If you’re reading this slightly bleary eyed in the aftermath of a Christmas party and wondering why your LinkedIn feed has suddenly filled up with talk of the Employment Rights Bill, there is a simple explanation. The Bill passed yesterday (16 December 2025) and is now on track to become the Employment Rights Act 2025 before the Christmas break (possibly as early as tomorrow, 18 December 2025).
With many of the changes due to be phased in during 2026 and 2027, the Act represents one of the most significant shifts in UK employment law in a generation. For HR teams and business leaders, it is less about one headline reform, and more about a clear change in direction that will need to be factored into workforce planning and decision making over the next few years.
Against that backdrop, what are the key headline changes that HR and UK businesses should be aware of?
Statutory Sick Pay (April 2026)
The current three-day waiting period will be scrapped, with SSP payable from day one. The lower earnings limit will also be removed.
The TUC (Trades Union Congress) has estimated that this change will cost UK employees £425m to pay for extra sick days. However, according to the report, businesses "would gain benefits of £2.4bn thanks to productivity boosts". Make of that what you will. Whilst this message may seem confusing, what is clear is that businesses need to ensure SSP changes are budgeted for in next year’s figures.
Paternity Leave and Unpaid Parental Leave (April 2026)
Both these family-friendly rights will become a day-one right, scrapping the current waiting period for both. In addition, employees will be able to take paternity leave before or after shared parental leave in a change from the current regulations.
Stronger trade union rights (from April 2026 onwards)
Proposed changes to expand access to employers’ premises for trade unions, alongside enhanced rights around recognition and industrial action, with the government still consulting on these changes and the supporting regulations.
Collective redundancy (April 2026)
The Act is due to retain the “at one establishment” test while adding a further, business-wide threshold, the detail of which remains subject to future regulations.
Protective awards for collective redundancy failures are also due to double from 90 to 180 days’ pay from April 2026
Tribunal Time Limits (2026)
Following concerns that the current time limit of three months to bring a claim is too short, Tribunal time limits are due to be extended to six months from October 2026.
Unfair Dismissal Protection (proposed from January 2027)
One of the main issues delaying the Bill was the government’s proposal for day one unfair dismissal protection. This, along with the “initial period of employment” stance was ultimately dropped in favour of a six-month qualifying period. The new qualifying period is expected to apply to employees who have six months’ qualifying service as of 1 January 2027, meaning service accrued before that date is likely to count. We will update readers on this point as soon as it is clarified.
In addition, we expect that the current cap on unfair dismissal compensation (currently 52 weeks’ gross salary or a statutory cap, whichever is lower) will be scrapped for dismissals after 1 January 2027.
Dismissals During or After Family Leave (2027)
The Act enhances protection against dismissal during family leave and following a return to work. The government is consulting on the exact details and whether these protections should apply beyond redundancy situations.
Guaranteed Hours and Working Patterns (expected 2027)
The Act will introduce a new guaranteed hours and shift scheduling regime requiring employers to offer guaranteed hours where workers regularly exceed their contracted hours, provide reasonable notice of shifts and cancellations, and extend these rights to agency workers. Many of the details are still to be set out and we will keep you updated on developments.
Harassment (timing TBC)
The Act builds on the existing duty to take reasonable steps to prevent harassment, by requiring employers to take all reasonable steps to prevent workplace sexual harassment, and by extending potential liability to third-party harassment where those steps have not been taken.
Final Thoughts
The Employment Rights Act 2025 represents a broad rebalancing of the employment relationship, with many of the changes set to be phased in over the next two years. For HR teams and UK businesses, this is a set of reforms that will need to be factored into business planning, workforce strategy and budgeting throughout 2026 and 2027.
Although some of the details are yet to be finalised, the direction of travel is clear. Employers who take time now to understand the changes, monitor the developing regulations and plan ahead will be far better placed to manage risk and avoid last-minute disruption as each provision comes into force.
BPE will be exploring the key areas of reform in more detail in a series of future bulletins, focusing on what the changes mean in practice and how employers can prepare. To stay up to date as the regulations develop, you can subscribe to our employment law updates here.
