The UK Government’s Employment Rights Act 2025 is now law, introducing what has been described as the most significant package of employment reform in a generation. Although already in force, many of the key measures will be phased in over the next 12 months and beyond.
This creates an important opportunity to review and update employment policies, ensuring they remain compliant as the changes take effect.
This article breaks down the key reforms and highlights how Abbiss Cadres can support you to prepare, adapt and manage risk across workforce strategies.
The key changes
Employee consultation – increased penalties for failure
Employers engaging in redundancy programmes involving 20 or more redundancies have for some time been required to consult with employee representatives or trade unions before any redundancies are affected.
Consultation must be meaningful and undertaken “with a view to reaching agreement”. Where this does not happen, a protective award may be made. The penalty imposed is now doubled from a maximum of 90 days to 180 days’ pay per affected employee.
Going forward, therefore, the price for not engaging in compliant consultation will increase significantly.
This change came into force on 6 April 2026.
Consultation will take place on whether there should be a higher threshold for collective consultation where redundancies take place across a number of sites in the UK.
Individual rights
Unfair dismissal: reduced qualifying period and unlimited compensation
Currently, the right to claim unfair dismissal requires continuous service of at least two years. This will be reduced to six months’ service only and, significantly, compensation, currently limited to the lower of 12 months’ salary or £123,543, will be unlimited.
The importance for employers of adhering to fair processes for dealing with misconduct or performance issues will therefore increase, particularly in respect of higher earners.
This change will come into force on 1 January 2027 for dismissals effected after that date.
Fire and rehire: Automatic unfair dismissal
Changes will take place to the practice of dismissing an employee who refuses to agree to changes to terms and conditions of their employment.
These dismissals will be automatically unfair (requiring no period of continuous service) where the changes concern pay, working hours, pension arrangements, shift times or length and time off rights and the reason for dismissal is because the employee refused to agree or because the employer intended to hire someone else to do the work on the changed terms.
The only defence will be where the employer was acting because of serious financial difficulties.
This change is expected to come into effect in January 2027 for dismissals effected after that date.
Use of NDAs: discrimination and harassment gagging clauses
Provisions in contracts of employment or settlement agreements which seek to prevent workers from disclosing acts of discrimination or harassment will be void.
This change is expected to come into force in 2027. Consultation opened on 15 April 2026 and will close on 8 July 2026.
Zero hours contracts: guaranteed hours and regulation of shifts
At present, zero hours contracts are relatively unregulated, and the only requirement is that they cannot contain a term restricting employment elsewhere.
Regulations will be made entitling zero hours workers to guaranteed hours based on their existing working pattern, to reasonable notice of shifts and to compensation if shifts are altered or cancelled at short notice. Some exceptions may be permitted and the detail of these is expected later in the year following consultation.
These changes are expected to come into effect in 2027.
Family rights
- Parental leave: These rights will be available from day one of employment.
- Bereavement leave: There is already a right to one week’s paid leave for parental bereavement. This will be extended to other family members**, although this additional entitlement will be unpaid**.
These rights came into force on 6 April 2026.
Equality
Gender Pay Gap: Equality action plans
Currently, employers with more than 250 employees must publish data on the gender pay gap in the organisation.
From April 2027, an equality action plan must be published by these employers setting out steps to be taken to reduce the gap, with financial penalties imposed for default. Regulations on the detail will be prepared.
We encourage you to advise your employers to report on a voluntary basis.
The requirement for action plans will come into force in spring 2027.
Trade unions
Rights in respect of trade unions and their members are to be strengthened in the areas of:
- Access to the workplace – trade unions will be able to request access to an employer’s workforce and may apply to have access determined by the Central Arbitration Committee (CAC).
- Recognition rights – the process for unions to gain bargaining rights will be simplified and the threshold for recognition lowered.
- Strike action procedures – voting thresholds for industrial action will be simplified to a simple majority. The removal of the turnout threshold of 50% is expected to be aligned with the introduction of electronic balloting in August 2026 (statutory trade union ballots) and 2027 (recognition and derecognition ballots).
Consultation on a draft code of practice for access to the workplace will close on 20 May 2026.
These changes are expected to come into force in late 2026 and through 2027.
Working time: New record-keeping requirements
Employers are obliged to keep adequate records that demonstrate compliance with entitlement to annual leave, as well as the requirement to make a payment in lieu of accrued but unused holiday in the current year or carried over from a previous leave year on termination of employment for full time, irregular hours or part-year workers.
Failure to comply will constitute an offence and may result in a fine, enforceable by the Fair Work Agency (FWA) once it has been granted the necessary enforcement powers.
This change came into force on 6 April 2026, but the FWA’s enforcement powers are not yet in place.
Other areas
The changes listed above are the most immediate changes that you will need to review in your HR strategy. In addition, there are further consultations under way in:
- Public sector contracting and the “two-tier workforce” – requirements to treat contractors no less favourably than public sector counterparts are expected to come into force in October 2026.
- Flexible working – requirements for employers to consider flexible working requests are expected to come into effect in 2027.
Right to “switch off”
Single Worker Status – the removal of the limb (b) worker category would strengthen employment protections for gig economy workers and others in non-traditional employment. The government has not yet committed to a timeframe for consultation or implementation.
We will continue to report on further developments in the Government’s employment and industrial relations reform programme as they arise.
How we can help
We are here to assist businesses with a full-scale review of employment policies and procedures to bring them in line with the changes that have come into effect already and that are due to come into effect in future months.
There are also strategy decisions that we can provide input on to help businesses mitigate risks when executing their business plans.
You can contact us here to start a discussion about how we can help further.