Employment Rights Act 2025 ‘brings world of work into 21st century’

Big changes to the world of work have been on the horizon for a while and the Royal Assent of the Employment Rights Bill means they’re officially here – well, almost.

Finally reaching the finish line, the Employment Rights Bill received Royal Assent in December 2025, transforming it into the Employment Rights Act (ERA) 2025, making it law.

With HMRC celebrating it as “bring[ing] the world of work into the 21^st century”, it’s estimated over 15 million workers across the UK will benefit from these new laws. But while the law is now official, the rollout of headline changes won’t come until later – across various dates in 2026 and 2027.

Whether you’re a recruiter, end client or an employer, here’s the latest on the Employment Rights Act 2025 and how to stay ready.

What was the Employment Rights Bill – a quick recap

Part of the government’s Plan to Make Work Pay, the Employment Rights Bill was designed to (in short) make work fairer and more secure, while cracking down on employer practices that the government sees as exploitative. Specifically, it covers:

• Less uncertainty for workers
• Stronger trade union rights and easier industrial action procedures
• Better sick pay and family-related rights
• A brand-new Fair Work Agency to enforce workplace rights
• A push to eliminate shady tactics

It all has a motive to grow the economy, boost wages and reduce insecure work and non-compliance.

What’s changed now the Employment Rights Act 2025 is law?

Before anyone panics, right now, not much has changed.

The ERA did reach Royal Assent (officially approved by the King as an Act of Parliament), but the government will be using a phased approach to give businesses time to implement and adapt to these changes.

In their July 2025 Employment Rights Bill roadmap, the government noted that commencement dates will line up with commonly used dates i.e. 6^th April and 1^st October. So there (hopefully) shouldn’t be any surprises!

Out of the gate, the only measures introduced from Royal Assent of the Act include the repeal of the Strikes (Minimum Service Levels) Act 2023 and some parts of the Trade Union Act 2016.

What’s next for the Employment Rights Act 2025?

The ERA has plenty in store for us over the next 2 years. As it stands, the roadmap of changes includes batches across 2026 and 2027.

Disclaimer: the following is a brief overview based on current information as of the date of publishing. Implementation of these changes are subject to government consultation. For a more exhaustive list of changes, please check government websites.

February 2026

Stated in the legislation as coming into effect 2 months after the Bill became law, a couple of changes taking place include:

• Better protection against dismissal for taking part in legal industrial action – removes the 12-week limit for claiming unfair dismissal and makes it “automatically unfair” to fire someone for taking part.
• Simplifying industrial action processes – changes requirements like notice of industrial action (reduced to 10 days), majority rules for industrial action votes, industrial action mandates and political fund rules.

April 2026

Probably bringing some of the most notable changes, April 2026 brings the first of the Day-1 Rights and other protections with it, including:

• Statutory Sick Pay (SSP) changes – makes SSP a right from day 1 of sickness/absence and removes the ‘lower earnings’ limit for eligibility.
• Paternity leave – makes paternity leave a day-1 right, removing the restriction of 26 weeks’ minimum service to be eligible.
• Unpaid parental leave – becomes a day-1 right, removing the requirement of working for your employer for at least a year to be eligible.
• Shared parental leave restriction – removes the restriction that you can’t take paternity leave after shared parental leave.
• Whistleblowing protection for sexual harassment – sexual harassment becomes a ‘qualifying disclosure’ under whistleblowing law, meaning protection from detriment or unfair dismissal for whistleblowers.
• Gender pay gap and menopause action plan – introduces the requirement for employers to create action plans for menopause and gender pay gaps. Will be voluntary from April 2026 but mandatory sometime in 2027.
• Fair Work Agency (FWA) – introduces the Fair Work Agency, a single place for employers and workers to seek help on matters like employment disputes, statutory sick pay, minimum wage and protections for agency workers.
• Collective redundancy protective award – an employer failing to consult in a collective redundancy will now face a protective award (employee remuneration) with a maximum period of 180 days’ pay (doubled from 90 days!).

October 2026

October 2026 is expected to bring more major changes like:

• Restrictions to ‘fire and rehire’ tactics – automatically deems a dismissal as “unfair” if an employee is dismissed for 1) not agreeing to contractual changes or 2) so the employer can re-hire them (or replace) them on varied contractual terms.
• Employer liability for harassment – the Act will place liability on employers for harassment from third parties (customers, clients), unless they can prove “all reasonable steps” were taken to prevent it.
• Employment tribunal time limits – the time limit for making claims to the employment tribunal increase to 6 months.

