Employment Rights Act 2025: What Changes for Small Employers
Employment Rights Act 2025: What Changes for Small Employers
The Employment Rights Act 2025 is being rolled out through 2026 and 2027. Some changes are big. Most affect small employers more than large ones. Here's what you need to know.
Change 1 - Unfair Dismissal Protection Starts Earlier
What's changing: The qualifying period for claiming unfair dismissal is dropping from two years to six months (for most dismissals).
What it means: Right now, if you dismiss someone after one year and 11 months, they can't claim unfair dismissal. After the change, they can claim after six months. So the period to get dismissals right is much shorter.
What to do: Make sure your disciplinary process is airtight from day one. A new employee in month three can now claim unfair dismissal. Your procedure has to be fair, documented, and defensible from the start.
Change 2 -Statutory Sick Pay Changes
What's changing: The government is increasing Statutory Sick Pay and changing how it's calculated. (Check the government website for current rates—they change regularly.)
What it means: Your payroll costs for absent employees might go up. You need to understand the new rates.
What to do: Review your sickness policy. If you have an occupational sick pay scheme that's worse than the statutory minimum, employees will ask why. Consider whether you need to adjust it.
Change 3 -Tribunal Time Limits
What's changing: The time limit to bring a claim to employment tribunal is moving (check gov.uk for the current timeline). Some claims have tighter windows.
What it means: You have less time to realize someone's planning to claim and less time to resolve it before they go to tribunal.
What to do: Respond quickly to grievances. Don't leave things festering. If someone raises a concern, deal with it promptly.
Change 4 -Family Rights and Parental Leave
What's changing: Rules around parental leave, bereavement leave, and other family-related absences are being tightened.
What it means: Depending on the specific rules (which are still being finalized), you might have new obligations around time off for parents, carers, or people dealing with bereavement.
What to do: Update your HR handbook. Review your policy on compassionate leave and flexible working.
Change 5 -Equality Act Adjustments
What's changing: Disability discrimination protections are being strengthened in some areas.
What it means: You'll need to be more proactive about reasonable adjustments for disabled employees. Waiting for them to ask might not be enough anymore.
What to do: Audit your processes for employees with disabilities. Are you making reasonable adjustments? Are you thinking about this proactively?
Change 6 - Worker Rights (Gig Economy and Others)
What's changing: There's a push to strengthen rights for workers (not just employees). This affects freelancers, contractors, and gig workers.
What it means: If you use contractors or freelancers, you need to be careful about classifying them. The rules on who counts as an "employee" vs. a "worker" vs. self-employed are getting stricter.
What to do: Review your contractor agreements. Make sure people genuinely are self-employed, not workers or employees being misclassified.
When Do These Changes Take Effect?
Most are phased through 2026–2027. Some are already in effect; others come later. Check gov.uk for the exact timeline—it's still being finalized and might shift.
What Small Employers Should Do Now
1. Review your handbook. Disciplinary, grievance, absence, parental leave—make sure it reflects the new rules. (Easier to do now than to scramble when someone raises a claim.)
2. Train your managers. If the rules change, managers need to know. A one-hour training session on "What's new in employment law" is cheaper than defending a tribunal claim later.
3. Document your processes. Fair, documented processes are your protection. The new rules don't change that—they just make it more important.
4. Get advice early. If you're unsure whether something complies, ask. It's cheaper to get it right than to find out in a tribunal that you got it wrong.
The Bottom Line
Employment law is tightening for small employers. The good news: if you're already running fair processes and paying proper wages, most of this won't affect you. The better news: it's not complicated. It's just careful.
Want to make sure your processes comply with the new rules? We can audit your policies, train your managers, and advise on specific situations.