Employment Rights Act 2025 — Plain English Summary for Small Businesses

Statutory Sick Pay reform. The three waiting days before SSP was payable have been abolished. The lower earnings limit (£123/week) has been abolished. Every employee now qualifies for SSP from day one of sickness absence, regardless of their pay or how long they have been employed. The SSP rate is £123.25 per week for 2026/27 (£24.65/day for a 5-day worker). See our full guide: SSP from day 1 — what it means for your business.

Paternity leave from day 1 (leave only). Employees no longer need 26 weeks' service to take paternity leave. The right to leave is now a day-1 right. However, Statutory Paternity Pay still requires 26 weeks' continuous service. Flexible working requests also became a day-1 right. See our guide: New paternity leave rules 2026.

Fair Work Agency launched. The Fair Work Agency launched on 7 April 2026, replacing HMRC National Minimum Wage enforcement, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority. It has broader enforcement powers and can bring tribunal claims on behalf of workers.

Zero-hours shift notice and cancellation payment rights. From October 2026, workers on variable-hours contracts must receive reasonable notice before shifts are scheduled, and are entitled to payment when shifts are cancelled without reasonable notice. The right to guaranteed hours based on a reference period is a separate provision expected in 2027. See our sector-specific guide: Zero-hours in hospitality.

Employment tribunal time limits — expected October 2026 but not yet in force. The extension of tribunal claim windows from 3 to 6 months is included in the Act but has not yet commenced. It is expected to take effect October 2026 subject to commencement order. Until then, the 3-month limit continues to apply.

Unfair dismissal qualifying period reduced to 6 months. From 1 January 2027, the qualifying period drops from 2 years to 6 months. There is no "initial period" or lighter-touch process — the proposed initial period was dropped during the Bill's passage through the House of Lords. Full fair procedure (full ACAS Code, investigation, hearing, appeal) applies from 6 months. See our guide: Unfair dismissal qualifying period — what changes on 1 January 2027.

Fire and rehire restrictions (1 January 2027). From 1 January 2027, dismissing an employee for the purpose of re-engaging on worse terms will be automatically unfair in almost all cases. A narrow exception applies where the employer faces genuine financial difficulty. The restricted variations cover pay, pensions, hours, shifts, and time off.

If you run a small business with fewer than 50 employees, the changes that need your attention right now are:

1. Update your payroll for SSP. The new rules are already in force. If you're still applying waiting days or checking the £123 threshold, you're underpaying SSP.
2. Prepare your dismissal procedures for January 2027. From 1 January 2027, anyone employed for 6 months or more can claim ordinary unfair dismissal. There is no lighter-touch process. Begin documenting performance concerns earlier and ensure line managers understand the full ACAS Code will apply from 6 months. Act now — you have until 31 December 2026.
3. Audit your zero-hours workers now to identify shift patterns and prepare for shift notice requirements (October 2026) and guaranteed hours obligations (2027).
4. Extend your records retention. With tribunal time limits expected to double to 6 months from October 2026, keep disciplinary records, payslips, and correspondence for longer. 3 years minimum is prudent.

Sources: Employment Rights Act 2025. GOV.UK: Employment Rights Bill — overview. ACAS guidance. House of Commons Library briefing on the Employment Rights Bill (December 2025). GOV.UK secondary legislation tracker.
Last updated: 12 April 2026. See the full implementation timeline for all dates.