posted 17th December 2025
The UK Employment Rights Bill has cleared its final parliamentary hurdle and is expected to receive Royal Assent imminently, becoming the Employment Rights Act 2025. Its passage ends months of parliamentary discussion but marks the beginning of a far more consequential phase for employers. Consultations on regulations are expected to begin imminently, with implementation targeted to begin in April 2026 and continue in stages throughout 2026-2027.
What has been agreed
The Act represents the most significant overhaul of employment law in a generation. Key confirmed changes include:
- Unfair dismissal:A six-month qualifying period, replacing the current two years, with the removal of the compensation cap for unfair dismissal claims. The original proposal for day-one rights was dropped as part of a compromise with business.
- Guaranteed hours: New rights aimed at curbing “exploitative” zero-hours contracts, alongside compensation for short-notice shift cancellations.
- Day-one rights: Statutory sick pay, paternity and parental leave from the first day of employment.
- Wider protections: Stronger safeguards for pregnant workers and new mothers, expanded bereavement leave, enhanced whistleblowing protections and tougher duties on employers to prevent sexual harassment.
- Trade union reforms: Expanded and simplified collective rights.
Ministers have framed the legislation as a long-overdue modernisation of UK employment law, while trade unions have described it as a “generational shift” for worker security and dignity.
Why businesses remain concerned
Despite broad acceptance that the Bill should now pass, many businesses and industries remain cautious about its scale, rigidity and economic impact.
A substantial amount of the detail has been deferred to regulations, including crucial definitions of items such as “low hours contracts”, “irregular hours”, “inherently temporary work” and the reference periods used to trigger guaranteed-hours offers. These definitions will determine whether the reforms prevent abuse without unintentionally undermining legitimate flexible working models in sectors such as staffing, hospitality, logistics, healthcare and education.
There are also unresolved concerns around:
- The impact of uncapped unfair dismissal compensation on tribunal volumes and employer behaviour, particularly for higher-paid roles
- Tribunal capacity, enforcement and guidance for employers
- The interaction between a six-month dismissal qualifying period and some 12-month probation practices
- The operational impact of day-one statutory sick pay on temporary and contingent workforces
Business organisations and sector bodies have stressed that meaningful consultation will be essential to avoid unintended consequences for hiring, flexibility and growth.
What happens next
Royal Assent will trigger a series of consultations on regulations throughout the remainder of 2025 and early 2026, alongside the publication of impact assessments and draft regulations. Many of the provisions are not expected to come into force until late 2026–27, meaning implementation will be as important as the legislation itself.
For employers, the message is clear: while legislative uncertainty has ended, preparation has only just begun. HR, legal and leadership teams should closely monitor consultations, assess workforce models and engage with trade bodies to help shape workable regulations.
In short, 2025 may be about passage, but 2026 will determine impact.
