How best to prepare for incoming changes under the Employment Rights Act

The Employment Rights Act (ERA) 2025 received Royal Assent on 18 December 2025. It will introduce significant reforms to multiple areas of employment law, and it is imperative that employers are prepared for this.

Upcoming changes

January saw the removal of the 12-week limit for claiming unfair dismissal for employees taking part in industrial action; the notice needed for action reduced to 10 days from 14 days; and action mandates to last for 12 months instead of six. Other trade union-related measures to make it easier for them to gain recognition and access workplaces will come into effect in October 2026.

In April 2026, changes will include giving employees the right to statutory sick pay (SSP) from day one of sickness rather than day four, and removing the lower earnings threshold, as well as paternity leave and unpaid parental leave becoming a day-one right. A Fair Work Agency body will be established to enforce this.

Another upcoming change is giving zero-hours and low-hours workers a right to a guaranteed-hours contract reflecting the hours they regularly work, says Rachel Suff, senior employee relations adviser at the Chartered Institute of Personnel and Development (CIPD).

“In 2027, the existing day-one right to request flexible-working legislation will be strengthened so that any refusal of a flexible-working request must be reasonable,” she adds.

Collective redundancy consultations will be doubled from 90 to 180 days of pay per employee from April, while the qualifying period for unfair dismissal claims will be reduced from two years to six months in 2027.

Employers may now be faced with a higher risk of unfair dismissal claims, although enhanced protections, supported by clearer guidelines and defined standards, may reduce some disputes, says Lisa Trewhitt, principal in Mercer’s reward and talent team.

“Ending zero-hours contracts by guaranteeing minimum hours and reasonable notice reflects a commitment to job security and fairness,” she states.

Kimberley Rowbottom, UK HR director at Pluxee, adds: “UK employers must now report and act on gender pay gap action plans, which is mandatory for employers with more than 250 employees, as well as menopause support action plans.”

Effect on employers

The upcoming changes will shift the timeframe of responsibilities employers face, making early preparation and a greater duty of care essential. Day-one rights mean that obligations begin for employers immediately after hiring, impacting payroll, HR systems and onboarding processes.

HR and payroll teams must be provided with the opportunity to upskill in tools to streamline regulatory systems across the organisation, says Jeanette Wheeler, chief people officer at MHR.

“Updating processes to comply with SSP reforms so systems can calculate sick pay from day one, accommodating the lower earnings limit removal, and managing flexible workers by tracking hours and contract changes, will require better integration with workforce management systems and more sophisticated data analytics to manage changes effectively,” she says.

As multiple employers are already grappling with increases to the national living and minimum wages in an uncertain economic environment, some may anticipate further costs and reduce their hiring plans as a result.

Compliance requirements and administrative complexity is likely to increase, while larger employers will need to implement new reporting and equality measures, which will require additional planning and resources to avoid legal and reputational risks.

Removing the cap on dismissal compensation raises financial and reputational risk when termination procedures are not followed correctly, says Lorna Ferrie, legal and compliance director at HR and employment services provider Mauve Group.

“For organisations with international or remote teams, understanding how UK reforms intersect with global obligations is important and may require external expertise,” she adds.

Internal preparations to make

To get ahead of the upcoming changes, organisations should review the legislation thoroughly and seek external guidance if needed. The phased implementation will require forward planning in terms of updating processes, policies and payroll systems.

Training will be essential for managers and HR teams to ensure they understand and can effectively implement the new reforms across the workforce. Employers should focus on clear communication with employees to explain the new rights and entitlements. Operational capacities should be reviewed to ensure teams have the tools and time to effectively manage the changes.

Employers may benefit from consolidating their HR platforms to streamline administration and reduce manual workloads, says Rowbottom.

“Organisations will need to review their administrative capability to consider whether their HR team can take on additional compliance work and if their existing systems are capable of tracking the new requirements, such as flexible-working requests and zero-hours worker patterns,” she says.

HR teams should review employment contracts, handbooks, probation terms, and dismissal or legal policies to ensure they are fully compliant.

“Where possible, organisations could also create contingency funds to prepare for higher costs,” Ferrie says.

Handling specific changes

Policies vary depending on organisations’ sizes and structures. Some require immediate action, whereas others can be via phased implementation. This will help employers create an effective strategy to ensure all existing policies are updated in time.

Preparations for changes taking effect from April should be underway by now. According to Reward Gateway | Edenred’s January 2026 research, 42% of workers do not understand the upcoming parental leave changes, such as day one paternity leave and unpaid parental leave, well enough to know how they are personally affected. This will require answering any questions and ensuring employees are kept in the loop.

For SSP changes, employers can forecast and budget early, updating financial models and factoring in seasonal trends such as winter sickness spikes. It is also a good opportunity to review absence policies and introduce return-to-work interviews, monitoring these to manage patterns.

“Organisations must communicate the April changes to managers and employees now, update policies, processes and employment contracts to reflect the new rights, and ensure payroll systems are current,” says Suff.

The October measures regarding unions accessing workplaces, protection and gaining recognition may lead to more interest in collective bargaining and worker representation. Employers should review their employment relations strategies, ensure employees have spaces to share their views and equip managers with conflict-handling skills. This will help to establish effective, trust-based relationships with union representatives.

Employers will need to rethink recruitment, dismissal and contract management practices in light of the new unfair dismissal protections, says Trewhitt, while also planning for guaranteed hours contracts.

“Challenges employers may face include increased administrative and compliance burdens, greater limits on flexibility, and higher labour costs,” she says. ”Large employers should be prepared for new transparency reporting obligations, including gender pay gap action plans and menopause support initiatives.”

In April, a Fair Work Agency will be established as part of the Employment Rights Act, bringing with it increased pressure on payroll teams to ensure 100% accuracy and compliance.

“This is where employers should already be working to gather a deep understanding of the new legislation, and ensuring they have robust auditing procedures in place so they can provide detailed analytics to prove compliance,” says Wheeler.

Regarding changes later this year and in 2027, organisations should consider any actions they need to take now. They could map the full legislative timeline and monitor regulatory developments. Documenting decisions and testing internal processes ahead of any rollouts is also key.

Employers that proactively adapt and communicate all new reforms transparently will be best positioned to support their employees through this period of legislative change.