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What does the Employment Rights Act 2025 mean for my business?

For a business with three staff, the changes you'll feel first are already here: statutory sick pay from the first day of illness, and a legal duty to keep six years of holiday records, both since 6 April 2026. The biggest change still to come is that staff can claim unfair dismissal after six months' service rather than two years, from 1 January 2027.

That last point is often reported as protection "from day one". It isn't what the law says. Section 25 of the Act replaces the two-year qualifying period with six months, and the commencement regulations set that for 1 January 2027. A qualifying period works like the waiting period on an insurance policy: until someone has worked for you that long, they generally can't bring this kind of claim.

Day one was the plan. The government's own July 2025 roadmap lists protection from unfair dismissal as a "'Day 1' right" among the 2027 measures, and the ministerial foreword promises "protections from unfair dismissal from day one". Six months is what Parliament actually passed. If you've been planning around day one, it's worth updating your plans.

That gap between what was announced and what became law runs through the whole Act. So here it is in three groups: what's in force, what has a date, and what's still waiting.

What's already in force

Statutory sick pay changed on 6 April 2026, and for a business with three staff this is the change you're most likely to notice. The three unpaid waiting days have gone, so SSP is payable from the first full day of sickness. The lower earnings limit has gone too, so part-time and lower-paid staff who used to get nothing now qualify. The rate is now the lower of the flat weekly rate or 80% of average weekly earnings, and GOV.UK gives the flat rate as £123.25 a week. Acas puts the government's estimate of the cost to employers across the economy at around £450 million a year.

If one of your three people has two separate two-day absences in a year, that used to cost you nothing in SSP. Now it does. It's worth checking your payroll software is calculating this correctly rather than assuming it is.

Paternity leave and unpaid parental leave became day-one rights on 6 April 2026. The old 26-week service requirement for paternity leave has gone, although statutory paternity pay still needs 26 weeks' service. A new bereaved partner's paternity leave of up to 52 weeks, usually unpaid, is also a day-one right. Maternity leave was already a day-one right and hasn't changed.

You must now keep holiday records for six years. This arrived quietly on 6 April 2026 and is easy to miss. Section 35 adds a duty to the Working Time Regulations 1998 to keep records that show you've given the right amount of annual leave, kept for six years from when they were made. Acas says that means holiday taken, holiday carried over, holiday pay and any payment in place of leave, in any format you reasonably think fit, so a spreadsheet is fine. Section 35 also made failing to keep them an offence under regulation 29 of those Regulations, and Acas says the Fair Work Agency will be given enforcement powers. A shared calendar and a good memory are no longer enough.

This is the kind of record-keeping automation is good at. If holiday requests arrive by text, email and a word in passing, we're happy to set up an automation that records each approved request in one place, with the dates, carry-over and pay, so the six-year record builds itself.

The Fair Work Agency was set up on 7 April 2026, bringing the existing enforcement of minimum wage, gangmaster and employment agency rules into one body. Most three-person businesses won't deal with it directly. It's the body that would get involved if someone complained, and its own plan says it expects to begin enforcing holiday pay during 2027.

From 1 October 2026, the time limits for most employment tribunal claims doubled from three months to six. That's section 152, switched on by S.I. 2026/954. In practice, someone who has left has twice as long to decide to bring a claim, so the notes you keep when someone leaves matter for longer.

Two dates that are fixed in law, and one that only looks fixed

1 January 2027 is set in law for section 25. On that date the unfair dismissal qualifying period drops to six months, and the cap on the compensatory award (the part of a tribunal award meant to make up for lost earnings) is removed entirely.

The transitional rule in the commencement regulations is worth understanding. The new qualifying period applies where the employment ends on or after 1 January 2027. So someone who started with you in May 2026 will already have six months' service on 1 January 2027, and the protection from that day. There's no exception for staff who joined before the change.

Of the two, the shorter qualifying period is the one more likely to affect day-to-day decisions in a small business, because it applies to everyone you take on.

That's where a well-timed reminder earns its keep. If you'd like a reminder to review each new starter well before the six-month point, with their probation notes gathered in one place, we're happy to set up an automation that does that.

30 October 2026 is now fixed in law for the harassment duties. Regulations made on 1 October 2026 bring sections 20, 21 and 22 into force on that day. Two things change. The duty to prevent sexual harassment becomes a duty to take "all reasonable steps" rather than "reasonable steps", and employers become liable for harassment of their staff by third parties, such as customers, contractors and suppliers, unless they've taken all reasonable steps to prevent it. Acas says the law will later set out what those reasonable steps are. There's no small-employer exemption from either duty.

1 January 2027 is also the government's date for "fire and rehire", meaning dismissing someone and re-employing them on worse terms, becoming automatically unfair in most circumstances. But that's section 28, and when we checked the statute book on 6 October 2026 it was in force only for limited purposes, with no commencement order for 1 January 2027. The date comes from the government's timeline, not from the law.

The parts people worry about most don't have a date yet

Zero-hours contracts. The right to guaranteed hours that reflect the hours someone actually works, reasonable notice of shifts, and payment for shifts cancelled at short notice are all in the Act. None of them are in force. Section 1 was switched on from 6 January 2026 only so that the detailed rules can be written. The consultation on how it will work closed on 25 August 2026 and the response hasn't been published. The reference period, meaning the stretch of past weeks used to work out someone's usual hours, isn't settled, though the government's consultation states a preference for 12 weeks. The government's own timeline points to 2027, without a fixed date.

Flexible working. Same pattern. The right to ask for flexible working from day one has existed since 2024 and hasn't changed. What section 9 adds is that you can only refuse on one of the grounds listed in the law, it must be reasonable to refuse on that ground, and you must explain why in writing. Section 9 is only in force for the purpose of writing the detailed rules. It's scheduled for 2027.

Also planned for 2027, without dates: bereavement leave, including for pregnancy loss; stronger protection against dismissal for pregnant employees and those returning from maternity leave; collective redundancy consultation counted across the whole organisation; and rules making void any non-disclosure agreement that stops someone reporting harassment or discrimination.

You can set aside the mandatory gender pay gap and menopause action plans. They apply to employers with 250 or more employees.

What should you do now?

Three things, in this order.

First, check your payroll applies SSP from the first day with no earnings threshold, because if it's wrong, that affects what you're paying today. Second, start a holiday record that shows leave taken, carried over and paid, and keep it for six years. It takes an afternoon to set up, and failing to keep one can be a criminal offence. Third, before 1 January 2027, make sure anyone you take on has a written probation period, a review booked well before month six, and notes on file, because after that date, dismissing someone in month seven could mean defending a tribunal claim on its merits.

The zero-hours and flexible working changes are worth reading about but not worth acting on yet, because the detailed rules don't exist. Be cautious of anyone selling you compliance with them.

Acas surveyed 1,050 senior decision makers in April and May 2026 and found the three changes employers expected to struggle with most were day-one sick pay (30%), day-one paternity leave (27%) and the six-month unfair dismissal period (23%). Two of those three are already in place.

For advice on your own staff and contracts, Acas or an employment adviser is the right place to go. If it's the admin around it that's taking your time, like holiday records, review reminders and keeping notes together, you can read about what we do and get in touch.

Sources

Checked on 6 October 2026. This Act is being commenced in pieces and dates have already moved - fire and rehire slipped from October 2026 to January 2027. Verify any date here against legislation.gov.uk before acting on it.

The next step

The cost of waiting is not zero.

Somewhere in your market, a business the same size as yours has stopped writing follow-ups by hand. They are quoting faster than you, chasing money you are still chasing manually, and starting Monday already knowing where they stand. That gap does not stay the same size.

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