Employment Rights Act 2025: What SMEs Need to Know
The Employment Rights Act 2025 represents the most significant reform of UK employment law in a generation. It introduces sweeping changes that will affect every employer in the country. Here is what you need to know and what policies you need to update.
Key timeline
The Act received Royal Assent in 2025. Most provisions will come into force through secondary legislation in 2026-2027. Day-one unfair dismissal rights are expected from autumn 2027. Employers should start preparing NOW.
The headline changes
Day-one unfair dismissal rights
The current 2-year qualifying period for unfair dismissal claims will be removed. Employees will be able to bring unfair dismissal claims from their very first day of employment. A new statutory probation period (expected 9 months) will provide some flexibility, but employers will still need to follow fair procedures from day one.
Update: Disciplinary procedure, probation terms, employment contracts
Fire and rehire restrictions
Dismissing employees and re-engaging them on worse terms will be automatically unfair, except in very narrow circumstances where there is genuine financial difficulty threatening the business.
Update: Employment contracts, redundancy procedure, change management policies
Zero-hours contracts regulation
Workers on zero-hours contracts will gain the right to guaranteed hours based on their normal working pattern over a reference period. Employers must offer a contract reflecting hours regularly worked.
Update: Employment contracts, casual worker agreements
Third-party harassment liability
Employers will be liable for harassment of their employees by third parties (customers, clients, suppliers) if they have failed to take reasonable steps to prevent it.
Update: Anti-harassment policy, equal opportunities policy, staff training
Strengthened protections for pregnant workers and new parents
Extended protection from redundancy during pregnancy and for 18 months after return from maternity/paternity/adoption leave. Employers must offer suitable alternative employment during the protected period.
Update: Maternity/paternity policy, redundancy procedure
Fair Work Agency
A new enforcement body, the Fair Work Agency, will be established to enforce employment rights. It will have powers to inspect workplaces, issue compliance notices, and bring tribunal proceedings on behalf of workers.
Update: All employment policies to ensure compliance
Trade union access and recognition
Updated rules on trade union recognition, access to workplaces, and facilities time. Electronic balloting for industrial action will be permitted.
Update: Trade union recognition agreement (if applicable)
Collective redundancy consultation
Changes to the trigger for collective consultation — will now be based on total number across the business, not per establishment.
Update: Redundancy policy, consultation procedures
Policies every SME needs to update
What should you do now?
Update your policies for the Employment Rights Act 2025
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