If it feels as though employment law has been changing every few months this year, that is because it has.

The Employment Rights Act 2025 became law last December, but rather than arriving all at once, it is being implemented in stages over roughly two years.

The ERA 2025 is the most significant overhaul of UK employment law in a generation and its implementation is now well under way. Several changes are already in force. The next wave started this October, while some of the most far-reaching reforms — including the new six-month qualifying period for unfair dismissal — are due between January and the end of 2027.

This article looks at:

• what has already changed;

• what is coming next; and

• what employers should be doing now.

We have kept it short and practical. If you would like more detail on any point, or advice on how the changes affect your business, please get in touch.

Already in force: the April 2026 changes

Several changes affecting day-to-day HR took effect in April 2026.

Statutory Sick Pay

Since 6 April 2026, Statutory Sick Pay (SSP) is payable from the first day of sickness absence, with the previous three waiting days removed.

The lower earnings limit has also been abolished. Lower earners now receive the lower of:

• the standard weekly rate of £123.25 for 2026/27; and

• 80% of their normal weekly earnings.

Payroll arrangements and sickness absence policies should already reflect these changes.

Paternity and parental leave

Paternity leave and unpaid parental leave are now day-one rights, with no minimum service requirement.

Paternity leave can also be taken after shared parental leave, and a new bereaved partner's paternity leave of up to 52 weeks applies where the mother or primary adopter dies during the child's first year.

Whistleblowing

A disclosure relating to sexual harassment is now expressly capable of being a protected disclosure.

Workers who raise such concerns are protected against detriment and dismissal.

Holiday records

Employers must keep records adequate to demonstrate compliance with annual leave and holiday pay rules and retain those records for six years.

The obligation covers both leave and pay, including:

• the statutory 5.6 weeks' annual leave entitlement;

• accrual for irregular-hours and part-year workers;

• holiday pay, including rolled-up holiday pay where applicable; and

• payments in lieu of untaken leave on termination.

Records may be kept in any format the employer reasonably considers appropriate but must be retained for six years from the date on which they are made.

Failure to comply is a criminal offence punishable by a fine, and the Fair Work Agency can inspect records and enforce the duty. There is no requirement to hold records covering periods before 6 April 2026.

In practice, employers should be able to demonstrate, for each worker, how entitlement and holiday pay were calculated, what leave was taken or carried over, and that the worker had a genuine opportunity to take their leave.

Collective redundancies

The maximum protective award for failing properly to comply with collective consultation requirements has doubled from 90 to 180 days' pay per employee.

Fair Work Agency

Since 7 April 2026, a single state enforcement body has brought together enforcement relating to areas including:

• the National Minimum Wage;

• Statutory Sick Pay;

• employment agency rules; and

• modern slavery protections.

It is also taking on responsibility for holiday pay enforcement.

The Fair Work Agency can investigate, impose penalties and bring claims on behalf of workers. In practical terms, employers now face a greater risk of proactive state enforcement, rather than relying solely on individual employees bringing Tribunal claims.

Trade union reforms have also been phased in during 2026, including a simplified recognition process and e-balloting from 25 August 2026. These changes principally affect unionised workplaces and are not covered in detail here.

October 2026: longer claim windows and tougher harassment duties

Two particularly important changes affect employers during October.

Tribunal time limits doubled from 1 October 2026

The time limit for most Employment Tribunal claims — including unfair dismissal, discrimination and unlawful deductions from wages — has increased from three months to six months.

The new limit applies where the act complained of, or the last in a series of acts, occurs on or after 1 October 2026.

For breach of contract claims in Scotland, the change applies from 9 November 2026.

ACAS Early Conciliation remains mandatory before a claim is issued.

The practical effect is that employers will remain exposed to potential litigation for longer following a dismissal or workplace dispute. Relevant documents, emails and witness evidence therefore need to be preserved accordingly, and settlement discussions may take place over a longer period.

Stronger harassment duties from 30 October 2026

Since October 2024, employers have been under a positive duty to take reasonable steps to prevent sexual harassment of their employees.

From 30 October 2026:

• the duty becomes one to take all reasonable steps, imposing a higher standard judged against what the employer could realistically have done; and

• employers will be liable for harassment of employees by third parties — including clients, customers, suppliers and contractors — unless they can demonstrate that they took all reasonable steps to prevent it.

The third-party provisions cover sexual harassment as well as harassment connected with most protected characteristics.

An Employment Tribunal can already increase compensation by up to 25% where an employer has breached the sexual harassment duty, and the Equality and Human Rights Commission can also take enforcement action.

The Government has a new power to specify by regulations particular steps that will count as “reasonable”. Those regulations are not expected before 2027.

For most businesses, the practical response should include:

• a documented harassment risk assessment;

• an up-to-date policy;

• regular staff and management training; and

• a clear and trusted reporting route.

Businesses operating in client-facing sectors, hospitality, retail and events should pay particular attention to the increased exposure arising from third-party conduct.

Looking ahead: 2027

Arguably the biggest changes for employers will arrive in 2027.

Several still depend on regulations and consultation outcomes, so the precise detail and, in some cases, the implementation dates may change.

Unfair dismissal and fire and rehire – 1 January 2027

Six-month qualifying period

For dismissals taking effect on or after 1 January 2027, employees will need only six months' continuous service, rather than two years, to bring an ordinary unfair dismissal claim.

