Employment Rights Act 2025: Business action planner
With major changes on the horizon, our checklist is essential to help you get organised without delay and stay compliant with the Employment Rights Act (ERA) changes coming into effect from 2026 to 2027.
ERA: April 2026
1. Statutory sick pay (SSP) changes
From 6 April 2026, waiting days and lower earnings limit abolished.
Actions required:
- Update contracts, handbooks and sick pay policies to reflect immediate eligibility and train managers and those with payroll responsibilities on the new rules.
- Ensure payroll systems can calculate SSP from the first day of sickness and that the correct rates are applied
- Communicate changes and provide training where needed.
Non‑compliance may lead to penalties for incorrectly providing SSP. It’s also important to factor in the potential for increased short‑term absence costs when assessing the overall financial impact.
2. Paternity and parental leave
From 6 April 2026, becoming day-one rights. Paternity can be taken before or after Shared Parental Leave.
Actions required:
- Update contracts of employment, handbooks and family-friendly leave policies to reflect the new entitlements.
- Communicate policy updates clearly to all staff.
- Train managers on the new rules.
- Plan for increased uptake of family leave and parents to take statutory paternity leave before or after shared parental leave.
Non-compliance may lead to employee grievances or legal claims relating to entitlement errors. One cost consideration is increased leave-related absence.
3. Sexual harassment
From 6 April 2026, becoming a protected disclosure.
Actions required:
- Update contracts of employment, handbooks and grievance and whistleblowing policies.
- Communicate policy updates, reporting mechanisms and support for whistleblowers clearly to all staff.
- Train managers on how to handle whistleblowing complaints.
Non-compliance may lead to increased claims risks and reputational damage. One cost consideration is increased compensation payments.
4. Fair work agency
Established on 7 April 2026, powers rolling out in 2027.
Actions required:
- Audit employment law compliance, update contracts of employment, handbooks, policies and employment practices to ensure compliance
- Communicate policy updates clearly to all staff
- Train managers to identify and resolve compliance issues and to keep robust documentation.
Non-compliance may lead to increased claims risks and reputational damage. One cost consideration is increased compensation payments.
5. Collective redundancy
From 6 April 2026, penalties for failures in informing and consulting doubling to 180 days.
Actions required:
- Review and update redundancy procedures to ensure full compliance with consultation rules.
- Train managers on legal obligations and effective communication during collective consultation process.
- Keep up to date with legal developments and prepare to update policies and procedures as developments occur.
Non-compliance may lead to significant financial penalties and reputation harm. One cost consideration is the increase of the maximum protective award and potential legal cost.
6. Unfair dismissal
Qualifying period reducing to 6 months and cap on unfair dismissal compensation removed from 1 January 2027. This will impact anyone employed on or before 1st July 2026.
Actions required:
- Review recruitment and selection processes to help get the right employees in place, reducing the risk of disputes and claims.
- Update contracts and handbooks to reflect the six-month qualifying period.
- Review probation policies to ensure fairness and transparency, including appeal rights.
- Train managers to manage probationary periods, performance and conduct issues promptly and to document discussions, meetings and decisions contemporaneously to reduce disputes and demonstrate fair and lawful processes.
Poorly managed dismissals can increase the likelihood of tribunal claims, with risks further heightened when probationary periods aren’t handled consistently. Organisations should also factor in the potential rise in legal exposure and settlement costs when evaluating the implications of non‑compliance.
7. Duty to keep holiday records
From 6 April, employers must maintain adequate records tracking their staff’s annual leave and any associated payments.
Actions required:
- Employers will be required to keep records to prove compliance. The information that must be recorded includes:
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- Ordinary and additional annual leave.
- Annual leave carried forward from previous years.
- Details of holiday pay, including which pay elements have been included or excluded.
- Any payments in lieu of annual leave, including for carried‑over leave.
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- Employers should audit how they record workers’ annual leave entitlement and pay and identify where there may be gaps.
Non-compliance may lead to penalties for non-compliance with both the ERA and Working Time Regulations. Non-compliance may lead to significant financial penalties and reputation harm.
ERA: August to October 2026
8. Enhanced protections against harassment
Becoming duty to take “all” reasonable steps and third-party harassment provisions included.
Actions required:
- Update anti-harassment policies to cover third-party harassment and communicate them to staff.
- Engage with your staff.
- Provide training for managers and employees on recognising, reporting and responding to harassment.
- Conduct risk assessments and introduce preventative measures, including robust reporting mechanisms.
- Strengthen sexual harassment prevention measures across all work environments.
- Focus on learning and continuous improvement.
- Keep up to date with legal developments, including forthcoming regulations and prepare to update policies and procedures as developments occur.
One risk of non-compliance is the increased exposure to claims, as well as those involving third parties. This might bring about potential legal costs, compensation and reputational damage.
9. Tribunal time limits
Change expected in October 2026.
Actions required:
- Update internal HR processes and guidance to reflect the extended six-month time limit for most tribunal claims.
- Ensure managers maintain accurate records for longer.
- Consider whether the extended limitation period affects your approach to early resolution and settlement, as a longer window to bring claims may influence dispute handling strategy.
Non‑compliance can expose organisations to a higher risk of claims, and it’s important to factor in the potential for increased compensation payments or settlements.
10. Trade union engagement
Actions required:
- Develop a strategy for constructive engagement with trade unions.
- Train managers in effective communication and negotiation with union representatives.
Disputes or industrial action could be a risk of non-compliance and potential costs could incur as a result of this.
11. Performance and probation periods
Compliance review becoming more critical when unfair dismissal qualifying period changes.
Actions required:
Ensure probationary and performance processes are robust and consistently applied.
- Keep clear documentation for each stage of probation reviews.
- Train managers to handle performance issues effectively from the start of employment.
Tribunal claims could rise for poorly documented or mishandled probation dismissals, and these could also incur legal costs.
ERA: 2027
12. Strengthened flexible working rights
Actions required:
- Update flexible working policies to reflect new rights and decision-making expectations.
- Implement a clear framework for evaluating requests.
- Train managers on the updated policies and processes.
A key risk of non‑compliance is exposure to claims relating to flexible working rights, constructive unfair dismissal or discrimination. Organisations should also consider the associated cost implications, including potential investment in remote‑working systems and equipment.
13. Fire and rehire
Becoming automatically unfair unless statutory exceptions apply.
Actions required:
- Review and update processes for varying terms and conditions.
- Ensure contractual variations are properly justified and documented.
- Avoid relying on existing flexibility clauses without legal review.
- Train managers on the new automatic unfair dismissal risks and the narrow financial difficulties exemption.
Legal disputes, claims of unfair treatment and damage to reputation may be a risk of non-compliance.
14. Zero and low-hours contracts
New obligations including right to a more stable contract, guaranteed hours and compensation for cancelled or moved shifts.
Actions required:
- Update payroll systems.
- Update contracts and policies for zero-hours workers.
- Train managers on the updated policies and processes.
- Audit zero-hours staff to compare contractual hours with actual working patterns.
- Update contracts to ensure alignment with new rights.
- Communicate the new entitlements to workers.
Legal challenges over working hours or compensation for shifts cancelled or moved at short notice may be one risk of non-compliance. Companies should also take into account the cost considerations of increased labour costs when providing guaranteed hours.
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If you would like to discuss these changes with one of our HR experts, please contact us.
