Business Employment Rights Act 2025: What Employers Must Prepare For in 2026

Just before Christmas, the Employment Rights Act 2025 (ERA 2025) passed into law. The Act introduces wide-ranging reforms that will be phased in during 2026 and 2027.

The first changes are technical in nature. They relate mainly to industrial action and procedural updates. However, from April 2026, the Act will introduce significant changes that directly affect employers. Here’s what you need to know. I hope you find it helpful, but as always, please get in touch if Spotlight HR can assist you in preparing for these changes.

Employment Rights Act

~ Kimberly Bradshaw – CEO, Spotlight HR

Employment Rights Act 2025

Why the ERA 2025 Matters for Employers

The Employment Rights Act 2025 represents one of the most significant updates to UK employment law in recent years. While many of the changes are being phased in gradually, their cumulative impact will be substantial. For employers, the Act signals a shift towards stronger worker protections, increased enforcement activity and greater expectations around compliance. Organisations that prepare early will be better placed to manage risk, control costs, and communicate changes clearly to their workforce.

Employers who delay reviewing their policies may face operational disruption, employee relations issues or increased exposure to enforcement action once the new rules take effect.

When Do the Employment Rights Act 2025 Changes Take Effect?

The first major employer-facing changes under the Employment Rights Act 2025 will take effect in April 2026. These reforms will require employers to review and update several existing policies and procedures.

Key Changes from April 2026:

Statutory Sick Pay (SSP) reforms

  • All workers will be entitled to Statutory Sick Pay from the first day of absence
  • This removes the current four-day waiting period.
  • Eligibility will apply regardless of earnings level.
  • Workers will receive either 80% of their usual earnings or the flat statutory SSP rate, whichever is lower.
  • Further guidance is expected from the Department for Work and Pensions (DWP).

These changes are expected to have direct costs and administrative impacts for employers. Removing the waiting period means SSP liabilities will arise earlier, particularly for short-term absences.

Employers should review:

  • Absence management procedures
  • Payroll processes
  • Sickness reporting policies

Clear communication with employees will also be important for managing expectations and reducing misuse.

Day-one rights for paternity and parental leave

The introduction of day-one rights removes the buffer previously provided by qualifying service periods. This may increase the number of employees eligible for leave shortly after joining an organisation. Employers should ensure recruitment, onboarding and workforce planning processes reflect this change. Updating staff handbooks and manager guidance will also be essential.

Creation of the Fair Work Agency

Fair Work Agency will be established to simplify compliance and enforcement. However, it also means employers may experience increased scrutiny, as responsibilities previously split across multiple bodies are brought together. This will create a single point of contact for enforcing minimum employment standards.

  • HMRC (National Minimum Wage)
  • The Gangmasters and Labour Abuse Authority (GLAA)

Having clear records, up-to-date policies, and consistent processes will be key to demonstrating compliance if contacted by the Agency.

Increased protective awards in collective consultation

The maximum protective award will increase in collective consultation cases. This applies where an employer is proposing 20 or more redundancies.

Expanded whistleblowing protections
Whistleblowing disclosures related to sexual harassment will become qualifying disclosures. This extends existing whistleblowing protections for workers.

Trade union reforms
Changes will be introduced to trade union balloting and recognition processes. Further detail on these reforms is expected as guidance is finalised.

What Employers Should Be Doing Now

In advance of April 2026, employers should begin reviewing existing policies, contracts and procedures. This includes sickness absence policies, family leave provisions and whistleblowing arrangements. Training managers on upcoming changes can also help reduce risk and ensure consistent application across the organisation. Seeking advice early allows time to plan, rather than reacting once changes are in force. If you would like help, please get in touch.

We will continue to provide updates as further guidance becomes available.
 
The next phase of changes is expected in October 2026, although many proposals remain under consultation.