Employment Rights Act 2025: The Changes Small Businesses Need to Act On Now

The Employment Rights Act 2025 is the most significant change to UK employment law in a generation. It affects virtually every employer in the country, regardless of size, and it is being introduced in phases that have already begun. If you haven’t yet started preparing, now is the time.

This guide sets out what has already changed, what’s coming next and the practical steps small businesses need to take.

Key facts at a glance

  • The Employment Rights Act 2025 received Royal Assent in July 2025 and is being implemented in two main phases: April 2026 and October 2026.
  • The April 2026 changes are now in force. These include Statutory Sick Pay from day one, day-one parental leave rights and the launch of the new Fair Work Agency.
  • October 2026 brings further significant changes including fire and rehire restrictions, expanded harassment prevention duties and extended employment tribunal time limits.
  • The removal of the two-year qualifying period for unfair dismissal is expected in 2027, giving employees the right to claim unfair dismissal from day one of employment.
  • ACAS has published updated guidance on the Employment Rights Act which all employers should review.

The breadth of this legislation means it touches almost every HR policy and process you have. Contracts, absence policies, family leave entitlements, disciplinary procedures, whistleblowing policies — all of them may need updating. Starting with a clear picture of what’s changed and what’s coming is the most important first step.

What is the Employment Rights Act 2025?

The Employment Rights Act 2025 consolidates and significantly expands workers’ rights across multiple areas of employment law. It was introduced following the government’s commitment to “make work pay” and represents a fundamental shift in the balance of rights between employers and employees.

For small businesses in particular, the cumulative effect of the changes is significant. Many of the new rights apply from day one of employment, removing qualifying periods that previously gave employers a window to assess new hires before full statutory protections applied.

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Changes already in force from April 2026

The first phase of the Act came into effect in April 2026. These changes are live now and your policies and processes should already reflect them.

Statutory Sick Pay from day one. The removal of the Lower Earnings Limit and the three-day waiting period means more employees qualify for SSP and receive it from the first day of absence. If your absence policy still references a waiting period or a lower earnings threshold, it needs updating immediately.

Day-one parental leave rights. Both paternity leave and unpaid parental leave no longer require any qualifying service period. Any employee can take these from day one of employment. Review your family leave policy and make sure your managers understand the change, particularly when onboarding new starters.

Enhanced whistleblowing protections. Workers who raise concerns in good faith now have stronger safeguards against detriment and dismissal. This makes having a clear, well-communicated whistleblowing policy more important than ever, alongside training for managers on how to respond when concerns are raised.

Launch of the Fair Work Agency. A new single enforcement body has brought together oversight of National Minimum Wage compliance, statutory sick pay, holiday pay and other key rights. The Fair Work Agency has greater investigative powers than its predecessor bodies. Employers who are non-compliant in any of these areas face a higher risk of formal enforcement action.

Changes to trade union rights. The threshold for trade union recognition has been lowered and union access rights have been broadened. If you have a workforce that includes union members, or if you operate in a sector where union activity is increasing, take advice on what this means for your recognition procedures.

Changes coming in October 2026

The second phase introduces more far-reaching obligations, particularly around how employers manage change, prevent harm and engage with their workforce.

Restrictions on fire and rehire. The practice of dismissing employees and re-engaging them on less favourable terms is being tightened significantly. Employers will need to demonstrate that alternatives were genuinely explored and that consultation was meaningful. This is a significant change for any business considering restructuring or changing terms and conditions.

Expanded harassment prevention duty. The duty introduced in October 2024, requiring employers to take proactive reasonable steps to prevent sexual harassment, will be extended. The employer’s responsibility will cover harassment by third parties including customers, clients and contractors. ACAS guidance on harassment prevention is essential reading for all line managers.

Extended tribunal time limits. Employees will have six months rather than three months to bring most employment tribunal claims. This doubles your risk exposure window for any workplace issue that isn’t resolved properly. It makes thorough documentation and prompt, fair handling of grievances and disciplinary matters more important than ever.

Fair Pay Agreement for adult social care. Sector-specific pay standards will be introduced for the care sector. If you operate in or contract with this sector, monitor the implementation closely.

