What the Employment Rights Act 2025 means for your business

The Employment Rights Act 2025 is the largest overhaul of UK employment law since 1996. Most provisions are phased in between October 2024 and 2026, which means employers have a moving window of obligations — some already in force, some arriving shortly. The question is not whether this affects your organisation. It does. The question is where your exposure sits and what needs to change before a claim reveals it.

The most talked-about change is the reduction of the qualifying period for unfair dismissal. A new employee currently has to accumulate two years of service before they can bring an ordinary unfair dismissal claim, and that two-year period still applies today. ERA 2025 reduces it from two years to six months for dismissals on or after 1 January 2027 (the commencement order is still pending, so treat this as planned rather than yet in force). There is no day-one unfair dismissal right; that proposal was dropped before the Act passed. Once the shorter period is in force, probationary dismissals will carry much the same procedural expectations as any other termination — documented concerns, a structured conversation, a genuine right of response — and following a fair process is good practice regardless. See our full guide on the unfair dismissal qualifying period change for what this means in practice.

Zero-hours and low-hours workers gain the right to request a contract reflecting their actual working pattern after twelve weeks of regular hours. Employers must respond with a genuine offer or a stated business reason for refusal. The right does not ban zero-hours contracts — it creates a formal obligation to acknowledge and respond to patterns that have already become routine. Read our guide on zero hours contracts under ERA 2025 for the detail on what counts as a regular pattern and how to handle requests.

Statutory sick pay changes are significant for employers with staff on variable hours. The three-day waiting period is abolished — SSP becomes payable from the first day of illness. The rate of SSP has also increased. For businesses where short-term absence is frequent, the cost of sickness absence shifts meaningfully.

Neonatal care leave is an entirely new right. Parents of babies who require hospital care within 28 days of birth are entitled to up to 12 weeks of additional leave on top of existing maternity and paternity entitlements. This applies from day one of employment.

Flexible working requests now apply from day one rather than after 26 weeks. The number of requests a worker can make per year rises from one to two. Employers must consult before refusing and must respond within two months. See flexible working as a day one right for the exact handling process.

Tips and service charges fall under new rules. Businesses in hospitality, retail, or any sector where customers leave gratuities must have a written tipping policy and pass tips to workers in full. The policy must be accessible to all workers, including agency staff.

Third-party harassment now carries a proactive employer duty. If a customer or client sexually harasses a member of your team and you had not taken reasonable preventive steps, you may be liable. A single incident is sufficient — there is no repeat-offence threshold as there was under the old law.

Fire and rehire — the practice of dismissing staff and re-engaging them on lower pay — is now essentially reserved for businesses facing genuine insolvency risk. Using it as a negotiating tactic carries far greater legal exposure than before ERA 2025.

For most employers, the practical first step is reviewing employment contracts and probationary policies. Most contracts written before 2024 will not reflect these changes. See our ERA 2025 compliance checklist for HR teams for a systematic view of what to audit and in what order.

Mellow's Predictive Compliance maps the key Employment Rights Act 2025 changes against your account and flags which are outstanding. [Start a free trial →](https://mellowhr.com/register)