Following a prolonged journey through Parliament – and losing a number of key features along the way – the government’s Employment Rights Act has finally become law.
Kerrie Hunt, Partner in Thrings’ Employment team, takes a look at the new law, its reforms and how it will impact employers of all sizes. Here’s what you need to know:
What is changing?
Promoted as taking a “pro-business, pro-worker” approach that sought to level the playing field between employees and employers, the law will impact the rights of workers across the country in areas from contracts, family life, reporting and dismissals.
Dismissal
While the government was unsuccessful in introducing the day one right to claim for unfair dismissal, the final concession in getting the legislation through Parliament, it was able to reduce the window before this right applies from two years to six months. However, a late amendment was to lift the cap on compensation for unfair dismissal claims (currently the lower of one year’s salary or £118,223), an unexpected turn of events that will have the most impact on high earners and senior exits.
It is understood that the Government may aim to introduce this change on 1 January 2027 but unusually, it may apply retrospectively so that anyone with six months’ service by 1 January 2027 will be protected. The time limit for bringing claims in the employment tribunal is also increasing from three months to six months for most claims, which many believe will lead to an increase and as ACAS early conciliation recently increased from six to 12 weeks, it could be several months after a dismissal that a claim is issued and perhaps unexpectedly lands in an employer’s in-tray.
Fire and re-hire dismissals
The government has also secured its pledge to make “fire-and-rehire” practices largely illegal when it comes to ‘restricted variations’ relating to hours, pay and holidays, unless the business is in serious financial difficulty and the change cannot be avoided in the circumstances.
Otherwise, any employee dismissed following a refusal to agree the variation will have a claim for automatic unfair dismissal, and the question of reasonableness will not apply.
Other variations, such as a change of workplace are not caught.
Harassment
A further enhancement of the protections against harassment, following the recently introduced pro-active duty to prevent sexual harassment in the workplace in October 2026, is that in future employers must take “all reasonable steps” to prevent sexual harassment and harassment by third parties in the workplace. This third party duty extends to any of the protected characteristics covered by harassment under the Equality Act.
In addition, an employee reporting sexual harassment will also have the same protections as whistleblowers reporting other forms of wrongdoing, as sexual harassment will be a new category of protected disclosure under the whistleblowing regime.
Contracts
The government’s original promise to ban zero-hour contracts may have changed through the parliamentary process but the Government resisted an attempt to change this to a ‘right to request’ and staff on zero or low-hour contracts will still benefit from changes to the law, and where certain conditions are met must be offered ‘guaranteed hours’ reflecting the time they work, if it regularly exceeds these hours over a 12 week reference period.
They must also be given “reasonable notice” before being required to work a shift, or of changes and cancellations of shifts, with all staff – including agency workers –entitled to receive a payment if a shift is cancelled or changed.
These provisions are still subject to consultation and secondary legislation, and the devil is always in the detail, so the hospitality, retail and potentially social care sectors are likely to be looking closely at this.
Other key changes include statutory sick pay becoming a day one right and firms being required to provide “reasonable” explanation for the rejection of any flexible working requests.
Paternity/maternity leave
There are also big changes to family life with unpaid parental leave available from the first day in a new job and extending existing protections for women that apply in redundancy situations, to also apply to other non-redundancy dismissals during pregnancy, maternity leave and in the first six months after returning to work from such leave. These changes are also currently under consultation and will require new regulations.
A day one right also now applies for men taking paternity leave, whereas they previously had to wait 26 weeks before being eligible for the right.
Trade unions
The provisions relating to trade union legislation are largely unchanged and a combination of the changes may see an uptick in union membership in future.
The changes include an obligation on employers to inform employees of their right to join a trade union, a right of access to workplaces for unions to recruit new members potentially with a view to seeking recognition and thirdly, lowering the threshold for the number of union members within a relevant group of workers (bargaining unit) who are seeking recognition, from the current 10% to as low as 2%, or anywhere between the two.
These changes are some of the earliest expected to come into force in April and October 2026.
Other responsibilities for employers
Businesses are now required to keep records showing their compliance with statutory holiday entitlement for at least six years and, for those with more than 250 employees, a “gender-pay-gap action plan” must be produced alongside the already required reporting.
What’s next?
The new laws will be introduced in stages through the course of 2026 and 2027, with secondary legislation required to bring the various elements of the Act into force.
Kerrie Hunt, Partner in Thrings’ Employment team, said: “While some of the more radical proposals were diluted during the Act’s passage through Parliament, the changes that have made it into the final Act are still highly significant for employers in all sectors and of all sizes across the country.
“Reducing the qualifying period for unfair dismissal claims, tightening the rules around contractual changes and increasing obligations to prevent harassment all raise the bar for workplace compliance and it is important that business owners, HR teams and other people-facing leaders are seeking legal advice on how their policies shape up.
“With much of the detail to be implemented through secondary legislation over the next two years, some as early as April 2026, businesses now have a crucial window to review their policies, contracts and management practices. Employers that prepare early will be far better placed to manage risk, avoid disputes and adapt smoothly as the new regime comes into force.”
Thrings’ Employment lawyers are experienced in dealing with business matters that affect the workforce and has acted for both employers and employees from start-ups and SMEs all the way to multinational corporations across a wide range of employment matters. To find out how they can help strengthen your polices, and solve your disputes, please get in contact.