As the impact of the Employment Rights Act starts to be felt, Laura Darnley, Partner, Ward Hadaway discusses how HR needs to prepare for the next wave of change.
The Employment Rights Act 2025 is more than a legislative update: it is a comprehensive A–Z overhaul of UK employment law, affecting everything from agency workers to zero-hours contracts.
April 2026 will introduce some changes, but the reforms with the biggest impact are still to come – particularly the reduction of the qualifying period for unfair dismissal from two years to six months, effective for all employees from 1 January 2027. For HR leaders, this requires attention now, even though the change won’t take effect for another year.
The first changes
April 2026 is the first operational checkpoint. Statutory Sick Pay will be payable from the first full day of absence, with the removal of the three-day waiting period and the lower earnings limit. More employees will qualify, which may increase short-term absence costs. Even a small increase in recurring absences can have a disproportionate impact on team capacity and payroll, so it’s worth running scenario modelling now. Employers should review absence policies and pay particular attention to short-term, intermittent absences.
Paternity leave and unpaid parental leave will also become day-one rights, removing previous service thresholds. Managers must be ready to discuss these entitlements with new starters from day one.
The maximum protective award for failing to comply with collective redundancy consultation rules will double from 90 to 180 days’ pay per affected employee, raising the stakes for redundancy processes. Disclosures relating to sexual harassment will gain explicit whistleblowing protection, and the new Fair Work Agency is expected to consolidate enforcement functions, signalling a more coordinated approach to compliance. These changes highlight the broader trend: earlier rights, greater scrutiny, and the need for stronger, more formal processes.
New year new changes
Arguably the most significant change will arrive in January 2027. Reducing the unfair dismissal qualifying period to six months changes how early employment risk must be managed. Two years’ service has long acted as a safety net; from 1 January 2027, all employees with six months’ service – which will include all those who joined before 1 July 2026 – will be protected. New hires after this date will also qualify after six months. Organisations will need to ensure fair reasons and processes are demonstrable far earlier than under the current two-year threshold. Probation, onboarding, and early performance management will become even more critical, and preparing now will make the transition smoother.
robust record-keeping and documentation is even more important for employers.”
Two other changes make early-stage risk management even more important. First, the removal of the unfair dismissal compensation cap (also expected 1 January 2027) means claims from high earners could carry significant financial exposure. Even a single claim could exceed six figures, so senior hires, specialist roles, and executives warrant extra attention during recruitment, probation, and performance management. Second, tribunal claim time limits will increase to six months for most claim types. This is expected from October 2026. In conjunction with extensions to the ACAS conciliation process, which are already in force, these changes mean employees will have significantly more time to start conciliation and bring a claim – and the longer window increases the likelihood that organisations will face claims long after dismissal. With employment tribunal backlogs already high and cases taking longer to reach hearing, this makes robust record-keeping and documentation even more important for employers.
Recruitment as risk management
Going forwards, recruitment must be treated as risk management. Hiring mistakes will be harder and more expensive to undo under the new framework, so structured interviews, objective scoring, consistent assessment criteria, and thorough documentation are essential.
Probation periods will also take on greater significance. In many organisations, six-month probation is loosely managed, with limited documentation. That will no longer suffice. Contracts should clearly set out probation length, expectations, and extension options. Review meetings should be diarised, structured, and recorded, with feedback that is timely, constructive, and documented. Probation will become the primary safeguard in the early months of employment.
For example, a candidate dismissed after seven months for capability issues could bring an unfair dismissal claim – even if their probation period was loosely documented. Informal, gut-feel recruitment processes leave organisations exposed if early employment relationships break down. Now is the time to review panels for consistency, ensure all decisions are documented, and confirm selection processes are robust and defensible.
Care for contracts
Contracts themselves require careful attention. Government proposals indicate that restrictions on dismissal and re-engagement practices are coming (expected 1 January 2027). While details remain under consultation, the direction is clear: relying on dismissal and rehire to implement changes to terms and conditions will carry legal risk. Now is the time to review variation clauses, mobility clauses, and other contractual mechanisms. Future-proofing contracts now is far easier than retrofitting them later.
Policies will need rolling updates. April 2026 changes, such as sickness absence and some family leave, are just the start. Further reforms – including zero-hours contracts, flexible working and other family friendly rights – are still under consultation. Treating policies as living documents will save repeated effort. The most effective HR teams will need to link updates to manager briefings and training, ensuring managers understand not just what has changed, but why it matters and how it should influence day-to-day decision-making.
It is the changes later this year and into next that are likely to have the greatest practical impact.”
Preparation is key. Organisations that review recruitment, formalise probation, update contracts, and implement rolling policy reviews will be far better placed as these changes roll out.
For HR practitioners, the message is clear: now is the moment to be proactive, rather than just ticking compliance boxes. The Employment Rights Act 2025 is reshaping employment relationships across the employee lifecycle. The April 2026 changes are just the start, but it is the changes later this year and into next that are likely to have the greatest practical impact. Organisations can strengthen recruitment, probation, contracts, and policies now, embedding consistency and fairness from day one. Those who act now will not only reduce risk, but also create workplaces that manage employment relationships effectively at every stage – from the very start and throughout the employee journey.
