What is the Employment Rights Act 2025?
The Employment Rights Act 2025 — usually shortened to ERA 2025 — received Royal Assent on 18 December 2025. It came out of the Labour government's Plan to Make Work Pay and represents the most significant overhaul of UK employment law since the 1990s.
The Act covers a wide range of changes: zero-hours contracts, statutory sick pay, paternity leave, unfair dismissal, agency workers, collective redundancy, and more. Not everything is live yet. The government is rolling changes out in stages across 2026 and 2027, with the most significant provisions for shift-based businesses arriving in 2027.
The key thing to understand is that the preparation window is now. If you wait until the obligations land, you will not have the data you need to comply.
What has already changed
Several changes came into force in early 2026. If you have not already accounted for these, you need to act immediately.
1 April 2026 — National Minimum Wage increase
The NMW for workers aged 21 and over rose to £12.71 per hour. The 18–20 rate is now £10.85. The 16–17 and apprentice rate is £8.00. If your pay rates have not been updated to reflect this, you are already non-compliant.
6 April 2026 — Statutory Sick Pay from day one
SSP is now available from the first day of sickness, with no three-day waiting period. Workers earning below the previous lower earnings limit also now qualify. For shift-based businesses, this means every worker — including casuals — who falls sick is potentially entitled from day one.
6 April 2026 — Day-one paternity leave
Eligibility for paternity leave and unpaid parental leave is now a day-one right. Workers do not need to have accrued any length of service. Note: the 26-week qualifying period for paternity pay remains in place.
6 April 2026 — Mandatory holiday pay record-keeping
Employers must now keep records of annual leave and holiday pay for all workers. This is a new statutory requirement. If you are still managing this on spreadsheets or WhatsApp, you have a documentation problem.
6 April 2026 — Collective redundancy penalty doubled
The maximum protective award for failing to consult properly on collective redundancies has doubled from 90 to 180 days' gross pay per affected worker. If you are considering restructuring, the cost of getting this wrong has significantly increased.
18 February 2026 — Agency worker shift notice
Employment agencies and the businesses that hire their workers must now jointly provide agency workers with reasonable notice of shifts, changes, and cancellations. This applies to existing arrangements as well as new ones.
The Fair Work Agency — a new enforcement body
One change that has received less coverage than it deserves: the government launched the Fair Work Agency in April 2026. This is a new body that consolidates several existing enforcement functions into one place.
What this means in practice is that the FWA can take employers to employment tribunal on behalf of workers — without the worker having to bring the claim themselves. It covers national minimum wage compliance, holiday pay, and agency worker regulations.
The tribunal time limit for workers bringing their own claims has also been extended from three months to six months. There is a longer window for claims to be made against you.
Worth knowing: The FWA is brand new and its enforcement priorities are still being established. But the extended tribunal window means that issues arising from 2025 and early 2026 could still result in claims well into 2027. Good record-keeping from now on is your best protection.
Zero-hours contracts — what is actually changing
This is the area most shift-based businesses are worried about. The short answer is: the most significant changes have not happened yet, but you need to be preparing for them now.
Does ERA 2025 ban zero-hours contracts?
No. Zero-hours contracts are not banned. The Act targets what it calls "exploitative" arrangements and introduces new rights — but workers will be able to choose to remain on flexible contracts if that suits them.
What is the guaranteed hours right?
From 2027 — the exact date is still to be confirmed — workers on zero-hours or low-hours contracts will have the right to be offered a guaranteed hours contract that reflects the hours they have actually worked over a reference period. The reference period is expected to be 12 weeks, though regulations are still being developed.
The key word is "offered". Employers will be required to make the offer. Workers can decline and remain on a flexible arrangement if they prefer.
Why does this matter right now if it is not live until 2027?
Because the obligation is calculated from data. When the right comes into force, you will need to demonstrate what hours each zero-hours worker actually worked over the relevant reference period. If you have not been tracking that data consistently, you will not be able to comply — or defend yourself against a claim that you failed to make the required offer.
