UK Employment Rights Act 2025 introduces major reforms

The Employment Rights Act 2025 is set to implement significant changes to United Kingdom employment law, with various protections and regulations taking effect between 2026 and 2027.

New rules aim to curb the ‘fire and rehire’ practice, where employers dismiss staff for refusing contract changes and re-employ them on inferior terms. Under the new legislation, certain ‘restricted variations’—such as reductions in pay, pension changes, or alterations to working hours and shift patterns—will be protected. Dismissing a worker for refusing these specific changes will be classified as ‘automatically unfair dismissal,’ a status that carries stricter legal requirements for employers.

Additional reforms include reducing the qualifying period for unfair dismissal protection from two years to six months, effective January 1, 2027. Furthermore, the existing cap on compensatory awards for unfair dismissal will be removed, meaning awards will reflect actual loss without a ceiling.

Regarding workplace conduct, from October 30, 2026, employers will be legally required to take all reasonable steps to prevent sexual harassment and may face liability for failing to prevent harassment by third parties. The Act also expands trade union rights, providing greater opportunities for union involvement in the workplace.