The biggest reform in twenty years
The Employment Rights Act 2025 is the most significant single piece of UK employment legislation since the Employment Rights Act 1996. Passed in late 2025, it introduces a tranche of day-one rights, changes the qualifying period for unfair dismissal, reforms zero-hours working, strengthens whistleblowing protection, and limits NDAs in harassment cases. The changes commence in stages between February 2026 and a final tranche of zero-hours reforms scheduled for 2027.
This article walks through each major change with its commencement date, the legal source, and what employers need to update in their employment contracts and HR processes.
February 2026: day-one rights
Paternity leave from day one
Under the previous regime, paternity leave required 26 weeks of continuous service before the qualifying week. From February 2026 it becomes a day-one right. The two-week entitlement and the rate (statutory paternity pay capped at the lower of 90% of earnings and the prescribed rate) remain unchanged.
Unpaid parental leave from day one
The 18-week unpaid parental leave entitlement (per child, up to age 18) previously required one year's service. From February 2026 it applies from day one of employment. The annual cap of four weeks per child remains.
Bereavement leave for non-parents
The Parental Bereavement (Leave and Pay) Act 2018 right (two weeks) is extended beyond parents to a wider class of bereaved relatives.
April 2026: SSP overhaul and holiday records
Statutory Sick Pay from day one
The three-day waiting period is abolished. SSP is payable from the first day of incapacity. The lower earnings limit (£123/week for 2024-25) is removed - every employee is entitled to SSP regardless of earnings, calculated at 80% of normal weekly earnings (subject to the SSP rate cap).
Practical impact: payroll systems need updating. Employment contracts that reference the previous waiting period need updating. Sickness absence policies need redrafting.
Six-year holiday-pay records
Employers must retain holiday-pay records for six years from April 2026, up from the previous two-year minimum. The change reflects the limitation period for unlawful deductions claims following Chief Constable of the Police Service of Northern Ireland v Agnew [2023] UKSC 33.
January 2027: unfair dismissal qualifying period
The qualifying period for ordinary unfair dismissal drops from two years to six months. This is the headline change of the Act and the one with the largest operational impact for employers.
Practical implications:
- Probationary periods become substantially more important. Most employers will move to six-month probations and enforce them rigorously.
- Performance management processes need to be in place from day one - informal feedback in the first six months is no longer enough to support a fair dismissal at the eleventh hour.
- Settlement agreement budgets will rise. Lower qualifying period means more eligible claims.
- The two-year unfair-dismissal protection had previously made it relatively safe to recruit aggressively and exit quickly. That risk profile changes.
The day-one protection from unfair dismissal for automatically unfair reasons (whistleblowing, trade union activity, asserting a statutory right) is unaffected - those have always been day-one rights.
2027: zero-hours reform
The Act introduces three protections for irregular-hours workers, commencing in 2027:
- Right to guaranteed hours - workers will be able to request a contract reflecting hours actually worked over a 12-week reference period. Employers can refuse on specified grounds (e.g. genuine business fluctuation) but must give reasons.
- Reasonable notice of shifts - workers must receive reasonable notice of shifts and any changes. The exact threshold is to be set by regulation.
- Compensation for cancelled or shortened shifts - payable when notice is short.
For employers reliant on flexible workforces - hospitality, retail, events, care - these reforms require operational planning, not just contract updates. Lexara's zero-hours template anticipates the regime where the contract begins on or after the implementation date.
Whistleblowing and NDAs
The Act reinforces the Public Interest Disclosure Act 1998 protections in two ways:
- NDAs cannot prevent disclosure of sexual harassment. Any clause purporting to do so is void. This applies to existing NDAs as well as new ones.
- Wider class of protected disclosures. The categories of qualifying disclosure are expanded, and the standard for showing the disclosure was made in the public interest is clarified.
Employment contracts and settlement agreements need to be updated to reflect the carve-out. Pre-2026 settlement agreements that contained sweeping NDAs are not retrospectively rewritten, but enforcement actions citing them will fail.
Other notable changes
- Trade union recognition - thresholds for statutory recognition lowered; access rights for trade unions strengthened.
- Tipping - the Employment (Allocation of Tips) Act 2023 requirements (already in force from October 2024) are reinforced; written tip-allocation policies and records are mandatory.
- Right to switch off - referred to a code of practice rather than directly mandated, but employers should expect ACAS guidance to become a tribunal yardstick.
What every employer should do now
- Audit existing employment contracts. Day-one rights, SSP wording, holiday records and whistleblowing carve-outs need updating before each commencement date.
- Strengthen probationary period drafting and enforcement. The six-month qualifying period (from January 2027) makes probation the primary vehicle for early performance management.
- Update payroll for SSP from day one ahead of April 2026.
- Extend holiday-pay record retention to six years.
- Review zero-hours and irregular-hours contracts for the 2027 changes - particularly compensation policies for cancelled shifts.
- Update NDA templates to include the sexual-harassment carve-out.
Lexara's employment contract generator applies each ERA 2025 change automatically based on the contract date. The model compares today's date against each commencement date and applies the rule that's in force.