Employment Rights Act 2025: What Small Employers Must Know
For UK employers: the Employment Rights Act 2025 is the biggest change to workplace law in years, and it is arriving in phases rather than all at once. This explainer sets out what has already changed, what is scheduled next, and the practical steps a small business should take now so each new rule lands without drama.
Key takeaways
- The Act received Royal Assent on 18 December 2025, and its measures are being phased in through 2026, 2027 and beyond.
- Since 6 April 2026, Statutory Sick Pay is paid from the first day of sickness to all employees, and paternity leave and unpaid parental leave are day-one rights.
- From October 2026, employers face a stronger duty to take "all reasonable steps" to prevent sexual harassment, including by third parties.
- From 1 January 2027, the unfair dismissal qualifying period is scheduled to fall from two years to six months, and the compensation cap is due to be removed.
- Other measures, such as limits on fire and rehire and guaranteed hours for zero-hours workers, are still to come. Check the government's roadmap for confirmed dates.
Most small employers do not have an HR department, so big legal changes tend to arrive as a vague worry: something has changed, but what, and when? The Employment Rights Act 2025 makes that worry understandable. It touches sick pay, family leave, harassment, trade unions, dismissal and working hours, and its measures come into force on different dates.
The good news is that you do not need to absorb everything at once. The phased timetable gives you time to update contracts, policies and habits one step at a time. This article explains each phase in plain language and suggests what to do about it. It is general information, not legal advice. Dates and details can change as regulations are made, so check GOV.UK, Acas or a qualified employment adviser before you rely on any point.
The timeline at a glance
Here is how the main measures are scheduled, based on the government's published plans. Anything marked as later or to be confirmed may move, so treat the dates as planning guides rather than guarantees.
| When | What changes | Status |
|---|---|---|
| 6 April 2026 | SSP from day one with no lower earnings limit; day-one paternity leave and unpaid parental leave | In force |
| October 2026 | Duty to take "all reasonable steps" to prevent sexual harassment; liability for third-party harassment; trade union access and the duty to tell workers of their right to join a union | Scheduled; check the commencement details |
| 1 January 2027 | Unfair dismissal qualifying period cut from two years to six months; compensation cap removed | Planned |
| Later | Fire and rehire limits, guaranteed hours for zero-hours workers, longer tribunal time limits and other measures | Dates still being confirmed |
Already in force: sick pay and family leave
Statutory Sick Pay from the first day
Since 6 April 2026, Statutory Sick Pay (SSP) is paid from the first day of sickness. The old waiting days have gone. The Lower Earnings Limit no longer applies either, so every employee qualifies regardless of how much they earn. The weekly rate is the lower of £123.25 or 80% of the employee's average weekly earnings, for up to 28 weeks.
For small employers, the practical effect is that short absences now cost money from day one, and low-paid part-time staff who previously got nothing now get SSP. There is no general scheme to reclaim SSP from the government, so it is a cost you need to budget for.
Day-one paternity and parental leave
Paternity leave and unpaid parental leave became day-one rights from 6 April 2026. Previously, employees needed a period of service before they could take them. Now a new starter can ask for this leave straight away. Statutory pay for paternity leave can still have its own eligibility conditions, so check GOV.UK for the current rules on pay as opposed to leave.
Example
Imagine Dan runs a small print shop. He hires Leo in May 2026, and in June Leo tells him his partner is due to give birth soon. Under the old rules, Leo would not have qualified for paternity leave so early. Now he can take it. Dan checks GOV.UK to see whether Leo also qualifies for statutory paternity pay, plans cover for the two weeks, and updates his family leave policy so the next new starter gets the right answer straight away. The names here are made up.
From October 2026: harassment and trade unions
A stronger duty to prevent sexual harassment
Employers already had a duty to take reasonable steps to prevent sexual harassment of their workers. The Act strengthens this to "all reasonable steps", and it is scheduled to make employers liable for harassment by third parties, such as customers, clients or suppliers, where the employer has not taken all reasonable steps to prevent it.
For a small business, "all reasonable steps" will depend on your size and resources, but it is likely to mean more than a policy sitting in a drawer. Think about:
- A clear, written anti-harassment policy that covers third parties as well as colleagues.
- A risk assessment. Where could harassment happen? Late shifts, lone working, customer-facing roles, work events and client visits are common risk points.
- Training so staff and managers know what harassment looks like and how to report it.
- A simple reporting route, including a contact other than the person's line manager.
- Action when something is reported, written down, with records kept.
- Regular review of what you are doing and whether it works.
