This month’s update is a big one.

Back in December, the Employment Rights Bill received Royal Assent and became the Employment Rights Act 2025. You’ll probably have seen a lot of headlines about it already but the reality is a bit less dramatic and a lot more gradual.

This isn’t a single moment where everything changes overnight. Instead, we’re looking at a phased set of reforms rolling out between now and 2027, with plenty of consultation and secondary legislation still to come. In other words, the direction is clear but many of the finer details are still being worked through.

Below is a look at what’s coming, when it’s likely to happen and what you should be starting to think about now.

What’s already changed (from December 2025)

ACAS early conciliation – longer timelines

If an employee contacted ACAS on or after 1 December 2025, early conciliation can now run for up to 12 weeks (previously six).

This doesn’t change tribunal time limits but it does mean disputes may sit in limbo for longer before either resolving or moving forward.

Changes coming from April 2026

National Minimum Wage increases

New minimum wage rates will apply from April 2026:

• Age 21+: £12.71
• Age 18–20: £10.85
• Age 16–17: £8.00
• Apprentices: £8.00

For many businesses, this won’t just be about updating payroll, it’s also about managing pay differentials and budgetary considerations.

Statutory Sick Pay – a big shift

Statutory Sick Pay is changing in a way and will affect all employers.

From April 2026:

• SSP will be payable from day one of absence
• All employees will qualify, regardless of earnings
• Payments will be 80% of weekly pay or the statutory rate, whichever is lower

The SSP weekly rate for 2026/27 is expected to increase to £123.25.

In practical terms, any sickness absence will trigger a payment. This makes having a clear, absence policy and processes more important than ever.

What to start thinking about now:

• Updating contracts and policies to remove outdated eligibility rules
• Tightening up absence reporting and return-to-work conversations
• Reviewing absence triggers and monitoring patterns fairly
• Factoring the increased cost into workforce planning

Family-friendly rights from day one

From April 2026:

• Paternity leave (not paternity pay) becomes a day one right
• Unpaid parental leave also becomes available from day one

Length of service will no longer determine eligibility, so onboarding and manager awareness will be key.

Sexual harassment disclosures

Disclosures relating to sexual harassment will be treated as protected whistleblowing disclosures, provided the individual believes the issue is in the public interest.

This strengthens protections for employees and increases the importance of trusted reporting routes and clear non-retaliation policies.

Collective redundancy – higher financial risk

Where collective consultation rules aren’t followed properly, tribunals will be able to award up to 180 days’ pay per affected employee (to be increased from 90 days).

This significantly raises the stakes and reinforces the need to follow ACAS guidance closely.

Trade unions and enforcement

Several changes are aimed at making union recognition and enforcement easier, including:

• Removing the current workforce support threshold for recognition
• Proposed changes to ballot turnout rules
• Moving towards digital balloting

Alongside this, the creation of the Fair Work Agency is an important development and one that shouldn’t be overlooked.

The Fair Work Agency

The Fair Work Agency will bring together enforcement responsibilities that currently sit across multiple bodies. This includes enforcement of:

• National Minimum Wage
• Labour exploitation and modern slavery provisions
• Employment agency standards

Crucially, this will not be a passive or advisory body. The Agency is expected to have powers to investigate employers, carry out inspections, issue penalties and pursue enforcement action where breaches are found.

For employers, this signals a shift towards more proactive enforcement, rather than relying primarily on individual complaints being brought forward. Even well-intentioned businesses may find themselves under scrutiny if systems, records or practices fall short.

What this means in practice:

• Greater importance on accurate pay records and compliance checks
• Increased risk where working arrangements, pay practices or agency use are informal or inconsistent
• A need for confidence that policies are not just written, but actually followed day to day

As more detail emerges about how the Agency will operate, employers should expect higher expectations around transparency, documentation and ongoing compliance.

In addition, the Agency is expected to have the power to bring employment tribunal claims on behalf of individuals, as well as to provide legal assistance, support or representation where individuals have already raised a claim themselves. This marks a notable shift away from enforcement relying solely on individuals taking action and further increases the importance of getting the basics right.

