The Employment Rights Act 2025 is giving rise to some of the largest changes in employment law in a generation and it is reshaping the way many UK employers manage their people.
Why the changes matter for employers
Many organisations rely on flexibility to manage changing workloads, customer demands, staffing pressures, shift patterns, seasonal peaks and evolving business requirements. The challenge now is that employment law is moving towards greater predictability, stronger worker protection and closer scrutiny of how flexible working arrangements are used.
Significant changes have come into force since the Act received Royal assent in December 2025. Further reform will be introduced in stages in October 2026 and January 2027. Employers that begin preparing in advance will be better placed to manage the changes, support their workforce and reduce legal and operational risk.
What has already changed?
Trade union and industrial action provisions
Between December 2025 and February 2026, the Act introduced provisions to repeal of significant parts of the Trade Union Act 2016 and the Strikes (minimum service levels) Act 2023 whilst also introducing protections for workers taking industrial action.
Statutory sick pay from the first day of absence
Since 6 April 2026, statutory sick pay has been payable from the first day of sickness absence, rather than the fourth. The lower earnings limit has also been removed, bringing more lower-paid, part-time and irregular-hours workers within scope.
For warehouse and logistics employers, this is not just a payroll change. It may affect absence costs, shift cover and how managers handle short-notice sickness across large operational teams. Absence policies, payroll systems and manager guidance should be checked now.
Day one family leave rights
Paternity leave and unpaid parental leave have also become “day one” rights. This means employees no longer need a minimum period of 'qualifying' service before becoming eligible. For employers with high turnover or regular recruitment drives, family leave will be an important consideration for workforce planning.
Increased risk around collective redundancies
There is also greater financial risk around collective redundancies. The maximum protective award for failing to comply with collective consultation obligations has doubled from 90 days’ pay to 180 days’ pay. For businesses restructuring sites, changing shift models or reducing headcount after contract losses, consultation planning has become even more important.
Whistleblowing, pay gap reporting and the Fair Work Agency
Further important changes have included enhanced whistleblowing protection, voluntary gender pay gap and menopause action plans (to become mandatory in for employers with 250 or more employees (and certain categories of workers) from 2027) simplified process for trade union recognition and the establishment of the Fair Work Agency.
What is changing in October 2026?
Preventing sexual harassment
From October 2026, employers will be required to take “all reasonable steps” to prevent sexual harassment. Vicarious liability for harassment (covering all protected characteristics) by third parties. These new provisions will require significant risk assessment and preventative measures.
Managing risks involving third parties
This applies to situations at the workplace, where your staff may deal with visiting drivers, contractors, suppliers, agency workers and customer representatives on a day-to-day basis; in addition to off-site out of hours situations such as travel sharing arrangements, conferences and client entertainment.
Policies and training should reflect expectations for the warehouse environment, interactions with third parties and not just focus on office-based scenarios. Clear reporting routes, visible expected standards of behaviour (role modelled by leaders and managers) and prompt, confidential, sensitively handled action will be key.
Longer employment tribunal time limits
Employment tribunal time limits are also due to increase to six months for most claims from October 2026. This gives employees a longer period to issue claims and makes accurate record-keeping and data retention more important.
The importance of accurate records
Notes of meetings, shift changes, all relevant evidence, communications and documents gathered for dealing with disciplinaries, grievances, absence management and performance discussions should be clear, consistent and retained for an appropriate period to enable you to defend claims, which may be issued to you significantly longer than a year following termination based on the surge in claims that the Employment Tribunals have already seen and the expected increase in that volume of claims as a result of the changes due to take effect in 2027.
Why 2027 could mark the most significant changes
Unfair dismissal protection after six months
From 1 January 2027, unfair dismissal protection will apply after 6 months (5 months and three weeks continuous service (bearing in mind the one-week statutory notice period)), rather than the current 2 years (1 year and 51 weeks service). The cap on compensatory awards is also due to be removed which will give rise to potentially greater value claims (and settlement expectations) for higher earners.
Managing probation periods and short-service dismissals
For employers who have bypassed a fair (and potentially protracted) process for short-service dismissals, this is a significant change and will require training for recruitment teams and line managers.
Performance and conduct reviews during probation periods will need to be managed properly from the outset, concerns should be raised early, and dismissals should be supported by fair process and clear evidence (particularly where termination of employment takes effect on or after 5 months and three weeks service).
Fire and rehire protections
Fire and rehire protections (including claims for automatic unfair dismissal) and restrictions on certain types of changes to terms and conditions of employment will apply from 1 January 2027.
Restrictions on contractual changes
This will affect employers seeking to change contractual terms such as (but not limited to) pay, hours, shift patterns or benefits which will be classed as restricted variations.
Preparing before the restrictions take effect
In a sector where operating models may need to change quickly, consider what you need to put in place before the end of this year (bearing in mind the requirement to have a well-documented business justification and the requirement consult (in addition to any collective consultation obligations for changes affecting 20+ employees) and issue notice before effecting any changes) before the restrictions are introduced.
You may wish to consider introducing a practice of making pay rise offers subject to signing updated contracts.
Flexibility will need more structure
Guaranteed hours and shift notice rights
Further reforms expected in 2027 include rights to guaranteed hours (after 12 weeks and every 12 weeks thereafter), reasonable notice of shifts and payments where shifts are cancelled or changed at short notice.
Reviewing flexible labour arrangements
These changes could have a direct impact on employers using zero-hours, low-hours or agency arrangements to respond to fluctuating demand. Operators should begin by identifying where flexible labour is used, the types of status and contracts that are in place and require review, how often shifts change, and whether regular working patterns have developed in practice.
Flexibility will remain possible
The reforms do not mean operating flexibly will be unlawful. However, it does mean it will need to be managed more carefully.
Practical steps for employers
For employers, now is the time to review contracts, staff handbooks, absence procedures, probation processes, agency arrangements and workforce planning.
The businesses that start to prepare now will be in a stronger position to protect operational agility while reducing legal risk.
Key Contact
Claire Brook
Employment Law Partner
Claire advises a wide range of employers on all aspects of employment law, from recruitment and employment, through to complex dismissals and representation at employment tribunals.
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