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Employment Rights Bill - What you need to know

The Employment Rights Bill, introduced by the Labour government in October 2024 as part of its Make Work Pay agenda, completed its parliamentary passage in December 2025 and is now law as the Employment Rights Act 2025. The Act represents the most significant reform of UK employment law in a generation, consolidating wide ranging changes across unfair dismissal, zero hours working, family rights, trade unions and enforcement.

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April 2026

Statutory Sick Pay and Family Friendly Rights
The Act introduces day one entitlement to Statutory Sick Pay (SSP), removing the lower earnings limit and making SSP payable from the first day of absence.

Additional reforms include:

  • Day one rights to paternity leave and unpaid parental leave

  • A new statutory bereavement leave, including for pregnancy loss before 24 weeks

  • Enhanced protection from dismissal for pregnant employees and new mothers for at least six months after return to work

October 2026

Unfair Dismissal Rights – Reduced qualifying period

The Act reduces the qualifying period for ordinary unfair dismissal from two years to six months, while also removing the statutory compensation cap.

Earlier proposals for full day one unfair dismissal rights were ultimately rejected following extensive consultation with business groups. The six month threshold is now embedded in primary legislation, limiting the scope for future dilution without further Acts of Parliament.

Implementation is expected in January 2027, allowing employers time to adjust probation and performance management processes.

Zero and low hours contracts

Employers will be required to proactively offer guaranteed hours contracts to workers on zero or low hours arrangements after a defined reference period (expected to be 12 weeks).

The Act also introduces:

  • Mandatory reasonable notice of shifts

    Plus reasonable notice for cancellation or changes such as moving start time or finish time

  • Compensation for short notice cancellations

    This includes alterations applying to qualifying shifts as specified in the act. This is a right to payment (under Chapter 4). A separate right to Compensation/Right to claim for breach appears under Section 27BN. 6 months less a day limitation applies and compensation limited to just and equitable value – duty to mitigate applies.

  • Anti-avoidance provisions preventing manipulation of working patterns

  • Extension of protections to agency workers, with shared liability between agencies and end hirers

Detailed mechanics will be set out in regulations following consultation during 2026.

Fire and rehire restrictions

The Act significantly tightens the ability of employers to use fire and rehire tactics. Dismissal and re-engagement will only be lawful where the employer can demonstrate genuine business necessity and full consultation.

Further detail will be introduced via secondary legislation following consultation in 2026.

Trade Union and industrial action reform

  • Abolition of the 50% turnout threshold for industrial action ballots

  • Simplified balloting and notice requirements

  • Reduced notice period for industrial action (to 10 days)

These changes are intended to rebalance collective bargaining power and are politically contentious, particularly among employer groups.

These are some of the upcoming changes:

  • Fair Work Agency

    The Fair Work Agency (FWA) will be an Executive Agency of the Department for Business and Trade (DBT), created administratively.

  • National Minimum Wage

  • Employment agency standards

  • Holiday pay

  • Labour exploitation protections

The FWA will have powers to issue penalties, bring tribunal claims and share intelligence across regulators, marking a shift toward more proactive enforcement.

What you can do

To support your customers through this transition, you can make them fully aware of the value of Legal Expenses Insurance (LEI) and the comprehensive support ARAG can provide, including access to legal advice, legal documents and a wide range of additional resources.

Encouraging customers to seek early guidance, review existing processes, and understand how LEI can help them navigate upcoming changes will strengthen their preparedness as new legislation and regulatory details emerge.

By highlighting ARAG’s support services, you can help your clients manage risk more effectively, maintain confidence, and minimise disruption as the employment rights landscape evolves.

 

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Disclaimer – all information on this website was correct at the time of publishing. All legal advice is based on the laws of England and Wales. The information included in these articles was correct at the time of publishing.