The Employment Rights Act 2025 became law on 18 December 2025, and it is being switched on in stages. Some changes have applied since April, one started on 1 October, the next arrives on 30 October 2026, and one of the biggest for small firms follows on 1 January 2027.
If you employ even one or two people, most of it applies to you, and a lot of what circulates on social media is out of date or simply wrong. Here is what has changed, what is coming, and what a small employer should do, date by date.
In a nutshell
- Some changes are already in force. Day-one sick pay and new holiday records.
- Tribunal claims now have six months. For anything that happened from 1 October.
- A tougher harassment duty starts on 30 October. Including harassment by customers.
- Unfair dismissal after six months. From 1 January 2027, not two years.
- Fire and rehire is restricted. Expected from January 2027.
- Zero hours contracts are not banned. But new rights are on the way.
1. What has already changed since April 2026
Several changes have applied since 6 April 2026:
- Statutory Sick Pay from day one. The three waiting days and the lower earnings limit are gone. SSP is now the lower of £123.25 a week or 80% of average weekly earnings, so low earners are now entitled too. We covered this in our guide to the new sick pay rules.
- Paternity leave and unpaid parental leave from day one. The leave is a day-one right, but Statutory Paternity Pay still needs 26 weeks' service.
- Holiday records. You must now keep records of holiday taken, holiday carried over, holiday pay and any payments in lieu, for at least 6 years. Acas warns that failing to keep them could be a criminal offence.
A new enforcement body, the Fair Work Agency, was set up on 7 April 2026. It already enforces the minimum wage, and it is due to start enforcing holiday pay no earlier than April 2027.
2. Tribunal claims: six months from 1 October 2026
Since 1 October 2026, employees have 6 months instead of 3 to bring most employment tribunal claims. The longer limit applies where the act complained of, or the dismissal, happened on or after 1 October 2026. Earlier matters keep the 3-month limit.
For a small employer, the practical point is records. Rotas, emails, warnings and notes of meetings need to be kept long enough to answer a claim that can now arrive months later.
3. The harassment duty from 30 October 2026
Since October 2024, employers have had a duty to take reasonable steps to prevent sexual harassment of their staff. From 30 October 2026, two things change:
- The duty becomes a duty to take all reasonable steps. What is reasonable depends on your size and sector, but doing a few things is no longer enough if more were reasonable.
- You must not permit your employees to be harassed by third parties, such as customers, clients or members of the public. You can be liable if you did not take all reasonable steps to prevent it.
Acas suggests a written policy, more than one way to report a problem, training, a simple risk assessment covering customers, and clear conduct rules for clients and suppliers. Write down what you did and why, including why any step was judged not reasonable for a business your size.
4. Unfair dismissal after six months from 1 January 2027
At present, most employees need 2 years' service to claim ordinary unfair dismissal. From 1 January 2027, this falls to 6 months, and the cap on the compensatory award is removed. The government originally planned a day-one right, then settled on six months, and says any further change would need a new Act.
The new rules apply where the employment ends on or after 1 January 2027, even if notice was given in December. Employees who already have 6 months' service on that date are covered straight away. Some protection already applies from day one, for example dismissal for whistleblowing or because of pregnancy, and discrimination claims need no qualifying service.
In practice, a probation period that runs past six months no longer gives you extra room. Review new starters before the six-month point, and follow a fair, documented process for any dismissal.
5. Contract changes and fire and rehire
From January 2027 (expected, as the regulations have not yet been made), dismissing an employee for refusing certain contract changes, such as a pay cut, fewer hours or less holiday, will be automatically unfair. There is a narrow exception for an employer in such financial difficulty that the business itself is at risk.
The safe approach is to agree changes by consent and consult properly. Separately, from January 2027 employers are expected to give workers a standard statement of their right to join a trade union, with new starters' written terms and to existing staff by 5 April 2027.
6. What is still to come in 2027
You may have seen posts saying zero hours contracts are being banned. They are not. The Act gives zero hours and low-hours workers a right to be offered guaranteed hours based on the hours they actually work, which they can turn down, plus reasonable notice of shifts and pay for shifts cancelled at short notice. The consultation closed on 25 August 2026 and no start date has been set.
Other changes planned for 2027 include:
- Bereavement leave, including pregnancy loss before 24 weeks, expected from April 2027. Unpaid, from day one, up to two weeks.
- Flexible working: refusals will need a meeting and a reasonable explanation, expected in autumn 2027. It stays a right to request.
- Gender equality and menopause action plans, mandatory only for employers with 250 or more employees.
If your staff receive tips more than occasionally, you will also need to consult them on your tipping policy, with the government aiming for the end of 2026.
A worked example: Agnieszka's cafe
Agnieszka runs a cafe in Southampton with six staff. Two are on zero hours contracts, and one, Kasia, started on 1 June 2026.
- Before 30 October: a regular customer has been making comments to a young waitress. Agnieszka writes a short harassment policy, tells staff how to report problems, puts a notice at the counter, and records that she spoke to the customer. Under the new duty, doing nothing would be the risky choice.
- By 1 December: Kasia reaches six months' service. From 1 January 2027 she can claim ordinary unfair dismissal, so Agnieszka holds her end-of-probation review in November, with notes.
- Now: the two zero hours staff keep their contracts. Agnieszka starts keeping accurate records of hours worked and shifts cancelled, ready for the guaranteed hours rules when a date is set.
- Payroll: when a part-timer earning £150 a week is off sick for three days, SSP is paid from the first day at 80% of her average weekly earnings, about £24 a day over a five-day week.
Things to watch out for
- 30 October 2026 is close. The harassment changes start then, not in January.
- Zero hours contracts stay legal. New rights come later, with no date yet.
- Six months, not day one. Unfair dismissal rights start after 6 months from 1 January 2027.
- December notice counts. If employment ends in 2027, the new rules apply.
- Holiday records are already required. Keep them for at least 6 years.
- Expected is not final. Several 2027 dates can still move, so check the gov.uk timeline.
How Ollen Services Can Help
Most of these changes land in payroll and records: sick pay from day one, holiday pay records kept for six years, and accurate hours for staff on flexible contracts. Getting the numbers right is what we do.
Our payroll service handles SSP, holiday pay and the records behind them, so you can show what you paid and why. For contract wording and dismissals, we will tell you when to speak to Acas or an employment solicitor, as we are accountants rather than lawyers. We work in English and Polish.
Call us on 07513 491 259 or email hello@ollenservices.co.uk. A quick payroll check before the new year is a good way to start 2027 on the right footing.