Employment Rights Act: Businesses urged to prepare, not panic

Businesses with strong employment practices should not fear upcoming changes to employment law, but instead use the coming months to review policies, strengthen record-keeping and prepare for further reforms, according to a leading Lancashire employment law specialist.

The Employment Rights Act 2025, which strengthens employees’ rights in the UK, received Royal Assent in December 2025, and a variety of new measures are being introduced throughout 2026 and into 2027.

Rudy Fendlen, head of employment law at Woodcock Haworth and Nuttall (WHN) Solicitors, described the changes as ‘important’ but stressed the risk of the legal industry overstating their practical impact on many employers. 

He said understanding the updated legislation would allow companies to adopt a ‘prevention, rather than cure’ approach.

Rudy said: “There are important changes to take note of, but I see a passing shower rather than a storm. In truth, for businesses that already have strong employment practices in place, the impact is likely to be less than feared.

“The businesses best placed to navigate them will be those that understand what is changing, review their policies and procedures accordingly, and address potential problems before they become disputes. When claims do arise, good records are often the difference between successfully defending an Employment Tribunal claim and losing one.”

The Act is being introduced in a phased approach, with several measures now already in effect. This includes a strengthening of trade union rights in February, in addition to several changes from April such as the introduction of day one Statutory Sick Pay for employees and removal of the £125 per-week lower earnings limit.

Employees also gained day-one rights to paternity leave and unpaid parental leave from April, and several reforms around sexual-harassment whistleblowing and Bereaved Partners’ Paternity Leave have also come into force. A new Fair Work Agency, which brings together the enforcement of a range of employment rights under one body, came into operation too. 

Further changes are set to take effect over the coming months, including an increase in the time limit for bringing most Employment Tribunal claims, from three to six months, and a strengthening of sexual harassment and third-party harassment provisions.

In January 2027, the qualifying period for ordinary unfair dismissal reduces from two years to six months. Further changes in 2027 include new rights for workers on zero-hours and certain low-hours contracts, including rights to guaranteed hours, reasonable notice of shifts and compensation for certain cancelled shifts. and a new statutory right to bereavement leave.

Rudy pinpointed the changes to unfair dismissal legislation, which mean employees who have worked for an organisation for six months or more will be able to bring an unfair dismissal claim, as a prime example of how employers with strong employment policies ought not to worry.

Rudy added: “While employees will have the right to claim after just six months’ employment, instead of two years, fundamental principles remain. Employers will still need a fair reason and a fair process. Well-managed probation periods and effective performance management are going to be key.”

He also explained how the Act’s implementation has impacted the approach of both employers and employees, when it comes to bringing employment relationships to an end.

“Over time we may see an increase in Employment Tribunal claims, as employees will have more time to bring them, but a trend I have noticed over recent months is greater use of settlement agreements, alongside a rise in employee exits,” Rudy said. “It suggests both employers and employees are adopting a more proactive approach towards concluding employment relationships.”

Other legislative changes being introduced through the Employment Rights Act include mandatory gender equality action plans for larger employers, including measures relating to gender pay reporting and menopause, further flexible working reforms, new rules regulating umbrella companies and restrictions on certain non-disclosure agreement provisions relating to workplace harassment and discrimination. 

Rudy added: "Businesses should ensure they understand what is changing and when and seek advice as early as possible to make compliance far easier. It will be crucial to maintain proper documentation relating to performance, conduct, absence, grievances and disciplinary processes.

“Since the Act received Royal Assent last December, we have been working closely with our clients to prepare for these changes. Many of them, therefore, have already updated their policies and procedures, and are engaging with employees to prevent potential issues arising.”

Rudy joined WHN to lead the firm’s employment law service this summer, bringing a decade of legal expertise - including around four years advising owner-managed businesses on the full range of employment law issues.