Businesses that start tracking now will have 12 months of clean data before the obligation lands. Those that wait will be scrambling.
FlexiWork tracks zero-hours patterns automatically
Every shift logged in FlexiWork contributes to each worker's 12-week rolling pattern. When the guaranteed hours obligation arrives, your records are already there. No add-on, no extra cost — included on every plan.
Start free — 30 daysAgency workers and ERA 2025
If your business uses agency staff — whether for regular cover, seasonal peaks, or last-minute gaps — ERA 2025 adds new obligations at both ends of the arrangement.
From 18 February 2026, employment agencies and the businesses hiring their workers share a joint duty to provide reasonable notice of shifts, changes, and cancellations. This is already in force. If your agency is not giving workers adequate notice and you knew about it, you carry some of the liability.
From 2027, the guaranteed hours right is expected to extend to agency workers as well. The details are still being worked out, but the direction of travel is clear: agency workers who regularly work for the same hirer for extended periods will start to acquire rights that reflect that relationship.
Practical implication: If you book the same agency workers repeatedly across the same shifts, you may want to consider whether absorbing some of them as directly-employed casuals gives you more control over your obligations. This is a business decision, not a legal requirement — but ERA 2025 makes the calculus different to what it was before.
Unfair dismissal — what is changing in 2027
One of the headline changes in ERA 2025 is a reduction in the qualifying period for unfair dismissal from two years to six months. This is not live yet — it comes into force in January 2027.
When it does, anyone you hire from around July 2026 onwards will be protected from January 2027. In practice, this means the effective change starts to bite much sooner than the January date suggests.
For businesses where staff turnover is high — which describes most of hospitality and retail — this has significant implications for how you manage performance, probationary periods, and exit conversations.
| Change | When it applies | Current rule | New rule |
|---|---|---|---|
| Statutory sick pay | From 6 April 2026 | 3-day wait, earnings threshold applies | Day one, all workers qualify |
| Paternity leave eligibility | From 6 April 2026 | 26 weeks' service required | Day-one right |
| Holiday pay records | From 6 April 2026 | No specific recording obligation | Mandatory record-keeping |
| Agency shift notice | From 18 Feb 2026 | No formal obligation | Reasonable notice required (joint) |
| Guaranteed hours | 2027 (date TBC) | No obligation | Must offer after reference period |
| Unfair dismissal qualifying period | January 2027 | 2 years' service | 6 months' service |
| Collective redundancy penalty | From 6 April 2026 | Up to 90 days' pay | Up to 180 days' pay |
What to do now — a practical checklist
You do not need to have everything sorted overnight, but the businesses that will find 2027 manageable are the ones that start getting their house in order now.
- Update your pay rates. The NMW increase to £12.71 (21+) was live from 1 April 2026. If you have not updated your payroll, do it today.
- Remove SSP waiting day assumptions from your sick pay processes. Casuals and zero-hours workers who go sick are now potentially entitled from day one. Your absence management process needs to reflect this.
- Start tracking zero-hours worker hours consistently. Every shift worked needs to be logged against the worker, with actual start and end times. Informal arrangements or WhatsApp confirmations will not be adequate records when 2027 arrives.
- Check what notice you and your agency are giving workers for shifts. The joint obligation to provide reasonable notice has been in force since February 2026. If you are calling workers the day before and expecting them to show up, that arrangement may need to change.
- Review your holiday pay records. Mandatory record-keeping is now a statutory requirement. If your leave records are informal or incomplete, address that now rather than waiting for a claim.
- Think about your probationary and performance management processes. The qualifying period for unfair dismissal will be six months from January 2027. Structured probation periods with documented reviews will become essential rather than just good practice.
The honest picture: ERA 2025 does not make running a shift-based business impossible. Most of the changes are manageable if you have the right systems in place. The businesses that will struggle are those still managing their workforce on WhatsApp, spreadsheets, and tribal knowledge — because they will not have the records they need when the obligations bite.