UK Government Passes the Employment Rights Act
In December 2025, the UK government significantly upgraded employment rights by passing the Employment Rights Bill — now referred to as the Employment Rights Act 2025. The reforms introduced by the bill will be rolled out over the course of the next two years, with many provisions of the act requiring additional legislation and/or public consultation before they go into effect.
A range of labor matters are covered by the bill, including sick pay and paternity leave, flexible working arrangements, the use of non-disclosure agreements, and trade union rights. A brief overview of some key provisions follows.
Statutory sick pay (SSP): The act makes SSP available from the first day of illness and payable for the first three qualifying days of sickness. The act also removes the existing earnings threshold of £123 GBP per week for employees to qualify for the benefit, allowing employees with lower weekly earnings to benefit from SSP.
Family rights: The Employment Rights Act 2025 gives employees the right to parental leave and bereavement leave from day one of their employment. Parental leave must be paid, but employers are not required to pay for bereavement leave. The act also provides enhanced protection from dismissal after maternity/adoption, parental, or bereavement leave.
Zero-hours contracts and flexible working: Current proposals give workers on zero-hours contracts the right to a contract that reflects their regular working hours as well as the right to reasonable notice for required shifts and pay compensation for late cancellations. However, the House of Lords is pushing for changes in provisions related to these contracts and flexible working. Additionally, employees have a day-one right to flexible working, but employers can refuse the request based on reasons that are listed in the legislation. If the employer refuses the request, the refusal must be reasonable, and the employer must explain their reasoning in writing.
Redundancy: Collective consultation is required when there are more than 20 redundancies at an organization within 90 days, but a threshold for multi-site redundancies has not yet been defined. Because of changes made since the publication of the initial bill and an ongoing consultation around these provisions, employers will need to carefully monitor developments around the act.
Unfair dismissal: Under the act, protection from unfair dismissal begins at six months. Previously, employees could only bring claims of unfair dismissal after two years of employment.
The “Plan to Make Work Pay”
The UK government’s Employment Rights Act 2025 is part of its “Plan to Make Work Pay,” which aims to improve job security, raise living standards, and create fair working practices. The act’s measures will come into effect in 2026 and 2027, but additional changes in the measures could still be made before they go into force.
Sources: Covington and Burling LLP, Ogletree
