unions will need a simple majority of members who respond to an industrial action ballot to vote in favour of industrial action.

Trade Unions will not be required to secure 40% support in strike ballots for six important public services (fire, health, education, transport, border security and nuclear decommissioning sectors).

Strengthening protections for whistleblowers

Current law

The Act will explicitly add sexual harassment to the list of relevant failures that form the subject matter of a protected disclosure. This will provide clarity that a disclosure of information by a worker about sexual harassment can be a qualifying disclosure under s.43B of the ERA.

Employment Rights Act 2025

Whilst the current proposals seek to add in disclosures about sexual harassment amounting to protected disclosures, the new proposals also seek to simplify the legislation wording and further expand the remit of such legislation to also include mismanagement of public funds, abuse of authority “or anything else set out in regulations” (which we do not have the benefit of seeing yet).

However, the new changes also mean that the disclosure must actually be in the public interest as opposed to the worker reasonably believing it to be in the public interest.

A new public body, the Office of the Whistleblower, will be created to set standards, act as a reporting channel, and issue redress and enforcement orders. Intentional or reckless victimisation of whistleblowers will be made a statutory offence, with potential penalties of up to 10% of global turnover.

Some organisations, particularly those with over 50 staff, turnover exceeding £10 million, or operating in the financial sector, will face a new duty to investigate protected disclosures.

Extension of time limits for bringing tribunal claims

Current law

Most tribunal claims need to be brought within three months of the act complained of.

Employment Rights Act 2025

The Act was amended during its progress through parliament to extend time limits for bringing tribunal claims from three to six months. This will apply to all types of claims, including discrimination and unfair dismissal (although curiously it does not currently apply to breach of contract claims – this seems to be an oversight, so may be corrected).

Fair Work Agency

Current law

The UK has limited state enforcement of employment rights.

Employment Rights Act 2025

The Act gives the government various powers to enforce labour market regulation and to delegate this to a new public authority (expected to be called the Fair Work Agency).

The Fair Work Agency will be able to:

• Enforce failure to comply with the new obligation to keep adequate records of holiday pay.
• Enforce failure to pay certain statutory payments to workers – including holiday pay and statutory sick pay. Based on the existing regime for minimum wage enforcement, the agency will be able to issue a notice of underpayment to employers, which specifies the amount payable within 28 days. This is combined with a penalty of 200% of the sum due, payable to the Secretary of State. This will have major implications for employers who get holiday pay wrong across a workforce.
• Bring Employment Tribunal proceedings on behalf of a worker if the worker has the right to bring a claim, but it appears they are not going to.
• Provide legal assistance for employment-related proceedings, such as helping claimants with holiday pay claims.
• Recover their own enforcement costs from employers who are not complying with the law. This is a major new addition that will increase non-compliance costs for employers and potentially help to fund the agency’s work.
• Enter homes with a warrant to obtain documents and check computers.

Umbrella companies

Current law

Umbrella companies are not currently subject to the conduct regulations, meaning that they generally do not fall within the scope of the Employment Agency Standards Inspectorate.

Employment Rights Act 2025

The Act will allow for the regulation of umbrella companies by the Employment Agency Standards Inspectorate, and subsequently the Fair Work Agency.

From April 2026, new legislation will transfer the responsibility for accounting for PAYE and National Insurance contributions (NICs) for umbrella company workers. This responsibility will fall to the recruitment agency that supplies the worker to the end client or the end client directly, if no agency is involved.

Agencies and end clients that do not outsource payroll must ensure they are prepared to manage this responsibility. Additionally, umbrella companies will be subject to tighter scrutiny and enhanced due diligence obligations under the updated rules.

Tips and gratuities

Current law

It is mandatory for all tips, gratuities and service charges that employers have “control or significant influence” over to be passed on to workers in full.

When paid to an employer’s place of business on “more than an occasional and exceptional basis”, the employer must have a written policy on how it deals with tips.

Employment Rights Act 2025

When developing their tipping policies, the Act will require employers to consult with employees at the place of business. This consultation should take place with recognised trade union representatives or other elected representatives, but if absent, directly with the workers affected.

Employers will be required to review their policy on tipping at least once every three years, as well as being required to make an anonymised summary of the views expressed during consultation available to all workers at the place of business where the policy applies.

If an employer fails to comply with these measures, the workers will be able to present a complaint to an employment tribunal. A tribunal will be able to award up to £5,000 for financial loss sustained by the worker and attributable to the employer’s failure.