The Employment Rights Act received royal assent in December 2025. It is the biggest change to employment law in a generation. But what does it mean for Surrey businesses? Our blog looks at some of the impacts.
The Employment Rights Act is designed to modernise the labour market, bringing it into the 21st century. Ministers say it strengthens worker protections and increases employer obligations.
The employment law changes included in the Act will take place over a period of 2 years. Most changes will happen in 2026 and 2027.
New rights include day one paternity leave and statutory sick pay. Plus there are protections for pregnant workers, an end to exploitative zero hours contracts and a new right to bereavement leave.
Ministers claim stronger employment rights are good for the economy, pointing to academic research which shows the happier and healthier workers are, the more productive they are – and the longer they stay in their jobs. This contributes to economic growth.
But there will be a cost – with Government’s own analysis saying there will be a direct annual cost to business of around £1 billion per year.
Employment Rights Act: key headlines
- Ending One‑Sided Flexibility
- The Act tackles insecure work by introducing rights to guaranteed hours, reasonable notice of shifts, and compensation for short‑notice cancellations. These protections also extend to agency workers, supported by new remedies via employment tribunals.
- Fire and Rehire Restrictions
- The Act introduces tougher restrictions on “fire and rehire” practices. Dismissals for failing to agree to changes to certain core contractual terms will now be considered automatically unfair, except in cases of severe and genuine financial difficulty.
- Unfair Dismissal Changes
- Reducing the qualifying period for unfair dismissal claims from two years to six months, and the cap on compensatory awards will be removed.
- Increased dismissal protection for industrial action
- Dismissal for taking part in industrial action will become ‘automatically unfair’. This will remove the current 12-week limit for claiming unfair dismissal. This will change in February 2026.
- Strengthened Collective Redundancy Rules
- The maximum ‘protective award’ for failure to consult in collective redundancy will double from 90 days’ pay to 180 days’ pay. This will change in April 2026.
- Family‑Friendly and Sick Pay Reforms
- Employees will gain day one rights to statutory sick pay, paternity leave, and unpaid parental leave.
- New bereavement leave, including for pregnancy loss before 24 weeks.
- Removing lower earnings limit for sick pay. Currently, workers must earn a minimum amount to be eligible for statutory sick pay
- Establishment of the Fair Work Agency
- From April 2026, a new Fair Work Agency will consolidate enforcement of minimum wage, agency rules, exploitation prevention, and holiday pay compliance.
What should employers do now?
Although many changes take effect throughout 2026 and 2027, employers should begin reviewing contracts, policies, shift‑allocation processes, and dismissal procedures now.
By taking early action, you can reduce compliance risks and improve workforce stability.
More details on the changes can be found in the government’s Employment Rights Act factsheet.
Acas, the Advisory, Conciliation and Arbitration Service, also has a helpful online Employment Right Bill section on its website.
Need further support and advice? Get in touch with our team of experts via the Business Support Form.
