Employment Rights Act 2025 — Employer Compliance Checklist

The Employment Rights Act 2025 is the most significant reform to UK employment law in a generation. Several provisions — including changes to Statutory Sick Pay, unfair dismissal protections, and parental leave rights — came into force in April 2026. Others follow in October 2026. Employers who haven't reviewed their contracts, policies, and payroll processes are already operating outside the law.

Unlike some previous employment law changes, these reforms don't just affect new starters. The 2-year qualifying period for unfair dismissal reduces to 6 months from 1 January 2027 — not before. Until then, the current 2-year rule applies. But with January 2027 approaching, every HR decision you make now may fall within the new 6-month window when it takes effect. Start preparing now.

Employers who fall foul of the new rules face several categories of exposure:

• Unfair dismissal claims. Employment Tribunal awards for unfair dismissal have no statutory cap for certain types of dismissal. Basic and compensatory awards can reach £115,000+ for a single claim. The tribunal time limit extension from 3 to 6 months is expected from October 2026 (not yet in force). From 1 January 2027, employees can bring ordinary unfair dismissal claims after just 6 months' service.
• SSP underpayment. Employers who fail to pay SSP from day 1 — or who continue applying the old lower earnings limit — are liable for the underpaid amount plus potential penalties from HMRC enforcement.
• Fair Work Agency investigation. The Fair Work Agency launched on 7 April 2026, consolidating enforcement of employment rights including minimum wage, holiday pay, and agency worker regulations. It already has powers to inspect employment practices, bring tribunal claims on behalf of workers, and impose financial penalties. Businesses with poor record-keeping face immediate risk.
• Reputational damage. Employment Tribunal judgments are public. A finding of unfair dismissal or pregnancy discrimination can affect recruitment, client relationships, and contracts.

Many Employment Rights Act provisions have historically been written with large employers in mind. The 2025 Act is different. The removal of the 2-year qualifying period for unfair dismissal affects businesses of every size — and small employers, who often lack dedicated HR functions, are most at risk of inadvertently breaching the new rules.

For businesses with fewer than 50 employees, the key risks are:

• Probationary dismissals. If you dismiss someone in their first few months without following a fair procedure, you are now exposed to an unfair dismissal claim — even if they've been with you for 3 weeks.
• Zero-hours workers. If you rely on flexible workers, you need to prepare for two separate changes: shift notice and cancellation payment rights (October 2026), and the guaranteed hours obligation (expected 2027 — exact date subject to secondary legislation). Workers with a regular pattern over a reference period must be offered a contract that reflects it.
• SSP payroll changes. Small businesses that process payroll manually or through basic software need to check their SSP calculations have been updated. The old 3-day waiting rule and earnings threshold must be removed.
• Parental leave policies. Day-1 rights for paternity leave mean your employee handbook needs updating — even if you haven't had a new parent join recently.

The checklist above is designed for businesses of all sizes. The items shown are filtered to match your specific situation — so a 5-person office without zero-hours staff won't see irrelevant actions.

• Employment Rights Act 2025 — primary legislation, legislation.gov.uk
• ACAS guidance on the Employment Rights Act 2025 — plain-English explanations for employers and employees
• HMRC SSP guidance — current rates, qualifying conditions, and employer obligations
• Employment Tribunal service — how claims are made and what employers need to respond
• Fair Work Agency — government guidance on the new enforcement body