The Employment Rights Act 2025, a ‘key pillar’ of the government’s Make Work Pay strategy, ensures that workplace protections will benefit significantly more employees, regardless of earnings and duration of employment. 

In essence, the Act aims to ends exploitative zero-hour contracts and ‘fire and rehire’ practices, strengthens redundancy rights, boosts family-friendly rights and establishes a new Fair Work Agency to support enforcement of employment rights.

“[The Act]… is aimed at growing the economy, boosting wages, and reducing insecure work. The Act was developed in close collaboration with business and trade unions and will help bring our employment rights legislation into the 21st century, extending modern protections to millions more workers,” the Department for Business & Trade (DBT) said in a factsheet to help employers understand the changes. 

Most of the changes are being implemented in phases to ensure employers and businesses have enough time to prepare and DBT has launched a new website offering guidance for business and workers.

These are the key changes employers and financial professionals across the sector need to know:

Statutory sick pay from first full day of sickness

Two key features of statutory sick pay (SSP) are being removed under the Employment Rights Act:

• the Lower Earnings Limit, and
• the three-day waiting period which usually applies before SSP is paid.

From April 2026, SSP will be payable on the first full day of sickness, regardless of earnings.

Paternity and unpaid parental leave a day-one right

Employees will now be able to take paternity or unpaid parental leave from the first day of their employment, from April 2026.

Furthermore, fathers and partners will now be eligible to take additional parental leave, even if they have previously taken shared parental leave and pay.

Bereaved partner’s paternity leave a day one right

From 6 April, employees who lose the mother or primary adopter of their child within the first year of the child’s life will have the right to take time off work from the first day of their employment.

Although pay will be at the employer’s discretion, employees can be eligible for up to one year (52 weeks) of compassionate leave. 

Enhanced redundancy protections

Businesses who fail to follow correct redundancy procedures will face tougher penalties.

From April of this year, employers who have not properly consulted suitable employee representatives as part of their legal obligations during 20 or more redundancies per establishment within a 90-day period, will need to pay each affected employee a maximum protective award of 180 days’ pay, instead of 90 days.

Further changes to redundancy thresholds will come into force during 2027.

Stronger whistleblowing protections following sexual harassment reports

Employees who report workplace sexual harassment will soon be entitled to stronger whistleblowing protections against unfair dismissal.

Previously, the claimant had to demonstrate that their whistleblowing disclosure fell within the scope of existing wrongdoing categories.

Those reporting workplace sexual harassment will therefore benefit from greater protections when the law comes into force from April of this year.

New agency to uphold key employment rights

A new government body, the Fair Work Agency (FWA), which will enforce key employment rights will be introduced from April.

Consolidating information, support and guidance into one place and covering rights such as National Minimum Wage, sick pay and anti-slavery laws, the FWA will also have powers to investigate employment breaches and non-compliance as well as labour exploitation concerns.

It will work closely with HMRC, trade unions and independent representations. Employers requiring support and guidance on any employment rights issue should use the FWA website once it has launched.

Repeal of Trade Union Act 2016

A large proportion of the Trade Union Act 2016 will be repealed from 18 February. In its place, simplified measures have been introduced, while focusing on employee rights.

The key changes include:

• Unions will have 10 days (rather than 14) to inform employers of planned industrial action.
• Ballots approving industrial action will now have a 12-month mandate, not six.
• Employees taking part in industrial action will now be protected from unfair dismissal, regardless of the duration of the industrial action.

Preparing for the change

To ensure compliance to the Employment Rights Act 2025, employers will need to revisit their employment policies and update relevant documents and employee handbooks to ensure these are up-to-date with new legislation. Management and staff should also be informed of the changes, in addition to payroll providers, where relevant.