ERA 2025: What You Need to Know
Key changes in the UK's new Employment Rights Act and how to prepare
Legal UpdateWhat is the Employment Rights Act 2025?
The Employment Rights Act 2025 received Royal Assent in December 2025, marking the most significant update to UK employment law in decades. The reforms will be rolled out in stages over 2026–2027 and cover a broad range of employee rights and employer obligations.
Why does this matter for my business?
If your employee handbook was written before December 2025, it almost certainly needs updating. Even handbooks updated in 2024 will need amendments to comply with the new law. Bounda automatically flags policies affected by ERA 2025 changes.
When do the ERA 2025 changes take effect?
Royal Assent
ERA 2025 officially becomes law
First Wave of Reforms
Day-one SSP, unfair dismissal qualifying period reduced, enhanced leave rights
Progressive Rollout
Zero-hours protections, trade union rights, flexible working updates
Full Implementation
Unfair dismissal compensation cap removal, remaining provisions
What are the key changes in ERA 2025?
1. Unfair Dismissal
From two years down to six months of service to claim unfair dismissal
Plans for day-one unfair dismissal rights were dropped during parliamentary debate; six months is now the standard
The cap on unfair dismissal compensation is set to be removed, potentially increasing exposure on high-salary dismissals (likely from January 2027)
Action: Review your dismissal and performance management procedures. Ensure processes are robust enough to withstand claims from employees with just 6 months' service.
2. Statutory Sick Pay & Leave Rights
Statutory Sick Pay will be payable from day one of sickness — no more waiting days
SSP will be available without the lower earnings limit, extending entitlement to more workers (including part-time and low-paid staff)
Qualifying service requirements removed for parental and paternity leave — now day-one rights
A general right to bereavement leave, including for early pregnancy loss, with details to be set out in later regulations
Action: Update your sickness absence, paternity, parental, and compassionate leave policies. Remove any references to qualifying periods for these rights.
3. Worker Protections & Conditions
Employers must consult and engage meaningfully with workers when proposing changes to core employment terms (pay, hours, holidays, pensions)
Guaranteed hours and notice requirements for shift workers expected to be introduced for zero- and low-hours contracts
New protections prevent exploitative "fire and rehire" practices and unfair contract variations unless necessary for business viability
Action: If you use zero-hours contracts or anticipate restructuring, review your approach. Ensure robust consultation processes are in place.
4. Flexible Working & Family-Friendly Rights
The flexible working request process is streamlined, with clearer requirements for employers when refusing requests
Rights for paternity, parental and bereavement leave are enhanced and made more accessible
Action: Update your flexible working policy to reflect the streamlined process. Train managers on how to handle requests and document refusals properly.
5. Trade Union & Collective Rights
Certain restrictions on trade union activity and industrial action will be repealed
Protections for employees participating in protected industrial action are strengthened
Employers must include trade union rights in written employment particulars
Action: Review your employment contracts to ensure trade union rights are included. Update any policies on union membership and industrial action.
What must employers do to prepare for ERA 2025?
Start preparing now to ensure compliance when the reforms take effect:
Review contracts, handbooks and policies
Check all documentation against the upcoming changes. Bounda can help identify gaps.
Update dismissal and performance procedures
Reflect new qualifying periods (6 months) and potential unlimited compensation exposure.
Train managers on new leave rights
Day-one SSP, enhanced parental leave, bereavement leave, and flexible working processes.
Plan for zero-hours contract changes
Review scheduling and pay arrangements for zero-hours and shift workers.
Communicate changes to staff
Keep employees informed to manage expectations and ensure smooth compliance.
How can Bounda help with ERA 2025 compliance?
Bounda is built to help you stay compliant with ERA 2025 and beyond:
Legal Change Alerts
We monitor UK legislation and flag when your policies are affected by law changes.
Gap Analysis
Our AI checks your handbook against current law, including ERA 2025 requirements.
AI Rewrites
One-click policy updates that incorporate the latest legal requirements.
Policy Generation
Generate new policies already compliant with ERA 2025 from scratch.
Important Note
This guide provides a summary of the Employment Rights Act 2025 based on the legislation as passed. Secondary regulations will provide further detail on implementation, and some provisions may be amended before coming into force.
For specific advice on how ERA 2025 affects your organisation, we recommend consulting a qualified employment lawyer.
Frequently Asked Questions about ERA 2025
What is the Employment Rights Act 2025?
The Employment Rights Act 2025 is the most significant update to UK employment law in decades. It introduces changes to unfair dismissal qualifying periods, statutory sick pay, parental leave rights, zero-hours contract protections, and trade union rights. The reforms are being rolled out in stages over 2026-2027.
When do the ERA 2025 changes take effect?
The ERA 2025 changes are being implemented in stages. The first wave of reforms takes effect in April 2026, including day-one SSP and reduced unfair dismissal qualifying periods. Full implementation, including removal of the unfair dismissal compensation cap, is expected by January 2027.
Do I need to update my employee handbook for ERA 2025?
Yes, if your handbook was created before December 2025, it will almost certainly need updating. Key policies affected include disciplinary procedures, sickness absence, parental leave, flexible working, and zero-hours contracts. Bounda can automatically identify which of your policies need updating.
What is the new unfair dismissal qualifying period?
The qualifying period for unfair dismissal claims has been reduced from two years to six months of continuous service. This means employees can bring unfair dismissal claims much earlier in their employment, requiring employers to ensure robust dismissal procedures from the start.
What changes to statutory sick pay does ERA 2025 introduce?
ERA 2025 introduces day-one SSP, removing the previous three waiting days. It also removes the lower earnings limit, extending SSP entitlement to more workers including part-time and low-paid staff. Employers should update their sickness absence policies accordingly.
📋 Check Your Compliance
Use Bounda to run a gap analysis on your current handbook and see which policies need updating for ERA 2025 compliance.