The Employment Rights Act 2025 is one of the biggest overhauls of UK employment law in decades, with many of its provisions taking effect throughout 2026 and into 2027. From recruitment and probationary periods to zero-hours contracts, harassment and family-friendly rights, the reforms will affect businesses of every size.
We spoke to Matthew Ainscough, Senior Associate and Head of Employment at Taylor Emmet, about what employers need to know and why preparation now could save significant time, money and disruption later.
The Employment Rights Act 2025 has been described as one of the biggest reforms to UK employment law in decades. What makes it so significant?
I think it's probably the scope of it. It's going to impact businesses' operations from recruitment right through to termination, so it affects all aspects of employment.
The biggest change is unfair dismissal rights. At the moment it's two years, but that's coming down to six months. It's not giving companies long to assess someone's capability. Previously, employers had a big cushion of two years to really get to know someone and see whether they were a good fit for the business. Now they've got a very short period in which to make that assessment.
I think it's going to completely transform recruitment practices. Companies are going to have to be much more forensic upfront about someone's suitability for a role. They won't have the chance to rely on trial and error as they might have done previously.
Does that mean employers need to rethink how they recruit?
Definitely. Interviews are going to have to become much more practical, focusing on assessing someone's skills and experience rather than relying on gut instinct.
Recruitment may previously have been guided by personality and whether someone felt like the right fit, knowing there was time to deal with any issues later. Now, if someone doesn't have the skills from the outset, employers could face an expensive termination process.
Recruitment in itself is quite expensive, so getting it wrong is going to be costly. You've got the cost of the recruitment exercise, the cost of terminating employment if it doesn't work out, and then the cost of recruiting a replacement. It's almost like a triple whammy of costs. If you get the recruitment right first time, you'll obviously save yourself a lot of money.
Another major area of reform is zero-hours contracts. What changes should employers be aware of?
The main change is that once somebody on a zero-hours contract has worked a set number of hours, they'll be entitled to be offered guaranteed hours going forward.
For example, if somebody spends two months working 30 hours a week, the employer will be required to offer those 30 hours on a permanent basis. If those hours then can't be provided because shifts are cancelled, the worker has the right to be compensated.
It's quite a big shift and it will be particularly difficult for businesses where demand fluctuates significantly, such as hospitality, tourism and seasonal employers.
If work suddenly drops off, employers may still have to pay people even though there aren't enough shifts available. For a very small business, costs like that could become extremely difficult to absorb.
What should employers do to prepare?
If it's possible to forecast work levels, businesses should do that before offering guaranteed hours. Make sure you're satisfied you'll be able to provide those hours going forward.
The reforms also strengthen restrictions around 'fire and rehire'. What does that mean in practice?
Consultation has always been important whenever you're making significant contractual changes. People don't like having changes imposed on them without the chance to consider them properly or understand how they'll affect them.
A lot of workplace conflict comes from employers introducing contractual changes without allowing employees to query, negotiate or discuss them. That's bound to lead to grievances, resignations and disputes.
Going forward, the fire and rehire provisions make that approach even more difficult. Except in very rare circumstances, dismissing employees simply to re-engage them on different contractual terms will effectively become unlawful and amount to an unfair dismissal.
How important is documentation under the new rules?
It's absolutely essential.
If you're consulting on contractual changes, you need to document everything so you can demonstrate agreement if it's challenged later.
Record-keeping has also become increasingly important. Employers are now required to keep holiday records for up to six years, so businesses need good systems for storing employment records, sickness absence records and contracts.
If you can put your hand on the relevant documents quickly, you're in a much stronger position to defend a tribunal claim. Employers who are scrabbling around trying to evidence agreements are immediately on the back foot.
Technology can make that much easier. We work with a digital platform that allows employers to securely store contracts, holiday records and employment documentation in one place, making administration much more manageable.
There's also a greater emphasis on preventing workplace harassment. How does that change employers' responsibilities?
At the moment it's more reactive than proactive. Employers can defend themselves if they've taken reasonable steps to prevent harassment.
Going forward, the emphasis is much more on preventing it before it happens.
The best approach is proper training so employees understand what harassment is, what it looks like and how to report it if they experience or witness it.
Businesses should also have clear reporting procedures, particularly in larger organisations, so employees know who they can speak to confidentially if an issue arises.
Trade union rights are also being strengthened. What impact do you expect?
For businesses with unionised workforces, the impact could be significant.
One of the biggest changes is that trade unions will have greater rights to access workplaces in order to recruit members. Employers will need to provide suitable space for meetings and allow employees time away from work to attend them.
For businesses that haven't previously dealt with trade unions, that will be quite a significant cultural shift.
That said, it's not necessarily a negative development. Sometimes unions can help resolve issues before they escalate. Because they're independent, they can provide objective advice to employees and potentially head off grievances that might otherwise have landed on an employer's desk.
Aside from those headline reforms, are there any other important changes businesses should know about?
Enhanced maternity protections are one of the key changes. Employees who are pregnant or returning from maternity leave will receive extended protection when redundancy situations arise and will have priority for suitable alternative roles.
Statutory Sick Pay has also changed, with entitlement now beginning from day one rather than after the fourth day.
If a business owner starts preparing today, where should they begin?
The first step is reviewing employment contracts and policies.
One of the biggest practical changes is probationary periods. If employers continue using six-month probation periods, employees could gain unfair dismissal rights before their probation review takes place.
We're recommending three-month probation periods, with a final review at five months, giving employers enough time to complete a fair process if performance isn't where it needs to be.
Companies need to be starting now, really. Some changes begin this year, while others arrive in 2027, but updating contracts and policies isn't something that can be done overnight.
