HR Update: Employment Rights Act 2025 – Recent and Upcoming Timelines

The Employment Rights Act 2025 is now being implemented in stages. Some important changes are already in force, with further significant reforms taking effect from October 2026 and January 2027. Below we highlight some of the key changes SMEs should be preparing for.

Holiday and Holiday Pay – Effective from: 6^th April 2026

We have included this one as there has been little fanfare on this requirement.  It will be audited by the new Fair Work Agency, and they have powers to fine employers who are unable to demonstrate they have been keeping such records from this year onwards.

CHANGE: New obligations for employers to keep adequate records to demonstrate compliance with statutory annual leave and pay entitlements. Records to be maintained for 6 years. 

ACTION:  Ensure full holiday records are maintained to ensure straightforward compliance when it takes effect.  

Tribunal Time Limits – Effective from: 1^st October 2026

CHANGE: The current 3-month time limit will be extended to 6-months for the majority of legal claims, e.g. unfair dismissal discrimination and wages deductions.  For breach of employment contract claims, the timeline changes on 1st October 2026 in England and Wales, but is delayed until 9th November 2026 in Scotland.  The new 6-month limit applies only if the act or incident complained about happens on or after 1st October 2026. If the incident occurred before that date, the old 3-month deadline still applies.

ACTION:  Employers should factor the significantly longer claims window into their approach to document retention and dispute management. ACAS Early Conciliation can now last for up to 12 weeks and pauses the tribunal limitation clock, meaning that employers may not receive a claim until many months after the events concerned or after employment has ended.

Harassment Measures – Effective from: 30^th October 2026

CHANGE: From 30^th October 2026, employers will be required to take all reasonable steps to prevent sexual harassment of their employees. Employers will also face liability for harassment of employees by third parties where the employer has failed to take all reasonable steps to prevent that harassment.

ACTION:  Reasonable steps’ is replaced with ‘all reasonable steps’, bringing it in line with other legislative provisions and increasing the obligation on employers to show the duty is discharged. Undertake risk assessments. Review current policies and provide training for all employees/Managers.  Build on the changes that employers should have taken following the introduction of the duty to prevent sexual harassment on 26^th October 2024.

Trade Unions Measures – Effective from: 30^th October 2026

CHANGES: Extensive union rights will be implemented; however, we are still waiting on some of the fine detail.  These will include:

• Mandatory Statement of Union Rights - Employers will face a new statutory duty to provide all workers with a written statement explicitly notifying them of their legal right to join a trade union. This will need to be factored into day-one onboarding documentation, alongside the standard Section 1 Statement of Particulars.  The actual contents of the statement have still to be declared.

• Digital & Physical Workplace Access - Independent trade unions will gain a statutory right to access workplaces to recruit, organise and engage with workers.  This will be directed with a revised Code of Practice on Access and Unfair Practices that governs how unions request entry, and how employers must respond. Where agreement cannot be reached, the Central Arbitration Committee will be able to determine access arrangements, although it cannot impose an access agreement on an employer with fewer than 21 workers.

• New Statutory Roles and Facilities - Workplaces with recognised unions will see a significant expansion of union official rights.  There will be a brand new statutory role dedicated to promoting workplace equality, advising members and consulting with Management. Representatives are legally entitled to paid time off to perform these duties.  Also, employers must provide recognised union representatives with "reasonable facilities and accommodations" (e.g. physical meeting spaces, secure digital access) alongside their existing rights to paid time off.

• Protection Against Detriment Short of Dismissal - Workers are to be fully protected against less favourable treatment or disciplinary detriment (such as withholding bonuses, changing shifts or suspension); short of dismissal for taking part in lawful, protected industrial action.

ACTION:  Make necessary arrangements to comply with TU workplace access rights, and provide existing and new representatives with time off, accommodation and facilities. Take steps to ensure compliance with new duty to inform workers of their right to join a TU. Ensure workers are not subjected to a detriment for taking part in industrial action.

Unfair Dismissal – Effective from: 1^st January 2027

CHANGE: Qualifying period of employment reduced from 2 years to 6 months.  Cap on compensatory awards removed (both statutory maximum award and 52-week limit). 

ACTION:  Continue to assess the performance of those with less than 2 years’ service into 2026.  Employees who have completed six months' service by 1^st January 2027 will acquire ordinary unfair dismissal protection immediately. Employees recruited after July 2026 will generally acquire protection once they complete six months' service. Removal of the cap on compensation will increase importance of following fair processes for senior and highly paid employees.  NB:  Written Reasons for Dismissal - The qualifying service period required for an employee to demand a formal, written statement explaining the reasons for their dismissal is also lowered to 6 months.

Fire and Rehire/Replace – Effective from: 1^st January 2027

CHANGE: Automatic unfair dismissal where an employer seeks to vary the contract and the employee does not agree, or where the employer is seeking to employ or engage another person or re-engage the employee under a varied contract of employment to carry out ‘substantially the same role’ will be automatically unfair.  This will apply to ‘restricted variations’, which includes changes to pay, pensions, hours of work and holiday entitlement.  The only exception is where the business is in extreme financial constraints i.e. carrying on business as a going concern is at risk.  NB: The maximum protective award doubled from April 2026 from 90 to 180 days’ pay for a failure to collectively consult.

ACTION:  Review template contracts of employment for future recruits. Review contracts of employment of existing employees and seek to negotiate changes/ removal of undesirable clauses with the option of dismissal and reengagement if necessary (subject to current statutory Code of Practice) prior to January 2027.

There are a lot more employment law changes scheduled later on in 2027, and future implementation dates remain subject to parliamentary processes and may change, which we will keep you advised on.  So it is vital that employers are aware of the practical implications from all of these new requirements, and make sure Managers are fully informed too, using our newsletters and, of course, direct access to the BackupHR team if you are a client.  If you are not a client, then you are welcome to speak to us about what would be involved in joining our growing client base.