Employment law has changed. Not every single clause and often quietly without a big announcement or extensive press coverage, but the Employment Rights Act 2025 has been bringing in new rules in stages, extending modern protections to millions more workers.
Therefore, if you employ staff, you need to be aware that some of those changes are already in effect, with more on the way.
Most small business owners learn about these types of changes only when something goes wrong. A member of staff raises a grievance. A dismissal gets challenged. A contract gets scrutinised and it turns out it was out of date before the conversation even started.
In this blog we look to set out the straightforward version of what has changed, what’s coming, what it means for your business, and what to do about it.
The Act is coming in phases – here is what matters now
The Employment Rights Act 2025 received Royal Assent in 2025, but the changes are being introduced in phases across a two-year period, with most using April and October as common start dates. Some are already in force. Others are coming later this year and into 2027.
The honest position is this: if you have not looked at your employment contracts or staff handbook in the last year or two, there is a good chance something in there needs updating – regardless of exactly which phase you are at.
- STATUTORY SICK PAY – the waiting days have gone
This one is already in force. From April 2026, the three-day waiting period for statutory sick pay no longer exists. Sick pay now applies from the first day of absence. The lower earnings limit has also been removed, meaning more workers qualify than before.
If your contracts or sickness policy still reference the three-day waiting period, they are out of date. That is a straightforward fix, but it needs doing.
- PATERNITY LEAVE – also already in force
From April 2026, paternity leave is a day one right. Previously, employees needed 26 weeks of service before they could take it. That qualifying period is gone.
If your contracts still reference the old qualifying period, they need updating.
- ZERO-HOUR CONTRACTS – this one is coming
This change is not yet in force, but it is on its way and worth preparing for now.
Workers on zero-hour contracts will have the right to guaranteed hours that reflect what they actually work, reasonable notice of shifts, and payment if shifts are cancelled at short notice.
Zero-hour contracts are not being banned outright. If you rely on them and your workers are regularly working predictable hours, the context is changing. Now is a good time to review how those arrangements are set up and make sure your contracts reflect the reality of how people work for you.
- FLEXIBLE WORKING REQUESTS – coming in 2027
Employees already have a day-one right to request flexible working, but the new rules will make it harder for employers to reject reasonable and feasible requests without proper justification. Employers will still be able to refuse requests for one or more of the existing eight statutory business reasons, but only where it is reasonable to do so.
If an employer is considering refusing a request, they will need to consult with the employee under a new process, which will be set out in secondary legislation, and explain why the refusal is reasonable. The Government is due to consult on the new consultation process in February 2026
- FIRE AND RE-HIRE – this is also coming in Jan 2027
Dismissing someone and re-engaging them on new terms as a way of changing their employment conditions has always been a risky approach. The Employment Rights Act 2025 makes it significantly more restricted.
This change is being phased in, but the direction its going in is clear. Dismissals of this kind will be treated as automatically unfair in most circumstances. The only exception is where a business is in severe financial difficulty and genuinely has no alternative.
If you are thinking about changing any employee’s terms and conditions, take advice before you do anything. This is one of those areas where a conversation before you act costs far less than sorting it out afterwards.
- BEREAVEMENT LEAVE – this one is coming too
A new right to unpaid bereavement leave is being introduced, including leave for pregnancy loss before 24 weeks. This is not yet in force, but it is coming.
If your staff handbook does not have a bereavement leave policy at all, now is a sensible time to add one. Getting ahead of this costs very little. Being caught without a policy when an employee needs it costs considerably more in time, stress, and in the relationship.
- UNFAIR DISMISSAL – a significant change is on its way in January 2027
Currently, employees need two years of service before they can bring an unfair dismissal claim. That qualifying period is being reduced to six months.
This is not yet in force, but when it is, it will be one of the most significant changes for small employers. It means that within six months of someone starting work for you, they could have the right to challenge a dismissal at a tribunal.
The Act will also remove the existing cap on compensatory awards for unfair dismissal (which as of 6 April 2025 is the lower of either £118,223 or 52 weeks’ gross pay).
If your contracts, probationary procedures and disciplinary processes are not properly set up, this matters. A lot.
The real question is – when did you last look at your contracts?
Most small business owners are running on contracts and handbooks that were put together years ago. Some were downloaded from the internet. Some were written when the business looked very different from how it looks now.
Employment law does not stand still. What was compliant two or three years ago is not necessarily compliant today.
Your contracts are either protecting you, or they are not. The Employment Rights Act 2025 is a good reason to find out which.
What to actually do
- Get your employment contracts out and read them. Check whether they still reflect how your business actually works – notice periods, sickness, disciplinary procedures, leave entitlements.
- Do the same with your staff handbook. Does it have a bereavement leave policy? Does the sickness section reflect day one sick pay? Are your disciplinary and grievance procedures clearly set out? Are there policies you need that aren’t included, such as a uniform policy or probationary period policy?
If you find gaps or you are simply not sure what you are looking at, that is what a consultation is for.
How we can help
We work with employers across England and Wales – sorting out contracts and handbooks that properly reflect how their businesses work, and supporting when something does go wrong.
Our website will be able to provide more information on how we can help you: www.mckenzielegalandhr.co.uk/employment-legal-advice
A 30-minute consultation is £50. We will tell you honestly what needs updating and give you a fixed fee before any work starts. If you instruct us within seven days, the consultation fee comes off your first invoice.
www.mckenzielegalandhr.co.uk/contact-us or call us on 0118 321 4188.