From October 2026

Fire and rehire – much tighter rules

The ability to dismiss and re-engage employees on new terms will be heavily restricted. Employers will need to show that changes are essential to business survival and that all other options have been explored through proper consultation.

Further clarification is expected, particularly around how this will apply to smaller or technical contractual changes.

Tips and service charges

Employers will be expected to formally consult with staff about how tips are shared and to provide anonymised feedback summaries.

Clear communication and transparency will be essential, especially in customer-facing sectors.

Preventing sexual harassment – raised expectations

The duty on employers will increase from taking “reasonable steps” to taking “all reasonable steps” to prevent sexual harassment, including harassment by third parties.

While guidance is still awaited, regular training, risk assessments and policy reviews are likely to be the minimum standard.

Trade union rights

Union representatives will gain stronger protections, more paid time to carry out their roles, and greater access to workplaces through new access arrangements.

Employment tribunal time limits

The time limit for most tribunal claims will increase from three months to six months, which is likely to lead to more claims and longer periods of uncertainty for employers.

Informing employees of their right to join a union

Employers will have a new duty to actively inform employees of their right to join a trade union, likely through contracts or staff handbooks.

Looking ahead to 2027 and beyond

Unfair dismissal – qualifying period reduced

It has now been confirmed that the qualifying period for ordinary unfair dismissal is reducing to 6 months from January 2027.

This puts even more emphasis on good recruitment decisions, meaningful probation periods and early performance management.

Compensation limits

The current cap on unfair dismissal compensation may be lifted entirely, subject to further review. If this happens, financial exposure, particularly for senior roles, could increase significantly.

Zero-hours and low-hours working

Workers will gain the right to contracts that better reflect the hours they regularly work. Further rules are expected around notice periods and compensation for cancelled shifts.

Bereavement leave

A new right to at least one week of bereavement leave will be introduced. The qualifying relationship is still to be confirmed.

Collective redundancy thresholds

The current location-based threshold will be removed, meaning redundancy numbers across the whole organisation will count towards collective consultation requirements.

Pregnancy, maternity and flexible working

Additional protections are expected for employees during pregnancy, maternity leave and after returning to work. Employers will also need to clearly explain, in writing, why any refusal of a flexible working request is reasonable.

Equality action plans

Larger employers will be expected to introduce equality action plans, covering areas such as gender pay gaps and menopause support. This will be voluntary from April 2026 and mandatory from 2027.

So … How can Sparks HR help you?

With so many changes coming in stages, it can be hard to know where to focus first or what really applies to your organisation.

The Employment Rights Act 2025 (and what follows into 2026 and 2027) is one of the biggest shake-ups to employment law in decades. It affects how you hire, manage and exit employees and the cost of getting it wrong is increasing.

This is where taking a proactive, preventative approach really matters. Putting the right foundations in place now is far simpler, and far less expensive, than trying to fix things once a problem has already landed.

It’s also worth noting that employment tribunal claims are predicted to increase by up to 17% as these changes come into force, making it even more important to be proactive rather than reactive.

Sparks HR can support you by helping you:

• Understand what is changing, when it comes into effect and what it means for you in practice
• Review and update contracts, policies and handbooks so they’re future-ready, not reactive
• Sense-check your current absence management approach ahead of the SSP reforms
• Support managers with practical guidance and training, particularly around managing in line with your policies and ACAS Code of Practice, probation, performance and difficult conversations (to name a few)
• Talk through workforce planning, cost implications and key risk areas before they turn into issues
• Provide you with peace of mind through having ongoing support through an HR retainer, giving you consistent, on-hand advice as changes roll out
• Start gearing up early for equality and menopause action plans, focusing on meaningful, workable solutions rather than last-minute compliance

Getting this right now puts you in a much safer position and helps avoid costly claims, legal advice and rushed fixes later on. In short, it’s about prevention rather than cure and being ready and proactive, rather than reactive.

Final thoughts

There’s still a lot of detail to come but the overall direction is now set. Employers who start reviewing policies, processes and management capability early will be in a much stronger position as these changes roll out.

If you want to chat this through, please feel free to reach out for an initial complementary conversation.

Alison x