Understanding the UK Employment Rights Act

The Employment Rights Bill has now crossed the finish line and has officially become the Employment Rights Act. For employers, however, this is not the end of the journey but the beginning of a new and more complex one. After months of political wrangling and last-minute compromises, the Act represents the most significant overhaul of individual employment rights in a generation. And while its provisions will be introduced gradually, the direction of travel is now clear.

 

Much of the attention so far has focused on headline legal changes and compliance documentation. In reality, the greatest risk to employers will not lie in the wording of contracts or policies, but in everyday management behaviour. Training managers to understand and apply the new legal standards will be far more important than producing perfect paperwork.

 

 

A phased approach – but no room for complacency

The government has now confirmed that implementation will be staggered over the next two years. Introducing changes that will quietly but significantly alter how businesses manage dismissals, working hours, restructures, and workforce flexibility.

 

For most employers, 2025 will bring relatively limited immediate change, with the exception of certain trade union reforms that are being accelerated. However, the bulk of individual employment rights reforms will follow in 2026 and 2027.

 

This phased timetable may feel like breathing space, particularly for organisations already facing economic pressure. That would be a mistake. Delay does not remove risk; it simply pushes it further down the road. Employers who wait until the law changes before adapting management practices will find themselves unprepared when the new rights bite.

 

 

Unfair dismissal - delayed, not diminished

One of the most far-reaching reforms is the right not to be unfairly dismissed after six months of continuous service. This represents a moderated version of the government’s original proposal to make unfair dismissal a day-one right, with the qualifying period instead being reduced from the current two years to six months. The government has now confirmed that this change will not take effect until 2027. This extended implementation period and less stringent approach will be welcomed by many employers, although they do not diminish the significance of the reform itself.

 

When this protection arrives, the long-standing approach of treating short-service dismissals as low-risk will no longer be sustainable. Managers who currently rely on informal conversations, rushed decisions, or minimal documentation during the early months of employment will be exposing their organisations to significant legal and financial risk, particularly given the removal of the statutory cap on compensatory awards. Even with a proposed “lighter-touch” dismissal process for new starters, poor handling is likely to generate claims.

 

The key issue here is not legal theory but managerial competence. A badly managed dismissal will remain risky regardless of how well drafted the policy is.

 

 

Fire and rehire - narrowing the options

Restrictions on dismissal and re-engagement practices are scheduled to take effect in October 2026. While not an absolute prohibition, the new framework significantly tightens the circumstances in which employers can lawfully rely on this approach.

 

Managers under pressure to push through contractual changes may be tempted to treat these reforms as a technical HR issue. That would be a costly error. The decision to terminate and re-engage staff, or to replace employees with agency labour following failed negotiations, will attract close scrutiny. Training managers to understand when alternatives must be exhausted and how consultation should genuinely be conducted will be critical.

 

 

Collective redundancies - higher penalties, sharper focus

From April 2026, the financial consequences of failing to comply with collective redundancy consultation requirements will increase substantially, with the maximum protective award doubling to 180 days’ pay. While further changes to consultation triggers are not expected until 2027, this earlier reform alone significantly raises the stakes for employers contemplating restructuring.

 

Collective consultation is an area where poor planning and inconsistent management behaviour frequently cause problems. Board-level strategy can be undone by line managers giving mixed messages or acting prematurely and failing to follow the full required process. Again, documentation will not save an employer if managers do not understand the importance of process and timing.

 

 

New day-one rights and expanded protections

April 2026 will also see several “quick win” reforms come into force, including immediate entitlement to paternity leave and unpaid parental leave, and an expanded statutory sick pay regime that applies from the first day of absence and to lower-paid workers, with the removal of the lower earnings limit.

 

Individually, these changes are manageable. Collectively, they place greater responsibility on managers to handle absence, leave requests, and workforce planning lawfully and consistently. Misunderstanding or misapplication at the line-manager level is where disputes are most likely to arise.

 

 

Guaranteed hours, flexibility, and future reforms

Further reforms expected in 2027 will reshape zero- and casual-hours arrangements, protections for pregnant workers, and introduce new rights such as bereavement leave. Consultation is still ongoing in many of these areas, and key details remain unsettled.

 

This uncertainty reinforces, rather than weakens, the case for early preparation. Employers cannot train managers overnight. Building confidence, consistency, and legal awareness takes time.

 

 

Why training matters more than paperwork

Updating contracts, handbooks, and policies is essential, but these documents only work if they are properly understood and applied. In practice, it is managers who make the decisions that give rise to claims: how performance issues are handled, what is said in meetings, when dismissals are rushed, or how flexible working requests are responded to.

 

As employment rights expand, inconsistent management practices become increasingly dangerous. A single poorly handled conversation can unravel the most carefully drafted legal framework.

 

Employers who invest now in practical, scenario-based management training will be far better placed to manage risk than those who focus solely on compliance documents.

 

 

Acting now, not later

The Employment Rights Act will reshape workplace relations over the coming years. While its most significant measures are delayed, they are not going away. The employers who navigate this period most successfully will be those who treat preparation as a cultural issue, not just a legal one.

 

Engaging in consultations, reviewing policies, and, above all, equipping managers with the knowledge and confidence to make fair, lawful decisions will determine whether these reforms become a manageable transition or an expensive lesson.

 

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Amber Ballans is a Solicitor and Employment Law Specialist at Goughs Solicitors

 

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