The UK is rolling out a multi-phase implementation of the Employment Rights Act introduced last year, with major changes coming into effect across August and October. April already brought earlier overhauls, including day-one Statutory Sick Pay (SSP) and paternity leave; the focus now shifts to unfair dismissals and greater freedom for trade unions.
According to the Department for Business, Innovation, Science and Trade, the aim of the sweeping new measures is to “bring employment rights legislation into the 21st century” and extend protections to millions more workers.
Outsourced public service workers
From October, contractors and subcontractors delivering outsourced public services must ensure that new employees recruited to work alongside transferred staff are offered employment terms and conditions that are “overall no less favourable” than those of their transferred counterparts. Contractors must also maintain fair employment practices on pensions, sick pay, holiday entitlement and working hours across the contract workforce. Unlike past guidance, these requirements carry legal weight.
Contracting authorities – such as NHS trusts, councils and central government departments – will be legally bound to enforce these obligations in supplier contracts.
Tips, seafarers and workplace harassment
The Employment (Allocation of Tips) Act 2023 already made it illegal for employers to withhold tips or service charges, but the Employment Rights Act 2025 tightens the rules from October. Previously, consulting staff when drawing up a tipping policy was recommended under the Code of Practice but not legally required. From 1 October, employers who handle tips on more than an occasional basis must formally consult their workforce before creating or updating a written tipping policy. The policy must be formally reviewed at least once every three years, and tribunals can order up to £5,000 in compensation per affected worker for financial losses resulting from improper consultation.
The Seafarers’ Charter, a voluntary agreement covering pay, contracts and rest hours for maritime workers, will become mandatory from December. The change gives the government legal authority to enforce fair working conditions and pay for seafarers, closing loopholes that previously allowed poor treatment on ships operating from UK ports.
From October, employers must take “all reasonable steps” to prevent sexual harassment of employees, upgrading the previous threshold of “reasonable steps”. This aligns the preventative duty in Section 40A with the existing statutory defence against vicarious liability in Section 109(4) of the Equality Act. Employees cannot bring a standalone tribunal claim for breach of this duty, but a tribunal finding a breach can add an uplift of up to 25% to compensation in a successful sexual harassment claim. The Equality and Human Rights Commission (EHRC) can also enforce standalone breaches.
Trade union reform
The vast majority of the Trade Union Act 2016 will be repealed under the 2025 Employment Act, including strengthening rights around union representation and facility time. Strike ballot thresholds will be removed, and the required notice period before industrial action will be reduced from 14 days to 10 days. Many of the main repeal provisions came into effect in February, with more to come in August and October.
Unfair dismissal and equality rules
The qualifying period to claim “ordinary” unfair dismissal at an Employment Tribunal will be cut from two years to six months. Day-one protections against discrimination and automatically unfair dismissal grounds remain unchanged. The qualifying period for employees to request written reasons for their dismissal will also drop from two years to six months, and the statutory cap on compensatory awards for unfair dismissal claims will be removed entirely. Previously, the cap was the lower of 52 weeks’ gross pay or a set statutory figure. These changes take effect in January.
Large employers with 250 or more employees will be required to detail evidence-based actions they are taking to improve gender equality, including addressing the gender pay gap and supporting women during the menopause. Currently voluntary, this requirement becomes mandatory in spring next year.
Fire and rehire, flexible working and social care
The Employment Rights Act 2025 severely restricts “fire and rehire” and “fire and replace” practices, making dismissal to force through changes to core contract terms automatically unfair from January 2027, with a very narrow exception for severe financial distress.
Employers who cannot immediately accept a flexible working request will need to follow a new process to discuss ways to overcome problems with the proposed arrangement or potential alternatives. If they still decide to reject the request, they must set out why they feel it is reasonable to do so. These changes take effect in 2027.
The establishment of Social Care Negotiating Bodies (SCNBs) and Fair Pay Agreements (FPAs) will tackle severe domestic recruitment and retention issues, low pay and high turnover across the 1.5 million adult social care workforce. SCNBs will bring together employer and worker representatives, including trade unions, for national-level collective bargaining, while sector-wide agreements will negotiate minimum pay, terms and conditions, and wider employment matters. The SCNB rollout will not become fully effective until early next year, while the FPA will take until 2028 to come into force.
Zero-hours contracts
The Employment Act 2025 seeks to end “one-sided flexibility” in zero-hours and low-hours contracts while keeping flexibility optional for workers who prefer it, such as students or carers. Eligible workers gain three main rights:
- Right to Guaranteed Hours: Employers must offer a contract with guaranteed hours reflecting regular hours the worker actually worked over a defined reference period, such as a proposed 12-week baseline. Workers can reject the offer and stay on their current flexible arrangement.
- Right to Reasonable Notice of Shifts: Employers must give reasonable advance notice of upcoming shifts and any changes to existing schedules. This applies only to employer-initiated changes; voluntary shift swaps between workers do not trigger a violation.
- Payment for Cancelled or Curtailed Shifts: Workers are entitled to financial compensation if an employer cancels, shortens or reschedules a shift at short notice.
Many of these changes are scheduled to come into force in 2027.
