Blog
Your essential guide to the Employment Rights Act 2025 and what it means for you.
Published 24 February 2026
It’s been described as “the biggest upgrade to workers’ rights in a generation”, and the Employment Rights Act (ERA) is something that both employers and employees cannot afford to ignore.
Chances are, over the past few months you’ve heard a lot, or at least something, about the new legislation, but maybe you’re still not completely sure what it actually means for you.
Employment law can be complicated, so if you want to understand the changes that are becoming law and how they will, or could, affect your working life, this simple, clear and easy‑to‑follow guide will help you make sense of it all.
So…what is this new ERA 2025?
The Act (formerly the Employment Rights Bill) was introduced to Parliament by the government on 10 October 2024 (1) [Cited 24.2.26] . It receivied Royal Assent on 18 December 2025, which is the final step in the law‑making process.
The legislation is intended to modernise employment law, strengthen worker rights, ban exploitative practices that previously allowed employers to avoid giving workers stable hours or fair treatment, leaving many people feeling worried and insecure, underpaid, and vulnerable to being pressured into accepting worse terms.
The ERA introduces major amendments to a range of existing employment laws, including the long‑standing Employment Rights Act 1996. The changes are being rolled out gradually throughout this year and next year, so we’re still in the early stages of putting it into action (2) [Cited 24.2.26] .
Why all the fuss?
In December, the Prime Minister, Sir Keir Starmer, said the development marked “a major victory for working people in every part of the country.”
He was reported by BBC News as adding: “We have just introduced the biggest upgrade to workers’ rights in a generation…” (3) [cited 24.2.26]
The ERA is a big deal because it reshapes employment law and gives workers much more protection, security in their role and rights.
Tell me some of the main changes that will make a difference
Unfair dismissal rights change dramatically
Unfair dismissal is when you are fired from your job without a fair reason or without a fair process being carried out (4) [cited24.2.26]
The qualifying period for making an unfair dismissal claim is changing from two years to six months. This change has been widely welcomed because the 24‑month wait for protection was seen as unfair. It meant employees had no real safeguard if they were dismissed without a good reason.
Now that protection starts much earlier, employers will need to be more careful and thoughtful when managing probation periods, performance issues and any decisions to dismiss.
No cap on unfair dismissal compensation
From 6 April 2025, the maximum compensation for unfair dismissal has been the lower of £118,223 or 52 weeks' gross pay.
However, this statutory cap will be fairly short-lived as it will be scrapped completely, allowing for uncapped compensation for unfair dismissal claims effective from 1 January next year.
It is worth pointing out, however, that the Official Statistics Tribunal Statistics Quarterly: April to June 2024 show that in 2023/24, there were 650 claims that received compensation for unfair dismissal (a decrease of 18% compared to 2022/23), where the maximum award was £179,000 and the average (mean) award was £14,000 (5) [cited24.2.26]
Fire‑and‑rehire changes
The practice allowed employers to sack staff and then offer them the same job back but on worse terms, such as lower pay, less hours or with benefits removed or reduced.
It became very controversial and is widely seen as unfair because it put workers under incredible pressure, making them feel forced and left with no choice but to accept poorer conditions, often with the threat of losing their job if they refused what was being offered.
Employees previously had to challenge fire-and-rehire proposals in court. The Guardian reported how Tesco lost a high-profile “fire and rehire” case in the UK’s supreme court over proposals by the supermarket to let some staff go and re-employ them on lower pay (6) [cited 24.2.26] .
The ERA aims to prevent employers from using dismissal as a tactic to force employees into less favourable contracts. The much anticipated change was initially expected this year but is now due in January 2027.
Flexible working changes
All employees currently have a statutory right to request flexible working, regardless of how long they have worked for an employer (7) [cited 24.2.26]
There has long been a concern that flexible working requests are not always handled consistently or fairly across workplaces.
The change will mean that employers will need to justify why any refusal of a flexible working request is “reasonable” and confirm in writing the statutory ground(s) for refusal and the reasons why that refusal is considered reasonable.
From next year, employees who feel their request has been unfairly rejected will be able to challenge that decision at an employment tribunal.
Trade union recognition
Trade unions will be strengthened by the removal of the restrictive rules introduced under the Trade Union Act 2016 (8) [cited 24.2.26]. The ERA makes it more straightforward for unions to organise, ballot and take lawful industrial action.
Commenting on the Employment Rights Bill passing the Lords, completing its parliamentary passage and paving the way for it to become law, TUC General Secretary Paul Nowak described it as a “historic day” (9) [cited 24.2.26] . He added that repealing anti‑union laws and ensuring union access to workplaces were “…just some of the watershed measures this Bill will now deliver.”
When the changes will take effect
This will happen in stages and some key dates provided by ACAS include (10)[cited 24.2.26] :
- Unfair dismissal qualifying period reduced - 1 January 2027.
- No cap on unfair dismissal compensation - 1 January 2027.
- Fire-and-rehire reforms – was expected October 2026 and will now be 1 January 2027.
- Flexible working reforms – unspecified date 2027.
- Paternity leave and ordinary parental leave – 6 April 2026.
- Trade union recognition reforms – 18 February 2026.
The government will publish updated timelines.
What does all this mean for employers?
Policies, contracts and HR systems must be updated and managers will have to be trained on the new rules, especially around dismissal, flexible working, consultation and trade unions.
What about what it actually means for employees?
It’s good news because you will get stronger rights across the board. You gain unfair dismissal protection much sooner, there is no cap on a compensation for a successful unfair dismissal claim, flexible working and parental leave rights are expanding and controversial “fire and rehire” tactics are being restricted. Trade union recognition and access will he improved. In simple terms, you now have more protections, with earlier and far greater enforcement behind them.
Five FAQs (just to cover off some key questions)
- Is the ERA 2025 already in force?
Yes, the Act was hailed as an early Christmas present when it became law in December 2025, but most changes will be phased in this year and next year.
- Do I need to change my employment contracts now?
Employers do need to start reviewing contracts if they have not already done so. Key changes affect dismissal, consultation and flexible working.
- Will zero‑hours contracts be banned?
Not completely, which may sound as if it isn’t entirely good news, but the ERA 2025 does include reforms aimed at improving protections for workers on insecure contracts.
- Does this only affect large businesses?
No. It does affect smaller firms as well and they are likely to feel the impact much more because they often lack HR resources. Experts recommend preparing early.
- This guide is really helpful but where can I find out more or read the official documents?
The government has published factsheets and analysis on GOV.UK.
Finally
The ERA 2025 will undoubtedly reshape the UK employment landscape. The key thing for both employers and employees is to make sure you stay informed an up to date with the changes.
