Employment Rights Act 2025

Tackle insecurity at work and stagnant living standards: a baseline of security and predictability for insecure workers, protections from day one of employment, help balancing work and caring responsibilities, a higher floor of protections so that good employers are not undercut, better industrial relations through trade unions, and a single, stronger enforcement of employment rights — while keeping barriers to business growth low.[29][24]

According to the Department for Business and Trade (economic analysis and summary impact assessment, January 2026)

• Effect on GDP

  0.04%

  once fully implemented · according to the Department for Business and Trade (January 2026 economic analysis)[29]

  « Small, positive direct impact on economic growth », estimated increase in the level of GDP.

• Direct cost to business, share of total employment costs

  0.1%

  per year, once fully implemented · according to the Department for Business and Trade (January 2026 economic analysis)[29]

  Central estimate of about £1 billion a year (equivalent annual net direct cost to business), « no more than » 0.1% of employment costs; the October 2024 assessment gave a range of £0.9-5 billion.

• Unfair dismissal: the qualifying period falls from two years to six months, the cap on the compensatory award is removed, and the period can no longer be changed by regulations (from 1 January 2027).[10][21]
• Zero-hours and low-hours contracts: a duty to offer guaranteed hours reflecting the hours regularly worked over a reference period, reasonable notice of shifts and payment for shifts cancelled, moved or curtailed at short notice; also applied to agency workers. Start date to be set after consultation.[2][1][23]
• « Fire and rehire »: dismissing an employee for refusing a « restricted variation » of contract (pay, pensions, hours, shift timing, leave), or to re-engage them or another person on such varied terms, becomes automatically unfair — unless the employer shows the change was needed to address financial difficulties threatening its ability to carry on as a going concern and could not reasonably be avoided.[12]
• Statutory sick pay is due from the first day of sickness (no more waiting days) and for all employees regardless of earnings, at the lower of £118.75 a week or 80% of normal weekly earnings (since 6 April 2026).[4][5][20]
• Leave: paternity leave and unpaid parental leave from day one of employment (since 6 April 2026); a new right to bereavement leave, including for pregnancy loss; flexible working requests can only be refused on listed grounds and where refusal is reasonable.[6][7][8][3][23]
• Trade unions: repeal of the minimum service levels law and of most of the Trade Union Act 2016 (40% support threshold in strike ballots, notices, political funds), electronic and workplace balloting, a right of access to workplaces and a simpler recognition procedure. Removing the 50% turnout threshold requires a prior ministerial statement on the effect of e-balloting.[13][14][15][18][23]
• Fair Work Agency: a single state enforcement body (holiday pay, minimum wage, employment agencies, labour exploitation) with powers to issue notices of underpayment, impose penalties and bring tribunal claims; the Gangmasters and Labour Abuse Authority and the Director of Labour Market Enforcement are abolished.[1][16][28][24]
• Other measures: employers must take « all reasonable steps » to prevent sexual harassment, including by third parties; protections against dismissal for pregnant women and new mothers; equality action plans; time limit for tribunal claims raised from three to six months.[9][11][17][1]