2027

2027 is shaping up to be a big year for workers’ rights too. While the government hasn’t pinned down exact dates yet, we do have a general idea of changes coming our way:

• Unfair dismissal – employees will have the right to protection from unfair dismissal after 6 months in a job (currently 2 years!).
• Pregnancy and maternity rights – introduces more protections for pregnant workers and those returning from maternity leave against dismissal.
• Safeguarding zero-hour contracts – ending one-sided zero-hour contracts with rights to guaranteed hours, reasonable notice of shifts and payment for shifts cancelled or moved at short notice.
• Safeguarding for zero–hour agency workers – zero-hour contract rights above will also apply for agency workers but will apply differently to allow flexibility for the circumstances of the worker/agency/end client relationship.
• Flexible working as a day-1 right – makes flexible working available from day 1 of employment and places more requirements/restrictions on employers when it comes to processes and decision making.
• Regulation of umbrella companies – the definition of “employment business” will be expanded to include common umbrella activities, potentially bringing them into the scope of rules for the temporary labour market.

2027 could also bring more changes to:

• Collective redundancy
• Gender pay gap and menopause action plans
• Trade union changes
• Further harassment protections

What didn’t make it into the Employment Rights Act 2025?

The Employment Rights Bill has been on a long journey, with plenty of new amendments tabled – but not everything proposed made the final cut. A couple of notable cuts include:

Unfair dismissal protection from day 1

If you’ve followed the Act from the beginning, you may recall the government’s original proposal was for protection from unfair dismissal to be a right from day 1 of employment. It became a sticking point in debates, so it was agreed that a six-month qualifying period was a more balanced solution for both employers and employees alike.

Banning substitution clauses

MP Nick Timothy tabled amendments (Amendment NC12) to ban the inclusion of substitution clauses that allow employees, workers or dependent contractors to appoint a substitute to supply services or undertake work on their behalf.

Being withdrawn after debate, it was determined that this new clause would create a whole range of unintended consequences, exclude people from carrying out legitimate business activity and impact more than just a narrow group of workers.

Restricting the use of substitutes

Baroness Penn also tabled amendments (Amendment 280), arguing that substitution clauses are loopholes that allow companies to pass on the responsibility of right-to-work and criminal checks onto contractors.

The proposal was to restrict the use of substitutes by requiring company directors to keep a register of dependent contractors with the aim to make sure “employment rights are upheld [and] pay is not suppressed through illegitimate competition”.

But as with Timothy’s tabled substitution clause amendment, Penn’s contribution was withdrawn after debate raised concerns over the “significant additional reporting burdens” it would place on businesses.

What businesses need to do now

For employers, agencies, umbrellas and end clients alike, all these changes will have you wondering “but what do I need to do?”.

The answer will be very much dependent on your type of business, how you work and who you work with. But generally a good approach will be:

1. Get clued up on the changes

The first step is to understand what’s changing and what will impact you/your business. The above is a good starting point – make a note of anything you think is relevant and go away and research it. The government’s collection of Employment Rights Act factsheets is a good place to find more details.

2. Understand your responsibilities

After you get your head around what’s changing with the ERA, you need to understand what that means for you. Having an awareness of what you’re responsible for will outline where your liabilities are and what risks you need to prepare for.

3. Check your policies and processes

Many changes will impact employment rights and as they come into effect any relevant policies or processes will need to be updated. These should also be easily accessible to employees.

4. Clarify worker employment status

If you engage or employ contractors, you need to be very clear on their worker status and the difference between ‘employed for tax purposes’ and ‘employed for employment law purposes’.

A contractor could be determined as ‘self-employed’ for tax purposes, but as an ‘employee’ in employment law and therefore entitled to employment rights.

Mitigating new risks – how insurance could help

With so many moving parts coming into force through 2026 and 2027, the Employment Rights Act isn’t just a compliance exercise – it’s a shift in how risk shows up across your projects, your people, and your supply chain.

The ERA introduces new layers of financial exposure that businesses can’t afford to overlook. And that’s exactly where the right business insurance becomes more than a safety net.

Whether it’s protecting against employment disputes, HMRC enquiries into tax compliance, or ensuring your contractors and subcontractors are fully covered, now is the perfect moment to review your policies and prepare for new risks.

Partnering with Kingsbridge 

Whether you’re a recruitment business, accountant, or provide professional services to contractors and freelancers, partnering with Kingsbridge not only means you benefit from expert insurance & IR35 advice and support, your contractors do too – we can help them secure comprehensive Contractor Insurance including fundamental cover like PL, PI, personal accident and more.

As a Partner, referring contractors could also offer an extra revenue stream – talk to one of our in-house specialists to find out more. You can get in touch online or call on 01242 312 564.