After a lengthy process and numerous amendments, during which the bill ping-ponged between the House of Commons and the House of Lords, the Employment Rights Bill is set to become law on Thursday, 18th December 2025, as it received royal assent. It will then be known as the Employment Rights Act 2025. Most measures will be phased across 2026 and 2027 rather than taking effect immediately. The passing of the Bill heralds the most significant change to individual employment rights in a generation.
Many of the changes will not have any effect on your UK operations, but some may. Read below for a concise summary of the Employment Rights Act and some of the key changes that could impact your business.
Key reforms introduced by the Employment Rights Act 2025:
- Unfair dismissal protection from six months: Employers will no longer have a 2-year period to allow for unfair dismissal; it has been reduced to the first six months. Furthermore, the cap on potential unfair dismissal compensation will be removed.
- Sick Pay: Statutory sick pay will be paid from the first day of illness.
- Fire and rehire: There will be new rules to limit dismissal and rehire practices to stop “fire and replace” workplace trends.
- Preventative duty on sexual harassment: There will be a legal obligation for employers to proactively take the necessary steps to prevent workplace harassment.
- Flexible working: There will be a day one right for employees to request flexible working, with changes made to make the terms for refusal more difficult from the employer’s perspective.
- Family rights: Paternity leave will no longer require someone to work for an employer for 26 weeks and will thus become a day-one right.
- Fair Work Agency: A new agency that unites existing state enforcement powers to oversee compliance with employment rights and fair work standards coming into effect in April 2026.
- Zero-hours contracts: Employees on zero-hour contracts will have the right to guaranteed hours and thus will receive protection from the abuse of casual contracts.
Critics of the bill, such as shadow business secretary Andrew Griffith, say, “[The bill] will pile costs onto small businesses, freeze hiring, and ultimately leave young people and jobseekers paying the price for Labour’s capitulation to their union paymasters.”
The Employment Rights Act seeks to rebalance power in favour of employees by restricting employers’ flexibility.
The Employment Rights Act is now law, and in the words of Prime Minister Keir Starmer:
“It is the biggest upgrade to working people’s rights in a generation.
You will be protected from fire and rehire.
You won’t be forced onto an exploitative zero-hour contract.
You will get sick pay from day one.
You will have stronger family leave.”