What employers should do now

The April 2026 changes are already in force. If you haven’t reviewed your policies since the beginning of the year, start there. The October 2026 changes give you time to prepare, but that preparation is best done now rather than in a rush later in the year.

  • Review and update your Statutory Sick Pay policy and payroll processes immediately.
  • Update your family leave policy to reflect day-one parental leave rights.
  • Audit your whistleblowing policy and train managers on how to respond to concerns.
  • Assess your current approach to harassment prevention and check it meets the proactive duty, ahead of the October expansion.
  • Brief your management team on the extended tribunal time limits and what that means for how they handle people issues.
  • If you’re considering any changes to terms and conditions or any restructuring, take HR advice before proceeding — the fire and rehire restrictions change the risk profile significantly.

Our HR project support team can carry out a full Employment Rights Act readiness review for your organisation, identifying exactly what needs updating and producing clear, compliant documentation.

How Limelite can help

Navigating the Employment Rights Act changes is genuinely complex, and the consequences of getting it wrong are significant. Limelite works with organisations across Worcestershire, Birmingham and the wider UK to make sure they’re compliant, their documentation is up to date and their managers are equipped to handle the changes confidently.

Whether you need a one-off policy review, ongoing retained HR support or training for your management team, we can help. Book a free 30-minute discovery call to talk through what your business needs.

Book a free 30-minute discovery call

About the author

Helen Scullion Assoc. CIPD, HR Client Manager at Limelite HR & Learning. Helen supports organisations with day-to-day HR management, employee relations and practical people support. Connect with Helen on LinkedIn.

FAQS

  • What is the Employment Rights Act 2025?

    The Employment Rights Act 2025 is a major piece of UK legislation that significantly expands workers’ rights across employment law. It received Royal Assent in July 2025 and is being introduced in phases, with the first changes coming into force in April 2026 and further provisions following in October 2026 and 2027. It is widely regarded as the most significant change to employment law in the UK for a generation.

  • When do the Employment Rights Act 2025 changes come into force?

    The Act is being introduced in phases. The first phase came into force in April 2026, covering Statutory Sick Pay reforms, day-one parental leave rights, whistleblowing protections and the launch of the Fair Work Agency. The second phase follows in October 2026 and includes fire and rehire restrictions, expanded harassment prevention duties and extended tribunal time limits. Further changes, including the removal of the unfair dismissal qualifying period, are expected in 2027.

  • Do small businesses have to comply with the Employment Rights Act 2025?

    Yes. The Employment Rights Act 2025 applies to all employers in the UK, regardless of size. Many of the new rights apply from day one of employment, removing qualifying periods that previously gave smaller employers more flexibility. There is no exemption for small businesses. If you haven’t reviewed your policies and procedures against the April 2026 changes, you should do so as a matter of priority.

  • What does the Employment Rights Act 2025 mean for my HR policies?

    Significant parts of your documentation likely need updating. At a minimum, your Statutory Sick Pay policy, family leave policy and whistleblowing procedure should all be reviewed against the April 2026 changes. Ahead of October 2026, your approach to harassment prevention will also need to be strengthened. Any policies relating to changing terms and conditions or restructuring should be reviewed in light of the new fire and rehire restrictions. A full Employment Rights Act readiness review is the most effective way to identify what needs attention.

  • What is the Fair Work Agency?

    The Fair Work Agency is a new enforcement body that launched in April 2026. It consolidates the enforcement of key employment rights including National Minimum Wage compliance, Statutory Sick Pay, holiday pay and other core entitlements. The Agency has broader investigative powers than the previous separate enforcement bodies, which means non-compliant employers face a higher risk of formal investigation and penalty. If there are any areas where your pay or leave calculations may not be fully compliant, now is the time to address them.

  • What are the new fire and rehire restrictions coming in October 2026?

    From October 2026, employers will face significantly tighter restrictions on the practice of dismissing employees and re-engaging them on less favourable terms. Employers will need to demonstrate that alternatives to changing terms and conditions were genuinely explored and that meaningful consultation took place. Failure to comply will create significant unfair dismissal risk. If you are considering any changes to employment terms, take professional HR advice before proceeding rather than after.

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