Employment Rights Act 2025The new employment law, explained for small businesses
The Employment Rights Act became law on 18 December 2025. It is the biggest change to UK employment rights in a generation, and almost all of it applies to businesses of every size. Here is what has changed, what is coming and what you should do now, in plain English.
Written by Ruvimbo Huda, Chartered FCIPD · Last reviewed 7 October 2026What changes, and when
Dates below follow the Government roadmap and Acas guidance. Some 2027 dates are still to be confirmed and depend on consultations, so we update this page as soon as anything moves.
-
6 April 2026 In force
Family leave and sick pay
- Statutory sick pay is paid from the first day of illness, not the fourth, and the lower earnings limit has gone.
- Paternity leave and unpaid parental leave are day one rights.
- Employers must keep holiday records for at least six years.
- The maximum protective award for collective redundancy failures doubled to 180 days' pay.
- Sexual harassment became a qualifying disclosure for whistleblowing.
-
7 April 2026 In force
The Fair Work Agency
A new enforcement body covering holiday pay, statutory sick pay, the minimum wage and more. It can investigate and take action without an employee bringing a claim.
-
1 October 2026 In force
Six months to bring a tribunal claim
The time limit for most employment tribunal claims doubled from three months to six. Employees now have longer to raise a claim, so your records need to hold up for longer.
-
30 October 2026 Coming soon
All reasonable steps to prevent sexual harassment
The existing duty to take reasonable steps becomes a duty to take all reasonable steps, and employers become liable for harassment of their staff by third parties such as customers, clients and contractors.
-
1 January 2027 Coming soon
Unfair dismissal after six months
- The qualifying period for unfair dismissal falls from two years to six months.
- The cap on unfair dismissal compensation is removed.
- Dismissing and rehiring to change contract terms becomes automatically unfair in most cases.
- Employers must tell workers about their right to join a trade union.
-
During 2027 Expected
Flexible working, guaranteed hours and more
- Flexible working requests can only be refused for one of eight business reasons, and you must explain why refusing is reasonable.
- Zero hours and low hours workers gain a right to guaranteed hours, plus notice and compensation for cancelled or changed shifts.
- A new right to unpaid bereavement leave.
- Stronger protection from dismissal for pregnant employees and those returning from maternity leave.
- Confidentiality clauses that stop workers speaking about harassment or discrimination become void.
- Menopause and gender pay gap action plans become mandatory for employers with 250 or more staff.
A practical checklist for small employers
Before 30 October 2026
Carry out a sexual harassment risk assessment, including risks from customers and clients. Update your anti harassment policy, train managers, and make sure staff know how to report concerns. Write down the steps you take, because you may need to show them.
Before 1 January 2027
Review everyone approaching six months' service. Make probation meaningful: set clear standards, hold review meetings, keep notes, and deal with concerns early. Check your disciplinary and capability procedures follow the Acas Code, because uncapped compensation raises the stakes.
Ready for 2027
Prepare for the new flexible working test and, if you use zero or low hours contracts, plan how you will offer guaranteed hours. Check that your holiday records go back six years and that payroll applies sick pay from day one.
Employment Rights Act FAQs
Does the Employment Rights Act 2025 apply to small businesses?
Yes. Almost every change applies to employers of every size, including businesses with one or two employees. A small number of measures, such as mandatory menopause and gender pay gap action plans, only apply to larger employers.
When does the six month unfair dismissal rule start?
From 1 January 2027 the qualifying period for unfair dismissal falls from two years to six months, and the cap on compensation is removed. Anyone with six or more months' service on that date gains protection immediately, so people you hired in mid 2026 will be covered from New Year's Day. Read more in our guide to probation under the new rules.
Is statutory sick pay now paid from the first day?
Yes. Since 6 April 2026 statutory sick pay is payable from the first day of sickness rather than the fourth, and the lower earnings limit has been removed, so lower paid and part time staff now qualify.
What is the new duty to prevent sexual harassment?
From 30 October 2026 employers must take all reasonable steps to prevent sexual harassment of their workers, and can be liable for harassment by third parties such as customers or clients unless they took all reasonable steps to prevent it. See our practical guide.
Do I need to rewrite my employment contracts?
Not always from scratch, but most contracts and handbooks written before 2026 need updating: sick pay clauses, probation wording, family leave policies, flexible working and harassment policies are the usual gaps. Our HR Fundamentals packages are fully updated for the Act.
This page is general guidance, not legal advice, and reflects the position on the date shown. Sources: Acas and GOV.UK timeline update. For advice on your situation, get in touch.
Get ready with a local expert
Book a free 30 minute chat. We'll tell you honestly where your business stands against the new law and what to do first.