UK Employment Rights Bill 2025: Progress and Implications

The Employment Rights Bill 2025 (ERB 2025) is the most ambitious UK employment law reform in a generation. Introduced to Parliament on 10 October 2024, the Bill bundles 28 substantive reforms across the spectrum of UK employment law — from day-one unfair dismissal rights to fire-and-rehire restrictions, statutory sick pay reform, and the creation of a new Fair Work Agency. This law-update piece tracks the Bill’s progress, the published implementation roadmap, and the practical implications for UK private limited companies (Ltd).

1. Legislative Status (as of 2 May 2026)

The Bill received Royal Assent in late 2025 and is now the Employment Rights Act 2025 (the “Act”). However, the Act is largely a framework statute: most substantive provisions are brought into force by commencement regulations through 2026-2027. The Department for Business and Trade (DBT) published an Implementation Roadmap confirming a phased commencement timetable.

Reference: https://www.gov.uk/government/publications/the-employment-rights-bill-roadmap-for-implementation

2. The Roadmap — Three Implementation Waves

Wave 1 — Already in Force (April 2026)

• Repeal of the Strikes (Minimum Service Levels) Act 2023
• Repeal of certain provisions of the Trade Union Act 2016
• Increase in the maximum protective award for collective redundancy failures
• Removal of the 2-day waiting period for trade union ballots

Wave 2 — October 2026

• Day-one unfair dismissal rights (subject to a “statutory probationary period” — see Q3 below)
• Right to guaranteed-hours contract for zero-hours workers regularly working over a threshold
• Reasonable notice of shifts and compensation for cancelled shifts
• Strengthened fire-and-rehire restrictions (automatic unfair dismissal unless very narrowly justified)

Wave 3 — April 2027

• Statutory Sick Pay reform — abolition of waiting days; abolition of LEL eligibility test
• Bereavement leave extension
• Fair Work Agency operational
• Adult social care fair pay agreement mechanisms
• School support staff negotiating body restored

3. Day-One Unfair Dismissal — The Headline Reform

Currently, an employee must have 2 years’ continuous service to claim ordinary unfair dismissal under section 108(1) of the Employment Rights Act 1996 (ERA 1996). The Act repeals this requirement, making unfair dismissal a day-one right.

To balance the impact on employers, a statutory probationary period (“Initial Period of Employment”) is introduced — likely 9 months based on consultation responses. During the Initial Period:

• A “lighter touch” dismissal procedure applies
• Compensation cap may be reduced
• Procedural standards remain (information, hearing, appeal) but with reduced detail

The Initial Period is set by regulations and may be extended by employer-employee agreement up to a statutory maximum.

Practical impact: every probationary policy and contract template must be rewritten before October 2026 commencement.

4. Fire-and-Rehire — Tighter Restrictions

The Act amends section 104I ERA 1996 (introduced by the Trade Union and Labour Relations (Consolidation) Act 1992 amendments in 2023) to make a dismissal automatically unfair where:

• The principal reason is a refusal to accept a variation of contract; or
• The principal reason is to enable engagement of another worker on different terms

Exceptions remain only for financial difficulties so dire that, without the variation, the employer’s ability to carry on its business would be at risk.

The Acas Code of Practice on Dismissal and Re-engagement (in force 18 July 2024) is updated, and tribunals can uplift compensation by up to 25% for breach of the Code.

Reference: https://www.acas.org.uk/code-of-practice-on-dismissal-and-re-engagement

5. Zero-Hours and Predictable Hours

The Act creates a right to a guaranteed-hours contract offering hours reflective of the worker’s actual hours over a reference period (likely 12 weeks). An employer must:

• Calculate average hours over the reference period
• Offer a contract reflecting those hours
• Repeat the offer at periodic intervals if the worker remains on a zero/low-hours arrangement

Workers are not obliged to accept; they can stay on zero-hours by choice.

