After months of scrutiny, debate and political back-and-forth, the Employment Rights Bill has now cleared Parliament and is officially law.
The Bill passed both Houses on 16 December 2025 and received Royal Assent on 18 December 2025, becoming the Employment Rights Act 2025 (ERA 2025). The House of Lords ultimately backed down during the final round of parliamentary ping-pong, allowing the legislation to pass in full.
While this is a significant milestone, the practical impact for employers will be felt over time rather than overnight. Most reforms will be introduced in phases across 2026 and 2027, giving organisations a limited but valuable window to prepare.
For employers, the key issue now is not when the Act passed, but how and when its provisions will affect workforce strategy, cost exposure and litigation risk.
When does the Employment Rights Act 2025 take effect?
The Employment Rights Act 2025 is now law, but not all provisions take effect immediately.
Some sections will come into force automatically two months after Royal Assent, while others will be implemented later through commencement regulations. A number of reforms are also subject to consultation, impact assessments and supporting guidance before they are brought into force.
One area to watch closely is unfair dismissal compensation. During House of Lords debate, David Pannick KC observed that removing the compensation cap in discrimination claims has not caused market disruption, suggesting similar reforms in unfair dismissal may be manageable. However, the government has indicated that changes in this area will follow a formal impact assessment, meaning timing and detail remain subject to change.
The only provision that took effect immediately was the repeal of the Strikes (Minimum Service Levels) Act 2023, removing statutory minimum staffing requirements during strikes in certain public services and restoring the previous legal position.
Expected implementation timeline
Based on current government indications, employers should expect the main reforms to be introduced in four broad phases.
February 2026 (first phase)
Automatically effective two months after Royal Assent:
- Changes to industrial action balloting processes
- Trade union financing reforms
April 2026 (expected second phase)
Key workforce-wide changes, including:
Statutory sick pay
- SSP payable from day one of absence
- Removal of the lower earnings limit
Day one family leave rights
- Paternity leave becomes a day one right
- Unpaid parental leave available from day one
Collective redundancy penalties
- Maximum protective award increases from 90 to 180 days’ pay
Whistleblowing - Sexual harassment complaints become expressly protected disclosures
Trade union reforms
- Simplified recognition process
- Electronic and workplace balloting
Fair Work Agency
A new enforcement body with powers to investigate, issue penalties and pursue claims on behalf of workers
October 2026 (expected third phase)
Higher-risk litigation and compliance changes:
Fire and rehire
- Dismissals to force contractual changes become automatically unfair, unless unavoidable to prevent serious financial harm
Harassment
- Duty to take all reasonable steps to prevent sexual harassment
- Liability for third-party harassment reinstated
Employment Tribunal claims
- Time limits extended from three to six months
Trade union rights - New obligations to inform workers of their right to join a union
- Expanded access rights for union representatives
2027 (expected fourth phase)
Structural changes to employment rights:
Unfair dismissal (from 1 January 2027)
- Qualifying service reduced from two years to six months
- Compensation cap removed
Pay and workforce planning
- Gender pay gap and menopause action plans for larger employers
Pregnancy protections - Enhanced rights for pregnant workers
Collective redundancy
- Changes to trigger thresholds
Flexible working
- New “reasonableness” test for refusing requests
Working hours
- Obligation to offer guaranteed hours to low-hours workers
- Requirement to give reasonable notice of shift changes
What employers should be doing now
This is not about immediate change, but it is about early, structured preparation. Employers that wait until reforms are live may face increased cost, operational disruption and litigation risk.
Now is the time to:
- Review existing policies and procedures, particularly around sickness absence, family leave, harassment and flexible working
- Identify compliance gaps and areas of heightened exposure
- Carry out workforce impact assessments, including cost modelling for SSP and unfair dismissal changes
- Factor upcoming reforms into 2026 and 2027 workforce planning, especially where restructuring or redundancies are anticipated
- Plan manager training and internal communications well in advance
- Monitor consultations, draft regulations and statutory guidance as they emerge
Taking action early allows organisations to adapt in a controlled way, rather than reacting under pressure once changes are in force.
