The Employment Rights Act 2025...

What Every UK Business Owner Needs to Know

(And Why It Changes Everything)

If you run a small or medium-sized business in the UK, the next 18 months are going to feel very different from everything that came before.

The Employment Rights Act 2025 received Royal Assent on 18 December 2025. It is now law. And while the government has been kind enough to phase the changes in over two years rather than drop them all at once, make no mistake — this is the most significant shift in UK employment legislation in a generation.

For business owners already juggling rising costs, recruitment headaches and a tricky economic climate, the timing is not exactly ideal.

Here is a plain-English breakdown of what is changing, when, and what it actually means for your business.

What Has Already Changed

Some provisions came into force the moment the Act received Royal Assent in December 2025. Most notably, the minimum service level restrictions that previously allowed employers to limit the impact of strikes in certain sectors have been removed. If you operate in logistics, utilities or any sector where industrial action has historically been a risk, that risk just increased.

Then, from **18 February 2026**, the first wave of trade union changes landed:

- The notice period unions must give before strike action dropped from 14 days to 10

- Ballot mandates now last 12 months instead of 6

- Unions only need a simple majority to vote for action (the old 40% turnout threshold is gone)

- The requirement for a named picket supervisor has been scrapped

Collectively, this makes it significantly easier for unions to organise, ballot and act. If you have a unionised workforce or operate in a sector where unions are active, this matters now — not later.

April 2026 — The First Big Wave for Employers

From the 6th April 2026, a raft of changes came into force that affect almost every employer in the UK, regardless of size.

Statutory Sick Pay

The lower earnings limit has been removed and the three-day waiting period is gone. Employees are now entitled to SSP from day one of illness. For businesses with staff who historically took short-term absences, your sick pay liability has increased immediately.

Day-One Parental Rights

Paternity leave and unpaid parental leave are now day-one rights. Previously, employees needed 26 weeks' service before qualifying. That qualifying period no longer exists. You could hire someone on a Monday and find yourself managing a parental leave request within weeks.

Record Keeping

Employers must now keep detailed records of annual leave and holiday pay for a minimum of six years. If your record-keeping has been informal or inconsistent, this needs addressing as a priority — the Fair Work Agency (which also launched in April) has enforcement powers to investigate and penalise.

The Fair Work Agency

This is new and it matters. The Fair Work Agency brings together enforcement of key workplace rights under one roof. It can investigate employers, issue penalties and enforce rights including the National Minimum Wage. Think of it as HMRC for employment rights — with teeth.

October 2026 — The Legal Risk Escalates

Two significant changes land in October that directly increase your legal exposure.

Employment Tribunal Time Limits Double

Currently, most Employment Tribunal claims must be filed within three months of the act complained of. From October 2026, that window extends to six months. This means employees have twice as long to decide whether to pursue a claim — and twice as long for events to be reframed, evidence to be gathered and grievances to solidify. Expect more claims. The Tribunal system is already under significant strain; this will add to the backlog, meaning disputes that drag on longer and cost more to resolve.

Strengthened Anti-Harassment Duties

The bar for preventing sexual harassment rises from "reasonable steps" to "all reasonable steps," including harassment by third parties such as clients or customers. The distinction sounds subtle. In practice, it is anything but. Employers will need to demonstrate robust, documented policies, training and response procedures — not just a paragraph in a staff handbook.

January 2027 — Fire and Rehire Becomes Near-Impossible

From January 2027, the practice of dismissing employees and re-engaging them on new, less favourable terms — commonly known as fire and rehire — becomes significantly restricted. Employers who have historically used this as a lever to manage employment costs or restructure contracts will need to find alternative approaches. The window for doing so, in a legally defensible way, is closing.

2027 — The Changes That Will Reshape How You Think About Headcount

The biggest changes are still to come, but 2027 is not far away. Business owners who are not planning for these now are going to find themselves reacting rather than managing.

Unfair Dismissal Protection From Six Months

Currently, employees need two years of continuous service before they can bring an unfair dismissal claim (except in certain protected categories). That threshold drops to six months. The government estimates this will bring an additional 6.3 million workers into protection and generate around 9,000 additional ACAS early conciliation referrals per year. In practical terms, your probationary period needs to be managed with the same rigour you currently apply to employees with two years' service — from month seven onwards.

Guaranteed Hours for Zero and Low-Hours Workers

Workers on zero or low-hours contracts will gain the right to request guaranteed hours based on their actual working pattern. If their hours consistently exceed the contracted minimum, they can request a contract that reflects reality — and you will need to respond. The days of keeping someone on a zero-hours contract indefinitely as a flexible resource are numbered.

Right to Pay for Cancelled Shifts

Workers will have the right to be paid if a shift is cancelled, moved or cut short at short notice. For businesses in hospitality, retail, events or any sector that relies on flexible scheduling, this is a material cost change.

Statutory Bereavement Leave

A new statutory right to bereavement leave arrives in 2027. It will initially be unpaid, but it creates a legal framework where none currently exists. Policies will need updating.

What This Means in Practice

Taken individually, each of these changes is manageable. Taken together, they represent a sustained, multi-year increase in the cost, risk and administrative burden of directly employing people in the UK.

Smaller businesses — those without an HR department, employment lawyer on retainer or dedicated compliance resource — will feel this most acutely. The obligations do not scale down because you are small. The penalties do not reduce because you did not know.

The question for many business owners is not just how to comply, but how to structure their workforce in a way that keeps them agile, cost-effective and protected.

A Different Way of Thinking About Workforce Flexibility

One approach that a growing number of UK businesses are exploring is supplementing their core team with dedicated remote professionals — people who work exclusively for your business, integrated into your operations and culture, but engaged outside of the UK employment framework.

Done ethically and properly, this gives you genuine capacity without the escalating compliance overhead that comes with every additional UK employee. It is not a loophole. It is a different model — one that has been operating successfully for years across sectors from legal and finance to property, marketing and professional services.

At Virtuality, that is exactly what we do. Our remote professionals are rigorously vetted, properly onboarded and genuinely part of your team — not a temporary fix or a faceless resource. And as the Employment Rights Act continues to roll out its changes through 2026 and 2027, more businesses are finding that the maths starts to look very different.

Key Dates at a Glance

Date Key Changes

18 Dec 2025 Act becomes law. Minimum service level strike restrictions removed.

18 Feb 2026 Union balloting and notice rules relaxed.

6 April 2026 Day-one SSP. Day-one parental rights. Record-keeping obligations. Fair Work Agency launches.

October 2026 Tribunal time limits double to 6 months. Enhanced anti-harassment duties.

January 2027 Fire and rehire near-banned.

2027 Unfair dismissal from 6 months. Guaranteed hours. Cancelled shift pay. Bereavement leave.

Virtuality provides UK businesses with dedicated remote professionals — ethically sourced, properly vetted and fully integrated into your team. If the Employment Rights Act is prompting you to think differently about how you structure your workforce, we would be happy to have a conversation.*

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