Trade union access and the right to join
The Act also introduces duties around trade union access to workplaces and a duty to inform workers of their right to join a trade union. The details depend on regulations and guidance, so check GOV.UK and Acas for exactly what you must provide, how and when. A sensible first step is to add a short statement about union membership to your new starter information once the format is confirmed.
Pro tip
Do the harassment risk assessment with your team, not just for them. Staff who work the late shift or deal with difficult customers know exactly where the risks are. A 30-minute conversation will produce a better list than an hour on your own, and it shows you are taking the duty seriously.
From January 2027: unfair dismissal after six months
This is the change many small employers worry about most. Currently, most employees need two years of service before they can bring an ordinary unfair dismissal claim. From 1 January 2027, that qualifying period is scheduled to drop to six months. An earlier plan to make unfair dismissal a day-one right was dropped. The cap on unfair dismissal compensation is also due to be removed.
In practice, this means you have a much shorter window in which you can end employment without needing a fair reason and a fair process. Some claims, such as those involving discrimination or whistleblowing, have never needed a qualifying period, and that does not change.
What to do before January 2027
- Use probation properly. Set clear expectations at the start, hold regular reviews and write down what was discussed. Decide well before the six-month point whether the role is working.
- Adopt a fair disciplinary and capability process. Follow the Acas Code of Practice on disciplinary and grievance procedures, and apply it consistently.
- Train whoever manages people. Most unfair dismissal claims start with a rushed conversation. A short briefing on investigating, giving warnings and holding meetings pays off.
- Keep records. Notes of one-to-ones, warnings and support offered are your evidence that a process was fair.
- Review employment practices insurance. Check what your existing cover includes and whether it reflects the removal of the compensation cap.
Common mistake
Assuming that staff who joined before the change keep the old two-year rule. Qualifying periods are generally measured at the date of dismissal, so someone with seven months' service dismissed after the change could have a claim. Check how the transition applies to your existing staff with Acas or an adviser.
Still to come: fire and rehire, zero-hours and more
Several measures in the Act depend on later regulations, and their dates are still being confirmed. These include limits on dismissing and re-engaging staff on worse terms (often called fire and rehire), a right to guaranteed hours for zero-hours and low-hours workers, and longer time limits for bringing employment tribunal claims. Further changes to flexible working and family rights are also planned.
If you rely on zero-hours or casual contracts, start thinking now about how you would offer guaranteed hours based on regular patterns of work. If you have ever considered changing terms by dismissing and re-engaging staff, take advice before doing so. The government publishes a roadmap for the Act on GOV.UK; check it every few months, or ask your payroll bureau or adviser to flag new commencement dates.
Your practical action plan
You do not need to rewrite everything at once. Work through these in order of date:
Employment Rights Act checklist
- Confirm payroll pays SSP from the first day of sickness for all employees
- Update your sickness policy and absence reporting process
- Update family leave policies to show paternity and parental leave as day-one rights
- Write or refresh an anti-harassment policy that covers third parties
- Carry out and record a harassment risk assessment
- Brief staff on how to report harassment and who to tell
- Check GOV.UK and Acas for trade union information duties
- Tighten probation reviews before the six-month qualifying period starts
- Adopt a disciplinary and grievance procedure based on the Acas Code
- Diary a quarterly check of the government's roadmap for new dates
Frequently asked questions
Does the Employment Rights Act 2025 apply to very small businesses?
Yes. The main rights apply to employers of all sizes. What counts as "all reasonable steps" to prevent harassment may take your size and resources into account, but there is no general small-business exemption.
Can I still dismiss someone in their first six months after January 2027?
You can end employment, but you should still act fairly and lawfully. Claims involving discrimination, whistleblowing and certain other reasons do not need any qualifying period. Use probation reviews and the Acas Code to make decisions clearly and on the record.
Can I reclaim the extra Statutory Sick Pay?
There is no general scheme for employers to recover SSP from the government. Budget for it as a cost of employing staff, and keep your sickness absence records accurate.
Where can I check which parts are in force?
The government publishes an implementation roadmap on GOV.UK, and Acas provides practical guidance for employers. A qualified employment adviser can confirm how a specific change affects your contracts and staff.
Related reading
The bottom line
The Employment Rights Act 2025 is a series of changes, not a single cliff edge. Sick pay and family leave changes are already here, harassment and trade union duties follow in October 2026, and the shorter unfair dismissal qualifying period is planned for January 2027, with more to come.
Handle it one phase at a time: fix payroll, update your policies, take harassment prevention seriously and strengthen your probation and disciplinary process before 2027. Check GOV.UK and Acas regularly, and get advice before any difficult dismissal or change to terms.
