The Employment Rights Act (ERA) received Royal Assent and became law on 18 December 2025, introducing a broad range of changes to existing employment laws in UK which will come into force over the next two years. A summary of the key changes and their impact on employers is outlined here.

 

What’s changing?

The ERA reforms will be implemented over a two-year period. Several of the changes expected in 2027 are currently going through consultation.

 

Dismissal and disputes

April 2026

• Fair Work Agency: will be established to consolidate existing enforcement bodies and enforce employment rights, including holiday pay and SSP.
• Maximum protective awards for failure to consult in collective redundancies will double to 180 days’ pay per affected employee.

October 2026

• Time Limits for Employment Tribunal claims will increase to six months for all claims.
• Fire and rehire dismissals for refusing contract changes will become automatically unfair, with limited exceptions for employers in financial distress.

January 2027

• Unfair dismissal protection will be gained after six months qualifying service instead of the current two years
• Unfair dismissal compensation: the current limit on compensation (the statutory cap or one year’s salary, whichever is lower) will be removed.

2027

• Collective redundancies: there will be a new threshold for collective consultation where redundancies are proposed at more than one “establishment” – which will not be less than 20.

 

Harassment and equality

April 2026

• Whistleblowing protection: sexual harassment will become a qualifying disclosure under current whistleblowing rules.
• Gender pay gap and menopause action plans will be introduced for employers with 250+ employees, initially on a voluntary basis, then mandatory from April 2027.

October 2026

• Sexual harassment: employers will have a proactive duty to take “all” reasonable steps to prevent sexual harassment.
• Third party harassment: employers will be liable for harassment on any protected ground from third parties (such as customers) unless they have taken all reasonable steps to prevent it.

2027

• Reasonable steps: the meaning of “reasonable steps” will be clarified in law.

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• NDAs which prevent workers from making allegations or disclosures relating to harassment or discrimination will become unlawful.

 

Worker’s rights

April 2026

• Sick pay: SSP will be paid from the first day of illness, without qualifying days, and the lower earnings limit will be removed.
• Paternity leave will become a day one right, instead of requiring 26 weeks service, and will be available after taking shared parental leave.
• Parental leave will also become a day one right, instead of requiring one year’s service.

2027

• Pregnancy and maternity protection: it will be unlawful to dismiss women who are pregnant or have returned to work in the last six months, except in specific circumstances.
• Statutory bereavement leave will be introduced, with details on pay not yet confirmed.
• Flexible working rules will require employers to explain why their decision to refuse a flexible working request is reasonable.
• Zero-hour contract workers will have the right to request guaranteed working hours.

 

Trade unions

December 2025

• Minimum service level rules for strikes have been removed.

February 2026

• Dismissal for participating in industrial action will be automatically unfair.

April 2026

• Notice for industrial action will decrease to 10 days, with unions required to give less information in ballot notices and results.
• Industrial action will require a simple majority, with mandates lasting for 12 months.
• E-balloting will allow trade union members to vote electronically.

October 2026

• Access rights: trade unions will be able to make statutory access requests as part of a new statutory recognition process, overseen by the Central Arbitration Committee.
• Duty to inform: employers must inform workers about their right to join a trade union.
• Detriment: workers participating in industrial action will be protected from less favourable treatment, in addition to unfair dismissal protection.

2027

• Blacklisting: protection from discrimination and blacklisting for trade union membership will be strengthened.

 

What are the main implications?

The drop from two years to six months’ service for unfair dismissal protection is undoubtedly the most significant change in the ERA. Businesses will need to make much faster decisions about employee performance and retention. Employers must ensure that their HR systems, teams and line managers are prepared for the change so that timely and accurate decisions can be made and recorded.

The likely unintended consequence is that employers will be pushed into making final decisions about continuing employment at an earlier stage than they would like. While two years allows time for training and development, this is less likely to be practical within six months.

It seems unavoidable that in many cases, dismissals will be made after six months have passed, and the number of unfair dismissals cases will greatly increase, placing further strain on ACAS and the employment tribunals, especially taken together with increasing tribunal claim time limits and the recent doubling of the early conciliation period to 12 weeks.

The removal of the statutory cap on unfair dismissal compensation was included within the ERA at the last minute and without formal consultation. It is likely to be implemented in January 2027 alongside the six-month qualifying period, though the government has committed to publishing an impact assessment beforehand.

Its removal will greatly increase the value of unfair dismissal claims from high earners whose losses previously exceeded the statutory cap. Claimants may attempt to recover losses from bonus schemes, pensions, deferred consideration or other incentive schemes, and depending on circumstances, may seek “career” losses.

Coupled with the reduced qualifying period for unfair dismissal claims, businesses will need to make quicker decisions about senior executive suitability, to avoid uncapped claims for significant losses. It will no longer be possible to take a “pragmatic” approach to senior exits based on the compensation cap. On the other hand, the availability of uncapped compensation for unfair dismissal, may reduce the temptation for claimants to make spurious discrimination or whistleblowing claims.

The new threshold for collective consultation where redundancies are proposed across multiple sites within a 90-day period will significantly change how large employers approach redundancy exercises. For example, a retailer making 10 redundancies each at three separate stores would need to count these together, and collectively consult, instead of treating each store separately.

Banning NDAs which cover harassment or discrimination allegations could have unintended consequences. Both sides rarely agree on the issues at hand and settlements are usually made without an admission of liability. For the employer, confidentiality is valuable in terms of protecting its reputation and wider workforce harmony, especially when serious allegations have been made which are strongly disputed. Restricting these clauses may see more disputes reach the employment tribunal. It has been suggested that certain agreements will be exempt, potentially if confidentiality is requested by the employee, and the devil will be in the detail.

 

What about Northern Ireland?

Employment law is devolved in Northern Ireland, and the ERA will not apply. The separate reform package contained in the “Good Jobs” Employment Rights Bill (ERB) is expected to be introduced in the Northern Ireland Assembly in early 2026.

The Good Jobs ERB will bring Northern Ireland in line with the wider UK position in several areas although further reform would be required to other divergences (such as with TUPE law) which are not covered. The ERA naturally creates even further divergence.

Given that the majority of ERA changes are “employee friendly” there will likely be pressure to implement them in Northern Ireland, especially around unfair dismissal, harassment and wider workplace rights. However, this would require separate local consultation and legislation, which would naturally take time, and the ERA changes would be the latest addition to the backlog of potential employment law reforms in Northern Ireland.

Given this, the NI government may take a “wait and see” approach with the major ERA reforms, such as the unfair dismissal changes, before deciding whether to introduce them in Northern Ireland.

Less controversial and standalone changes, such as the introduction of bereavement leave, could be brought forward individually to maintain parity. The NI government has already committed to following the UK position on the changes to SSP.

 

For legal guidance and advice regarding Employment Rights Act 2026 or any Employment Law queries, please contact Patricia Rooney, Jack Balmer or another member of our Employment Team for more information.

 

While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.