Employees who joined on or before approximately 1 July 2026 may therefore have the necessary qualifying service from New Year's Day.

Removal of the compensatory award cap

The statutory cap on the compensatory award — currently the lower of 52 weeks' pay and the applicable fixed statutory cap — will be removed.

This is likely to increase potential exposure particularly in relation to senior and higher-paid employees and may affect the risk-benefit analysis surrounding without prejudice discussions and settlement.

Fire and rehire

New protections will significantly restrict the circumstances in which an employer can dismiss and re-engage employees in order to impose changes to specified core contractual terms, including matters such as pay, hours and holiday.

The rules will make seeking agreement with employees even more important, particularly where proposed changes affect terms protected by the new regime.

Trade union statement

Employers will also be required to inform workers in writing of their right to join a trade union, alongside the written statement of employment particulars.

Other measures expected during 2027

What should employers do now?

The changes are best handled through a planned review rather than a series of last-minute fixes.

1. Review harassment prevention before 30 October

Carry out and document a risk assessment, including risks arising from clients and other third parties.

Update relevant policies, refresh training and make sure reporting procedures work in practice.

2. Review hiring and probation before 1 January

Treat the first six months as the genuine assessment period.

Set clear probation objectives, conduct reviews on time and address performance or suitability issues promptly, while continuing to follow a fair process.

3. Update contracts and policies

Review templates and handbooks against the 2026 changes, including:

• sick pay;

• family leave;

• whistleblowing; and

• holiday records.

Employers should also begin preparing for the 2027 changes affecting flexible working, bereavement leave and the trade union statement.

Standard confidentiality and settlement wording should also be reviewed ahead of the new NDA rules.

4. Plan contractual changes carefully

Any proposed changes to pay, hours, holiday or other benefits should be planned with the new fire and rehire rules in mind.

Seeking agreement will become even more important, particularly where proposed changes affect terms protected by the new regime.

5. Review records and evidence

Holiday records must be retained for six years.

Employers should also ensure that documents relating to workplace disputes and dismissals are preserved for at least the longer Tribunal claim window.

6. Train managers

Line managers deal directly with probation, sickness absence, flexible working requests, grievances and workplace complaints.

Many employment disputes begin with the way these conversations are handled. Managers should therefore understand both the legal framework and the employer's internal procedures.

7. Review workforce models

Businesses relying on zero-hours, casual or agency workers should start reviewing working patterns now in preparation for the guaranteed-hours reforms expected in 2027.

8. Budget for increased exposure

Employers should factor in:

• potential uncapped unfair dismissal compensation for senior and highly paid employees and executives; and

• the additional cost of Statutory Sick Pay being payable from day one.

Overseas businesses with UK staff

Employees working in Great Britain will generally benefit from the statutory employment protections applicable here, subject to the eligibility requirements of the particular right. Overseas businesses establishing a new UK presence may also find our guide to setting up a UK subsidiary useful.

The reforms do not change the underlying position: where mandatory statutory employment protections apply, an overseas employer cannot avoid them simply by using a home-country employment template or choosing foreign law.

Cross-border working arrangements may, however, require a separate assessment of territorial coverage.

Groups with a subsidiary or branch in Great Britain — or which directly employ even a single member of staff based here — should keep the following points in mind.

Group templates should be reviewed

Employment contracts and handbooks prepared at head office should be checked against local UK requirements, including those relating to sick pay, family leave, holiday records and harassment prevention.

Group decisions require a local assessment

Restructurings and redundancies planned outside the UK must still comply with applicable local consultation requirements.

The fire and rehire protections expected from January 2027 will also restrict the use of dismissal to impose changes to specified core contractual terms.

Dismissal exposure may increase, particularly for senior employees

For dismissals taking effect from 1 January 2027, the qualifying period for ordinary unfair dismissal will reduce to six months' continuous service and the compensatory award cap will be removed.

Potential awards will remain linked to recoverable loss, but the change may be particularly significant for highly paid managing directors and country managers.

Compliance remains the employer's responsibility

The Fair Work Agency can undertake proactive investigations within its enforcement remit without waiting for an individual complaint.

Using an external payroll or HR provider does not remove the employer's own legal responsibilities.

For overseas businesses with UK staff, a focused review of the relevant employing entity's contracts, policies and HR practices before January 2027 is a proportionate way to prepare.

Conclusion

Like the library of a certain medieval abbey, employment law can at times resemble a labyrinth — and a moving one at that.

Each new statute opens another corridor, each set of regulations another room, and the visitor who enters without a lamp may wander for some time before finding the way out.

We hope we have provided the prudent employer with a small torch — or a filo d'Arianna.

How B&M Law can help

If you would like to review how the Employment Rights Act 2025 may affect your employment contracts, workplace policies or HR practices, B&M Law's Employment Law team can assist.

We advise both UK and overseas businesses on employment law compliance, workforce management and the employment aspects of establishing and operating a business in the United Kingdom.

Contact our Employment team to discuss how the changes may affect your business.

This article is for general information only and does not constitute legal advice. The law is stated as at 6 October 2026. Several measures referred to above remain subject to consultation and secondary legislation. Specific legal advice should be obtained on the facts of any particular case.