The Employment Rights Bill 2025 was finally approved by both Houses of Parliament on 16 December 2025, over 14 months after it was first published. Royal Assent is taking place on 18 December, at which point the Bill becomes an Act of Parliament.
It follows an unexpectedly protracted passage through Parliament, during which the Government had to concede several key amendments, most notably the removal of ‘day one’ rights to claim unfair dismissal and reintroducing a six-month qualification period, due to take effect from 1 January 2027.
In a last-minute surprise amendment, the Act will remove the compensation cap for successful unfair dismissal claims, meaning the removal of the statutory maximum award of £118,223, which is currently subject to a 52-week pay cap. The Government has committed to conducting an impact assessment before the commencement of these provisions in the Act.
The Act will introduce an extremely wide range of workplace reforms, described as the biggest upgrade to workers’ rights for a generation. It is the first phase of delivering the Government’s broader Plan to Make Work Pay, with reforms under the Act taking effect in stages throughout 2026 and 2027.
Early reforms under the Act
In the initial phase of implementation during the first half of 2026, these are the key provisions of the Act due to take effect.
1. Industrial relations and trade unions
The Strikes (Minimum Service Levels) Act 2023, which introduced minimum service levels for key public services during industrial action, is repealed as soon as the Act passes into law.
Within two months of Royal Assent, the majority of the Trade Union Act 2016 will also be repealed, with the exact date to be confirmed. This removes some of the current restrictions on industrial action and picketing, and will simplify the balloting process. Notices of industrial action will be required to be provided by unions to employers at least 10 days in advance (reduced from 14 days), and industrial action mandates will last for 12 months (increased from six).
From April 2026, further changes to simplify the statutory trade union recognition process will come into effect, potentially making it easier for trade unions to gain compulsory recognition.
Action points for HR
- Maintain dialogue with any recognised trade union and make contingency plans based on a higher risk of industrial action.
- Assess the possibility of compulsory trade union recognition resulting from changes being introduced under the Act and consider introducing alternative forms of employee engagement and representation.
- Employers may want to consider securing voluntary recognition agreements before these changes take effect, which can often be negotiated on more favourable terms than those likely to be imposed under the statutory process.
2. Statutory Sick Pay (SSP)
All employees will be entitled to receive SSP from the first day of a period of sickness absence from April 2026, without the current three-day ‘waiting period’. SSP will be payable at the lower of the statutory weekly rate (increasing to £123.25 from April 2026) or 80% of the employee’s normal weekly earnings. The ‘lower earnings’ limit will no longer apply, meaning SSP is payable even to the lowest-paid employees.
Action points for HR
- Review your sickness absence policy and employment contracts to ensure they reflect the new entitlement to SSP.
- Monitor absence levels and consider whether it’s necessary to take proactive steps to address frequent short-term absences.
3. Day one family leave rights
‘Day one’ rights to claim unfair dismissal may have been removed from the Act, but there are still some important day one rights remaining that will take effect from April 2026.
New parents will be eligible to take two weeks of statutory (paid) paternity leave, and all parents can take up to 18 weeks of (unpaid) parental leave up to the child’s 18th birthday, from the first day of their employment.
Action points for HR
- Review and update family leave policies to reflect these new day one rights.
4. Sexual harassment
Sexual harassment disclosures will become a ‘qualifying disclosure’ for the purposes of whistleblowing protection from April 2026, increasing the already high protection available to employees.
Further protections from all forms of harassment will take effect later in 2026, including a new duty for employers to take ‘all reasonable steps’ to prevent the harassment of their employees by third parties.
Action points for HR
- Review your current procedures for dealing with harassment complaints and train managers in dealing with complaints properly.
- Conduct an audit to assess the risk of third-party harassment and consider introducing appropriate measures to mitigate the risk.
5. Collective redundancy – protective award
The penalty for an employer’s failure to collectively consult when proposing to make 20 or more of its employees redundant will double from 90 to 180 days’ pay per employee, with effect from April 2026. This will significantly increase the financial risk of non-compliance. Note that collective consultation obligations also apply to proposals to dismiss and re-engage 20 or more employees to achieve a change to contractual terms of employment, meaning a failure to properly consult in these circumstances may also result in a protective award.
Action points for HR
- Plan carefully for any collective redundancy exercises to ensure full compliance with collective consultation requirements, reducing risk of protective award.
- Look out for further consultation on a new threshold for collective consultation when redundancies are proposed across multiple sites.
6. Fair Work Agency
The Fair Work Agency (FWA) is due to be established in April 2026, although its enforcement powers are likely to take effect at a later date. The FWA will combine the existing enforcement functions of HMRC relating to the national minimum wage, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority. It will also have the power to enforce payment of SSP and statutory holiday pay.
Action points for HR
- Look out for further details of the FWA, including when its enforcement powers will take effect.
Other measures taking effect in 2026 and beyond
Measures under the Act due to take effect in the second half of 2026 include further tightening of harassment protections, additional trade union powers, strict restrictions on the ability for employers to ‘fire and rehire’ employees as a mechanism to force through contractual changes, and the extension of the time limit for bringing an employment tribunal claim from three to six months.
Further major reforms are due to take place in 2027, including the introduction of a six-month qualifying period for claiming unfair dismissal and the removal of the current cap applying to awards of compensation. Extensive and complex protections for zero-hours employees are also expected, subject to further consultation.
To keep up to date with the implementation of the Act, including information about the latest consultations, our Employment Rights Act Hub collects together all our commentary as well as the latest version of our Employment Rights Act table, which summarises the key developments in the order in which they are expected to be implemented.
Look out for details of our future webinars and events in 2026, and sign up to receive the latest updates direct to your mailbox: https://www.birketts.co.uk/newsletter-and-events-subscription/.
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The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at December 2025.