The Employment Rights Act 2025

While a particularly controversial aspect of the Employment Rights Bill (unfair dismissal rights from day 1 of employment) received considerable attention (and was ultimately diluted down to a six month qualifying date) there are many other aspects of the Bill, now the Employment Rights Act 2025, which employers need to be aware of and, in some cases, take action, particularly around employee policies. Here is a summary of what the Act means from the employer’s perspective covering employee and trade union rights.

Trade union rights

The Act will see trade union rights strengthened, in particular;

• Lower threshold for statutory recognition
• Statutory right of access to the workplace
• Repeal of the Trade Union Act 2016 and the Strikes (Minimum Service Levels) Act 2023
• Lower threshold for industrial action
• Requirement to include right to join a trade union within s1 statement of particulars

The reforms will make it easier for trade unions to have access to workplaces and organise industrial action. 

Employers should update any relevant policies and provide training for managers. They may also wish to commence discussions with trade unions ahead of the changes being implemented. 

Increased compliance burden

Employers should update HR policies and processes to reflect new day-one rights such as:

• Statutory Sick Pay from day one (with no lower earnings limit)
• Immediate eligibility for paternity and unpaid parental leave
• Expanded bereavement leave provisions

Payroll systems, absence management, and family leave procedures will also require revision. 

There will also be increased protection from harassment in the workplace and by third parties. Existing policies should be reviewed and updated. 

While the day one unfair dismissal right has not been implemented there is still a reduction in the qualifying period from 2 years to six months. This should not be overlooked as it places more significance upon the effective use of probationary periods by employers to manage out an employee not meeting performance expectations within that relatively short period of time.

Compensation for unfair dismissal

The current upper compensation cap of £118,233 will be removed. While many employers may have seen the outcome of tribunal awards to be significantly below the previous cap this removal exposes employers to the increased likelihood of more senior employees resorting to employment tribunals with grievances about their dismissal. 

Impact on zero hours contracts and requests for flexible working should be understood

Zero-hours contracts: Employers must offer guaranteed hours if patterns emerge over a reference period, anticipated to be 12 weeks, requiring systems to track working patterns and manage compliance. 

Flexible working: Requests can be made from day one, and refusals must be justified in writing, adding an important compliance requirement to be met by employers.

And fire and rehire practices have been outlawed.

Dismissing employees to impose new terms is now largely prohibited other than in very limited circumstances, forcing employers to adopt more collaborative change processes.

In summary what more should employers do at this time?

Our suggestions are:

• Ensure there is effective HR training for managers, addressing performance evaluation and developing awareness of the new landscape that affects employers’ relationships with employees
• If your business has relied upon zero hours contracts the financial implications of the new rights for employees in that category need to be understood and factored into budgeting plans
• For all businesses there is a need to revisit employment policies updating these to meet the new legal requirements

If you would like to discuss any of the upcoming changes in more detail, please contact employment law specialists Rob Smedley and Erin Garnham who will be happy to discuss the implications of this new legislation further.