This sits alongside the existing Workers (Predictable Terms and Conditions) Act 2023 right to request, but goes further by imposing an affirmative offer obligation on the employer.

6. Statutory Sick Pay — Two Major Changes

Currently, SSP is paid only:

• From day 4 of a Period of Incapacity for Work (3 waiting days)
• To employees earning above the Lower Earnings Limit (LEL) (£125/week for 2025-26)

The Act:

• Abolishes waiting days — SSP from day one
• Abolishes the LEL test — opening SSP to lower-paid workers (estimated 1.3 million additional workers eligible)
• Introduces a rebate scheme for SMEs to offset the cost (details by regulation)

Implementation expected from April 2027.

7. Trade Unions and Industrial Action

The Act:

• Repeals the Strikes (Minimum Service Levels) Act 2023
• Repeals key provisions of the Trade Union Act 2016 (50% turnout requirement; 40% support requirement for important public services)
• Introduces electronic balloting for industrial action
• Strengthens trade union access to workplaces

8. The Fair Work Agency

The Act creates a new state enforcement body — the Fair Work Agency — with jurisdiction over:

• National Minimum Wage compliance (currently HMRC)
• Statutory Sick Pay (currently HMRC)
• Holiday pay enforcement (currently a private right only)
• Modern slavery employment dimensions
• Employment agency standards (currently EAS Inspectorate)

The Agency is expected to be operational from April 2027 and will issue labour market enforcement undertakings and prosecute non-compliant employers directly.

9. Equality and Family-Friendly Provisions

• Bereavement leave extended from “child” only to broader bereavement (likely 2 weeks for close family members)
• Pregnancy and maternity protections strengthened — protection from dismissal extended to 6 months after return
• Equal pay — duty on large employers (250+) to publish action plans alongside gender pay gap reports
• Sexual harassment — duty to prevent strengthened (already in force from 26 October 2024 under the Worker Protection (Amendment of Equality Act 2010) Act 2023)

10. Single Status of Employment — The Long Game

The Government has committed to a longer-term consultation on creating a single status of employment (combining “employee” and “worker” into one category) — but this is not in the Act itself and remains for separate legislation in a future Parliament.

11. Practical Implications for UK Ltds

12. Common Mistakes — Gyoseishoshi View

13. Compliance Priorities for the Next 12 Months

1. Contract refresh — probationary clauses, zero-hours reframe, fire-and-rehire boilerplate
2. Policy refresh — disciplinary, dismissal, redundancy, flexible working, harassment prevention
3. Manager training — day-one fairness, consultation under expanded obligations
4. Payroll and HRIS — SSP without waiting days; LEL removed; guaranteed-hours tracking
5. Records and notifications — extended HR1 thresholds; protective award doubling

Conclusion — A New Equilibrium

The Employment Rights Act 2025 reshapes the UK labour market toward greater worker security and stronger collective rights, while preserving (with statutory probationary periods) employers’ ability to manage early performance. UK Ltds that engage early — refreshing templates, training managers, and budgeting for SSP changes — will absorb the transition smoothly. Those that wait will face a compressed compliance window and elevated tribunal exposure.

A Gyoseishoshi cannot represent UK parties in tribunals. Scrib🐮 produces the contract architecture, policies, and HR template suite calibrated to the 2025 Act and its phased commencement timetable.

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Disclaimer

Legal information, not legal advice. MmowW Scrib🐮 is operated by a licensed Gyoseishoshi (行政書士) office in Japan. We are not UK solicitors.

Sources

• Employment Rights Bill roadmap: https://www.gov.uk/government/publications/the-employment-rights-bill-roadmap-for-implementation
• Acas Code on Dismissal and Re-engagement: https://www.acas.org.uk/code-of-practice-on-dismissal-and-re-engagement
• Employment Rights Act 1996: https://www.legislation.gov.uk/ukpga/1996/18/contents
• Worker Protection (Amendment of Equality Act 2010) Act 2023: https://www.legislation.gov.uk/ukpga/2023/51/contents