Employment Rights Act 2025: Key Changes Every Employer Must Know

February 2, 2026

The landscape of employment law is undergoing its most significant transformation in decades. With the introduction of the Employment Rights Act 2025, businesses across England and Wales face a raft of new obligations that fundamentally alter the employer-employee relationship.

For business owners and HR personal, staying ahead of these developments is not optional it is a commercial necessity. The Act introduces sweeping reforms designed to enhance worker protections, ranging from dismissal rights to redundancy procedures. Understanding these shifts now is crucial to mitigating risk and ensuring your policies are compliant before enforcement begins.

This guide examines the critical elements of the new legislation, focusing on the practical implications for your business operations and the steps you need to take to prepare for employment law changes in 2026 and beyond.

Changes to Unfair Dismissal Rights

Perhaps the most headline-grabbing change within the Act is the reform of unfair dismissal eligibility. Historically, employees required two years of continuous service to claim ordinary unfair dismissal.

Under the new legislation, this qualifying period has been significantly reduced. The Act amends the Employment Rights Act 1996 to change the qualifying period from “two years” to “six months.”

This shift drastically increases the number of employees eligible to bring a claim. Employers will need to be far more rigorous in their recruitment and probation processes. If a new hire is not working out, businesses must address performance issues comprehensively within that initial six-month window.

Removal of the Compensatory Award Cap

The Act omits Section 124 of the Employment Rights Act 1996. This section previously set a statutory limit on the compensatory award for unfair dismissal. The removal of this cap means that the potential financial exposure for businesses facing successful tribunal claims is now significantly higher. It is more important than ever to follow procedurally fair dismissal processes to the letter.

“Fire and Rehire” Practices

The Act takes a firm stance on the practice of dismissal and re-engagement, commonly known as “fire and rehire.”

Under the new rules, a dismissal will be automatically unfair if the principal reason is that the employer sought to vary the employee’s contract (and the employee refused), or to employ another person on varied terms. This change effectively closes the loophole that allowed employers to force through changes to terms and conditions by dismissing staff and offering new contracts on inferior terms.

Exceptions may exist where a business is facing critical financial difficulties, but the bar for justifying such dismissals will be exceptionally high.

Redundancy Rights and Collective Consultation

The triggers for collective consultation are being tightened. Currently, the duty to consult collectively arises when an employer proposes to dismiss 20 or more employees at one “establishment” within 90 days.

The consultation threshold will now apply to redundancies proposed across the business as a whole, rather than treating each site or office as a separate unit.

For businesses with multiple locations such as retail chains or care providers, this means that smaller rounds of redundancies at different sites could aggregate to trigger the collective consultation requirement. Failure to consult properly can lead to claims of unfair dismissal.

Zero-Hours Contracts and Guaranteed Hours

Flexibility in the workforce is being regulated more strictly. The Act introduces a right to a guaranteed number of hours offered.

If a worker works regular hours over a defined “reference period,” the employer must offer them a contract that reflects those normal working hours. While workers can choose to remain on zero-hours contracts if they prefer, the choice must be theirs, not the employer’s.

Additionally, new protections regarding shift scheduling include:

• Reasonable Notice: Workers are entitled to reasonable notice of any shift they are required to work.
• Payment for Cancellation: If a shift is cancelled, moved, or curtailed at short notice, the employer must pay the worker for that shift.

Employment Tribunal Claims: Extended Time Limits

Currently, employees generally have 3 months less 1 day to bring a claim to an Employment Tribunal. The Employment Rights Act 2025 extends this limitation period to six months.

This change applies to a wide range of claims, including unfair dismissal, discrimination, and redundancy pay. For employers, this means that the threat of litigation hangs over the business for twice as long after an employee departs. It also suggests that Tribunals may see an increase in case volume, as employees have more time to seek advice and prepare their claims.

Implementation Timeline

While the Act has received Royal Assent, not all provisions will come into force immediately. The government has indicated a phased approach to give businesses time to adapt. This will be undertaken over a two-year period with common commencement dates being 6^th April and1st October.

• Key changes in April 2026: Day 1 Paternity Leave and unpaid parental leave rights, whistleblowing protections and adjustment of statutory sick pay thresholds.
• Key changes in October 2026: Fire and re-hire protections, tribunal time limits and further enhancement of protection from sexual harassment.
• Key changes in April 2027: Day 1unfair dismissal rights, ending exploitative zero hours contracts and collective redundancy procedures.

However, relying on delays is a risky strategy. The wisest course of action is to review your contracts and handbooks now.

Frequently Asked Questions

What are the key employee rights under UK employment law?

Employment law provides a safety net of rights that employers must observe. Key rights include:

• Written Statement: The right to a written statement of employment particulars on day one.
• Fair Dismissal: Protection against unfair dismissal (now qualifying after 6 months under the new Act).
• Redundancy Pay: Statutory redundancy pay for those with two years of service.
• Discrimination: Protection against discrimination based on protected characteristics (age, disability, race, etc.) under the Equality Act 2010.
• Wages: The right to be paid at least the National Minimum Wage and to receive itemised pay slips.
• Leave: Entitlement to paid annual leave, maternity/paternity leave, and sick pay.

If you are an employee seeking advice on these rights, our services for you page offers detailed guidance.

Next Steps for Employers

The Employment Rights Act 2025 represents a new era of compliance. To protect your business, you should:

1. Audit your contracts: Ensure they comply with new rules on zero-hours and guaranteed shifts.
2. Review dismissal procedures: With the qualifying period dropping to six months, your probation reviews must be robust.
3. Train your managers: Ensure they understand the risks of “fire and rehire” and the new shift cancellation rules.

At Tayntons, we help businesses navigate these changes with confidence. From drafting compliant handbooks to defending Tribunal claims, our Employment Services for business are designed to safeguard your commercial interests.

Our team have provided expert legal support to employees based in and around Gloucester, Stroud and Cheltenham. We can provide a fast, effective resolution so you can move forward with confidence.

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