Employment Rights Act 2025: Changes to unfair dismissal

18 February 2026

1. Unfair Dismissal – Major Reform

Effective 1 January 2027 

  • Qualifying period reduced from 2 years to 6 months.
  • Statutory cap on compensation removed.
  • Applies automatically to all employees with six months’ service on that date.

Employer Impact:
Update dismissal procedures, probationary reviews, early‑performance‑management frameworks.

2. Fire & Rehire Restrictions

Effective January 2027

  • Employers cannot dismiss and re‑engage employees to force unfavorable contractual changes.
  • Restricted variations include pay, pension benefits, hours, shift structures, and time‑off rights.

Employer Impact:
Contract variation processes must be rewritten; legal risk increases significantly.

3. Statutory Sick Pay (SSP) – Day‑One Right

Effective 6 April 2026

  • Paid from the first day of absence.
  • Lower earnings limit removed.

Employer Impact:
Payroll calculation rules must be updated; sickness reporting processes reviewed.

4. Family-Friendly Rights

Paternity & Unpaid Parental Leave

Day‑One rights from 6 April 2026

Bereavement Leave

Expected 2027, pending secondary legislation.

Employer Impact:
Revise leave policies, handbooks, and manager training.

5. Trade Union Rights & Industrial Action Protections

Effective 18 February 2026 

  • Dismissal for participating in industrial action becomes automatically unfair.
  • Notice period for action reduced from 14 to 10 days.
  • Various ballot and reporting simplifications.

Employer Impact: HR and ER teams must update internal procedures immediately.

6. Collective Redundancy Reform

Effective 6 April 2026 

  • Maximum protective award increased from 90 to 180 days.

Employer Impact:
Greater exposure in non‑compliant redundancy processes.

7. Zero‑Hours & Variable‑Hours Workers

Expected 2027 (TBC) 

  • Right to request more predictable working patterns (12‑week reference period).
  • Compensation for short‑notice shift cancellation.
8. Agency Workers

Expected 2027 (TBC) 

  • Shared obligations between hiring organisation and agency.
  • Compensation requirements clarified.
9. Flexible Working – Day‑One Right

Expected 2027 (TBC) 

  • Requests from day one.
  • Employers must provide transparent, evidence‑based justification for refusal.
10. Fair Work Agency Established

Effective 6 April 2026 

  • New enforcement body for minimum standards, holiday pay, zero‑hours protections, etc.
Which Policies MUST Be Updated vs. NICE‑TO‑HAVE

Must‑Have (Legal Requirement)

  • Unfair Dismissal Policy
  • SSP / Sickness Absence Policy
  • Flexible Working Policy (once 2027 changes confirmed)
  • Family Leave Policies (paternity, parental, bereavement as applicable)
  • Zero‑Hours / Variable‑Hours Policy
  • Agency Worker Procedures
  • Collective Redundancy Policy
  • Fire & Rehire / Contract Variation Policy
  • Trade Union & Industrial Action Policy
  • Holiday Pay & Working Time Compliance Materials
  • Employee Handbook references to day‑one rights
Nice‑to‑Have (Best Practice Enhancements)
  • Enhanced onboarding / probation frameworks
  • Manager capability and training guides
  • Employee wellbeing and absence‑prevention documents
  • Workforce planning guides around predictable work patterns
  • Updated template employment contracts
  • Internal communications to improve awareness of new rights

 

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