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The most significant overhaul of UK employment law in a generation has arrived. Here’s what employers, employees, and businesses need to understand:
A LANDMARK MOMENT FOR UK EMPLOYMENT LAW
The Employment Rights Bill was introduced to Parliament on 10 October 2024, received Royal Assent on 18 December 2025, and is now the Employment Rights Act 2025. Described by the government as the first phase of delivering its Plan to Make Work Pay, the Act represents the most comprehensive rewrite of employment law the UK has seen in decades. The government is rolling out its changes in waves across 2026 and 2027, and the pace is already quickening.
At Lawdit, we advise businesses of all sizes, and this legislation touches almost every corner of the employment relationship: from how workers are dismissed to
how trade unions gain recognition of whether employees can be contacted outside of working hours. This article provides a structured overview of the key reforms and what they mean in practice.
THE UNFAIR DISMISSAL SHAKE-UP
Perhaps the most widely discussed element of the Act is the reform to unfair dismissal rights. Under the previous regime, employees had to accumulate two years of continuous employment before they could bring an unfair dismissal claim. The original bill proposed making this a day-one right — an ambition that was ultimately stepped back before Royal Assent.
The final form of the Act retains a qualifying period for unfair dismissal rights, albeit reduced from two years to six months, and removes any cap on unfair dismissal compensation. This six-month qualifying period will begin in January 2027.
The removal of the compensation cap is significant and should not be overlooked. Employers facing tribunal claims will no longer benefit from the ceiling that previously limited their financial exposure. For businesses, the change means that poorly handled dismissals — even those occurring after the six-month qualifying period — carry considerably greater risk than before.
The Act also takes a firm stance on “fire and rehire” — the controversial practice of dismissing employees and re-engaging them on inferior terms. The ERA makes firing and rehiring automatically unfair only for “restricted variations,” meaning changes to certain core terms. This will come into force on 1 January 2027. Government consultation is ongoing as to precisely which terms qualify as “restricted,” but early indications suggest changes to pay, shift patterns, and working hours will fall within its scope.
THE RIGHT TO SWITCH OFF: SHELVED, BUT NOT FORGOTTEN
One of Labor’s most publicised pre-election commitments was a statutory right for workers to disconnect from work communications outside contracted hours—the so-called “right to switch off.” Inspired by similar frameworks in Ireland, Belgium and France, it attracted significant attention from both employer groups and employee advocates.
In March 2025, the government confirmed that the right to switch off the Code of Practice had been shelved. It does not form part of the Employment Rights Act 2025 in its current form.
However, employers should not treat this decision as the end of the conversation. The right was intended to give workers and employers the opportunity to have constructive conversations and work together on bespoke workplace policies or contractual terms that benefit both parties. The underlying concern — that the blurring of work and home life has significant wellbeing consequences — remains live, and the issue may well return through future consultation or secondary legislation.
Meanwhile, it is advisable for employers to proactively address this issue. Clear contractual provisions setting out expectations around out-of-hours contact and well-drafted workplace policies remain both good practice and a useful defence should related claims arise — for instance, in constructive dismissal or discrimination proceedings.
STRENGTHENED TRADE UNION RIGHTS
The Act introduces some of the most significant pro-union changes in a generation, and for many businesses, this will be among the most operationally impactful reforms.
From 18 February 2026, dismissal for taking part in industrial action became automatically unfair, removing the previous 12-week limit for claiming unfair dismissal in this context.
On the question of union recognition, the changes are equally substantial. As of 6 April 2026, the statutory recognition scheme has been reshaped. Unions will no longer need to demonstrate that most workers in a proposed bargaining unit are likely to support recognition, removing the requirement for petitions or similar evidence. When recognition is decided by ballot, unions will only need a simple majority of votes cast, with the former 40% support requirement removed.
The Act also introduces new duties for employers to inform workers of their right to join a trade union, updated rules on a trade union’s right of access to the workplace, and a new right to reasonable accommodation and facilities for trade union representatives carrying out their duties.
For employers — particularly those in sectors where union activity has historically been limited — this combination of changes materially lowers the threshold for recognition and increases the risks associated with how industrial action is handled. Legal advice at the earliest stage of any recognition process is strongly recommended.
DAY-ONE RIGHTS, SICK PAY AND NEW FAMILY ENTITLEMENTS
Alongside the headline reforms, the April 2026 tranche brings several highly practical changes affecting day-to-day employment relationships.
The ERA 2025 removes the qualifying service requirements for both statutory paternity leave and unpaid parental leave, meaning both entitlements are now day-one rights from 6 April 2026.
On statutory sick pay, the Act makes two important changes: the three “waiting days” — the initial period of sickness absence during which SSP was not payable — are abolished, meaning SSP is now payable from the first day of absence; and the lower earnings limit threshold, which previously disqualified lower-earning employees from SSP eligibility, is removed. Employers should review payroll systems and absence policies to ensure they reflect these changes.
For those facing collective redundancy situations, the maximum protective award for failure to consult in collective redundancy has doubled from 90 days’ pay to 180 days’ pay from 6 April 2026. Combined with the removal of the compensation cap on unfair dismissal claims, this dramatically increases the financial consequences of procedural missteps during redundancy exercises.
A NEW ENFORCEMENT BODY: THE FAIR WORK AGENCY
The Employment Rights Act 2025 establishes the Fair Work Agency (FWA), a new single enforcement body consolidating functions currently split across several bodies, covering the National Minimum Wage, Employment Agency Standards, and labour abuse. The FWA has wide-ranging powers, including the ability to bring Employment Tribunal claims on behalf of workers and to issue compliance notices and financial penalties. It was established on 7 April 2026.
The FWA will have “dawn-raid” style inspection powers. Employers should work with their legal advisers now to ensure systems and processes are compliant and to consider internal protocols for handling any such inspection.
WHAT SHOULD BUSINESSES DO NOW?
The Employment Rights Act 2025 is not a single event — it is a rolling programme of reform with significant waves still to come. Businesses that take a reactive approach risk being caught out.
At a minimum, employers should audit employment contracts and handbooks against the April 2026 changes; review redundancy and dismissal procedures in light of the doubled protective award and removal of the compensation cap; take early legal advice if any trade union recognition approach is made or anticipated; ensure payroll and HR systems are updated for the new SSP rules; and keep a watching brief on the continuing government consultations around fire and rehire, flexible working, and bereavement leave.
The Employment Rights Act 2025 reshapes the relationship between employers, workers, and trade unions in fundamental ways. Staying informed — and seeking specialist advice early — is the best protection available.
For advice on how the Employment Rights Act 2025 affects your business, please contact Lawdit Solicitors at www.lawdit.co.uk. Our commercial team advises businesses across all sectors on employment, contractual and intellectual property matters.
info@lawdit.co.uk
