The Employment Rights Bill, which received Royal Assent to become the Employment Rights Act 2025 yesterday, introduces a wide range of changes for UK employers, with some already in effect and others phased in through 2027.
Some of the key updates include day-one flexible working requests from April, new tips rules from October, Statutory Sick Pay from the first day of absence and a six-month qualifying period for unfair dismissal claims with the removal of the compensation cap.
The Bill also restricts “fire-and-rehire” practices, strengthens protections for zero-hours workers, introduces liability for third-party harassment and expands trade union rights.
Experts warn that these changes increase financial and administrative responsibilities, particularly for SMEs, and urge businesses to review policies, workforce structures and HR procedures now to mitigate risk and ensure compliance.
Anthony Collins employment law partner Anna Dabek says: “It’s been a long and argumentative autumn, but with days to spare before the Christmas break, the Employment Rights Bill, has finally been passed in Parliament. A sigh of relief that the uncertainty is over, but also considerable concern from employers for the challenges that lie ahead as the provisions of the Bill are introduced over the next two years.
“Whilst boosting workers’ rights is an important and positive step, employers in the social care sector have already voiced their concerns about how these changes could impact their viability at a time of recruitment challenges, funding constraints and increasing employment-related costs. Many care providers support the idea of improving workers’ rights whether that be through better pay or predictable working practices, but they simply don’t believe it can be achieved without a long-term funding solution for the sector.
“We know from speaking to clients that changes such as making statutory sick pay a day one right, will be a challenge. Ensuring staff who are sick can take the time off they need is a good thing, however, many providers predict this could increase short-term absences, which will have a financial impact and require more management time. This change is one of the earliest to take effect in April 2026, so the challenge is imminent.
“Coming later, is the fundamental change to the right to bring an unfair dismissal claim. In the initial draft of the Bill, and up until July 2025, the current qualification period of two years was removed entirely. After much debate in Parliament, there will now be a six-month qualification period and the cap for compensation will be removed. Equally fundamental to providers with staff on irregular contracts, are the changes to zero-hour contracts. Staff on these irregular contracts will have a right to a guaranteed hours contract if certain requirements are met. Both changes are not due to take effect until 2027 as consultation and regulations confirming the details of the Guaranteed Hours Offer (GHO) are needed. We understand that any employee with six months’ service on or after 1st January 2027 will be entitled to bring an unfair dismissal claim.
“Recognising the challenges that lie ahead, employers in the social care sector must now focus on preparation. For those that get ahead of the legislative wave, there is an opportunity to prepare wisely and embed new working practices at an early stage, whilst positioning their organisation as an employer of choice.”
Society of Occupational Medicine chief executive Nick Pahl says: “As the Employment Rights Bill becomes law, workplace health management is shifting towards early interventions and day-one protections, emphasising the need for occupational health expertise, training, guidance, and support.
“The Bill’s expansion of Day-One Rights – including reforms to Statutory Sick Pay (SSP), flexible working, and unfair dismissal protections – places a greater emphasis on robust pre-placement health assessments. Occupational health guidance is essential for managers to identify necessary support through case-by-case assessments, preventing health issues from escalating.
“The introduction of mandatory Menopause Action Plans for large employers requires a strategic occupational health approach to ensure policies and management training effectively support employees. Occupational health experts can also help determine whether an employer has taken reasonable steps to prevent sexual harassment.
“To support the new Fair Work Agency in ensuring these reforms are effectively implemented, occupational health experts and services are needed. When in place, occupational health helps reduce absenteeism and increase workplace morale, retention, productivity, and profitability.”
Burges Salmon partner and head of Employment at law firm Luke Bowery says: “In passing the Employment Rights Act, Parliament has fired the starting gun on the biggest overhaul of employment law in decades.
“The Act will reshape almost every aspect of the employment relationship — from contracts to dismissal — creating new rights for workers and significant obligations for employers.
“Unfair dismissal protection after six months, coupled with uncapped compensation, statutory sick pay from the first day of absence, tighter rules on changing contract terms, guaranteed hours for zero-hours and low-hours staff, protection from third-party harassment, and stronger trade union rights are just some of the changes ahead.
“These reforms will be phased in over the next two years, with much of the detail still to be confirmed. But make no mistake – this is a sea-change businesses cannot afford to ignore. Employers should act now to review workforce strategies, budgets, policies and practices to prepare for what’s coming.”
