Employment Rights Act 2025: seven actions employers can take now

These reforms may increase costs, create more scope for employee disputes and place extra pressure on HR, payroll and operational teams. With the right preparation, employers can stay ahead of the requirements, reduce the risk of disruption and give managers the confidence to handle change well.

Alongside HR and operational readiness, employers should also consider whether their current insurance arrangements provide advice and financial support if employment issues escalate.

Here are seven practical actions to take now.

1) Review your policies and handbooks

Employers should review existing policies and employee handbooks to identify what needs to change and when.  

Key areas include:

• Family-friendly policies  
• Absence management and statutory sick pay
• Whistleblowing
• Gender pay gap and menopause action plans
• Equality, diversity and inclusion
• Flexible working
• Maternity protection
• Bereavement leave

Since 6 April 2026, paternity leave and unpaid parental leave have been day-one rights.  Statutory sick pay is also payable from the first day of absence, with the lower earnings limit and three waiting days removed.

Whistleblowing policies should also be reviewed as disclosures relating to sexual harassment are now protected disclosures.

Large employers with 250 or more employees are encouraged to publish gender pay gap and menopause action plans. Publication is expected to become mandatory from 2027.

From October 2026, employers should be ready for further changes covering areas such as harassment, tipping, employment tribunal time limits and trade union rules. In most cases, the detail is still subject to government consultation, so employers should keep policies under review rather than treating current wording as final.

Businesses in sectors where tipping applies should also review tipping policies, as changes are expected from October 2026. Policies will need to be reviewed regularly and updated where necessary. From 2027, employers should be ready for further changes to flexible working, maternity protection and bereavement leave. This includes a new statutory right to unpaid bereavement leave and enhanced protection against dismissal for pregnant workers and those on, or returning from, maternity leave.

Mapping these changes now will help you prioritise updates and avoid rushed decisions closer to implementation.  

2) Update employment contracts  

Employment contracts should be reviewed to make sure they remain compliant while continuing to support the needs of the business.  

Changes to ‘fire and rehire’ rules are expected from January 2027. These changes are expected to make it automatically unfair to dismiss and rehire employees on worse terms as a way of changing terms and conditions in most cases.  

From 1 January 2027, employees will be able to claim unfair dismissal after six months’ service, rather than two years. This means employees who started on or after 1 July 2026 could be in scope from the point the new rules take effect. Employers should consider whether contracts include probationary reviews at three or four months, so decisions can be made well before an employee reaches six months’ service.

Employers using zero-hours, short-hours, low-hours or irregular-hours arrangements should monitor the consultation detail closely. Current proposals include rights to guaranteed hours, reasonable notice and payments for short-notice changes, but the final rules are still being shaped.

Any contracts or documents that include a non-disclosure agreement should also be reviewed in light of the new provisions linked to harassment or discrimination allegations.  

3) Strengthen your processes and systems

Good systems will make these reforms easier to manage.

Employers should review whether their payroll and HR systems can support the new requirements as they come into force.  

Payroll systems, in particular, should already reflect the statutory sick pay changes introduced in April 2026.  

The changes to unfair dismissal rights will also place more importance on recruitment, onboarding and probationary processes. Managers will need to make decisions early, document them properly and follow a clear process.  

The Fair Work Agency has also been established to help enforce workers’ rights and support compliance. Employers should make sure they understand how this may affect their approach to record keeping, reporting and responding to employee issues.

Employers are also required to keep adequate holiday pay and entitlement records for six years. This makes accurate systems and clear internal ownership even more important.

For zero-hours, short-hours, low-hours and irregular-hours workers, employers may need systems that can record hours worked and document decisions around guaranteed-hours offers once the final rules are confirmed.

Strong record keeping has always been good practice. It will become even more important when handling flexible working requests, probationary reviews, dismissal decisions and employee relations issues.  

Clear, contemporaneous records can also be critical if a matter escalates. Where legal support or insurer helplines are available, early advice can help employers resolve issues before positions become entrenched.

4) Communicate early and train your managers  

How and when employers communicate these changes will be key to a smooth transition. Employees will want to understand what has changed, what is still changing and what it means for them. Managers will need to understand how to apply the rules fairly and consistently.

Now is the time to develop communication plans and identify where managers may need extra support.

Training should help managers build confidence in areas such as:

• Handling difficult conversations
• Monitoring performance
• Giving feedback
• Documenting decisions
• Managing flexible working requests
• Supporting employees during probationary periods
• Preventing sexual harassment

The requirement to take all reasonable steps to prevent sexual harassment is expected to include training for both managers and employees. A short e-learning module may not be enough, particularly if it does not address real workplace risks or encourage meaningful discussions. Keeping records of training attendance and content can also help employers evidence the steps they have taken if allegations arise.

Investing in manager training now can help prevent issues later.

5) Review employee representation  

The most forward-thinking employers already create open channels for communication, feedback and challenge.

Where employers work with trade unions, proactive engagement will become even more important. The Employment Rights Act 2025 introduces several trade union reforms, which could increase the importance and influence of union relationships.

Even for non-unionised employers, increased rights of access for unions may change how employee relations are managed.

Building trust now can help reduce the risk of disputes later.

6) Stay close to the detail

The Employment Rights Act 2025changes are being introduced in phases, and some details are still subject to consultation.  

Employers should make sure someone in the business is responsible for tracking updates, coordinating internal actions and monitoring compliance.  

Useful resources include:

• Acas guidance on the Employment Rights Act 2025
• Government updates on changes to employee rights

7) Check your insurance and legal support

Alongside HR and operational planning, employers should check what support is available if employment issues escalate.  

Employment practices liability and legal expenses insurance may provide access to legal support and help with defence costs, depending on policy terms.

Employers should:

• Confirm what cover they have, if any
• Check whether the policy includes access to legal advice lines, helplines or panel solicitors
• Understand notification requirements
• Confirm who is responsible for reporting circumstances internally
• Use helplines or advice lines early, where available
• Make use of templates and resources from HR providers, Acas or insurer resources

Knowing what support is available before an issue arises can help employers act quickly and avoid procedural missteps.

How Howden can help

The Employment Rights Act 2025 creates a clear opportunity to strengthen your people processes before the next phase of reforms takes effect.

Our Risk Advisory team can help you understand what your business needs to do, where the biggest risks may sit and how to prepare with confidence.  

We can support with standardised documentation, HR advice, management skills training, sexual harassment prevention training and wider HR consultancy.  

We can also help you review your current insurance arrangements and assess whether your programme gives you the right support if employment issues escalate.

To discuss how prepared your business is, speak to our team.