The Employment Rights Act 2025 came into force in stages from 6 April 2026, fundamentally reshaping employer obligations across the UK. For boards and senior executives, the changes are not a compliance footnote — they carry direct financial exposure, reputational risk, and operational consequences that demand board-level attention right now.

What Has Changed for UK Employers Since April 2026?

The first wave of provisions under the Employment Rights Act 2025 took effect on 6 April 2026, introducing three substantive reforms that affect every UK employer, regardless of sector or size.

Statutory sick pay (SSP) is now payable from the first day of absence. The previous three-day waiting period has been abolished, and the lower earnings limit has been removed. Employees earning below the previous threshold now receive SSP at 80% of average weekly earnings or the flat rate — whichever is lower. According to government estimates, removing the lower earnings limit extends SSP eligibility to approximately 1.3 million lower-paid workers. For organisations with large hourly-paid or shift-based workforces — retail, hospitality, logistics, manufacturing — the cost impact should already be reflected in your 2026 workforce budget.

Paternity leave and unpaid parental leave are now day-one rights. Employees no longer need qualifying service before accessing these entitlements. From their first day, new starters can trigger statutory leave obligations — compressing the operational and financial planning window significantly for CHROs and operational leads.

Executive Action

• Direct your CFO to quantify the full-year SSP cost uplift using current headcount and absence rates versus 2025 actuals — this should already be in your workforce cost model.
• Instruct HR to audit all employment contracts and handbooks — any reference to SSP waiting days or qualifying service for family leave is now legally inaccurate and constitutes a documentation risk.
• Review manager guidance to ensure front-line supervisors are not applying pre-April 2026 rules in absence or leave management processes.

Why Is This a Board-Level Issue, Not Just an HR Issue?

The Employment Rights Act 2025 is deliberate in its architecture. The introduction of the Fair Work Agency on 7 April 2026 — a new enforcement body consolidating multiple previous enforcement functions — signals a step change in how government intends to police non-compliance. The Agency has wide-ranging investigatory powers, can issue notices of underpayment, and can initiate civil proceedings against non-compliant employers.

For regulated firms and listed companies, this matters beyond routine employment liability. A Fair Work Agency investigation or a pattern of tribunal claims constitutes material information. The Companies Act 2006, FRC governance requirements, and broader stakeholder expectations all demand that boards can demonstrate active oversight of workforce compliance — not reactive crisis management after claims have been filed.

INFORMD has been tracking the Employment Rights Act since its parliamentary passage in 2025. The consistent signal from boardrooms we brief is that the legislation was widely anticipated — but the pace and specificity of implementation has caught many senior leadership teams underprepared. Senior executives who treat this as a routine HR update are misreading the governance exposure.

Executive Action

• Request a briefing from your General Counsel on current employment tribunal claims exposure and any emerging patterns that could become material under FRC or investor scrutiny.
• Ensure your Remuneration or Audit Committee is aware of the Fair Work Agency’s enforcement powers and how your organisation is managing compliance risk.
• Confirm that your People function has board-level sponsorship — not merely CHRO sign-off — for the ERA 2025 implementation programme. Speak to our team if you need a structured briefing on the governance implications.

What Does the Doubled Redundancy Penalty Mean for Your Restructuring Plans?

This is the provision most likely to affect board decision-making directly. From 6 April 2026, the maximum protective award for failure to comply with collective redundancy consultation requirements doubled from 90 days to 180 days’ pay per affected employee.

Collective redundancy obligations under the Trade Union and Labour Relations (Consolidation) Act 1992 are triggered when 20 or more redundancies are proposed at a single establishment within any 90-day period. Failure to comply — not to consult inadequately, but to breach the obligation entirely — previously carried a maximum award of 90 days’ gross pay per head. That ceiling is now 180 days. For an organisation restructuring 150 employees with mean earnings of £35,000, maximum protective award exposure has shifted from approximately £1.3 million to £2.6 million.

The right response is not to avoid restructuring — it is to ensure that collective consultation is properly sequenced, resourced, and documented before any announcement reaches the workforce. Boards that approve restructuring programmes without adequate legal and consultation safeguards are now taking a materially larger financial risk than they were twelve months ago.

Executive Action

• If any restructuring programme is being scoped, ensure employment legal counsel is engaged before any internal communication — announcement without prior consultation is the most common trigger for protective award claims.
• Audit your last collective redundancy process against current obligations. If processes were last reviewed before April 2026, your playbooks do not reflect the current exposure ceiling.
• Confirm that your legal and HR teams have updated their redundancy playbooks and that your board reporting templates flag the doubled award exposure as a standard risk item for any restructuring proposal.

What Must UK Boards Plan For Before January 2027?

The April 2026 changes are not the end of the implementation journey. A second substantive wave is scheduled for 2027, and boards should be building the preparation now — not in Q4.

Most significant: the qualifying period for unfair dismissal claims will reduce from two years to six months from 1 January 2027. From that date, employees can bring unfair dismissal claims after just six months of employment. Probationary periods — typically three to six months — previously sat well within the two-year qualifying period buffer. That buffer disappears entirely. Any employer whose probationary review processes are not rigorous, consistently applied, and well documented will be exposed to unfair dismissal liability on new hires far earlier than previously possible.

From 2027, employers will also be required to take “all reasonable steps” to prevent all forms of harassment, including by third parties such as clients, customers, and suppliers. This is a higher standard than the current obligation — which requires “reasonable steps” — and extends liability significantly for client-facing businesses in professional services, hospitality, and financial services. Explore our full library of executive briefings for detailed guidance on harassment compliance frameworks.

Executive Action

• Commission a review of probationary period policies and manager training before Q3 2026 — this is a board-priority item for your CHRO, not an end-of-year HR update.
• Assess third-party harassment exposure in client-facing operations and ensure your legal team has mapped the gap between current “reasonable steps” policies and the forthcoming “all reasonable steps” standard.
• Build the January 2027 changes into your annual governance calendar now, with a dedicated board agenda item in Q4 2026 to confirm readiness.

INFORMD provides intelligence briefings for senior business leaders across technology, finance, strategy, and compliance. Based in Milton Keynes, UK, we help executives stay informed and act with confidence. Explore our full library of executive briefings or speak to our team.

Frequently Asked Questions

What is the Employment Rights Act 2025 and when does it apply?

The Employment Rights Act 2025 received Royal Assent in December 2025. The first major implementation wave took effect on 6 April 2026, introducing day-one rights for statutory sick pay and family leave, and doubling the maximum protective award for collective redundancy consultation failures. Further provisions — including the reduction of the unfair dismissal qualifying period — follow from January 2027.

Which businesses are affected by the new collective redundancy rules?

All UK employers are subject to collective redundancy consultation obligations when 20 or more redundancies are proposed at a single establishment within any 90-day period. The maximum protective award for non-compliance doubled to 180 days’ gross pay per affected employee from 6 April 2026 — a significant uplift in financial exposure for any organisation planning workforce restructuring.

What is the Fair Work Agency and what enforcement powers does it have?

The Fair Work Agency launched on 7 April 2026 as a new government body consolidating multiple previous employment enforcement functions. It can investigate employers, issue notices of underpayment, and bring civil proceedings — making non-compliance with employment obligations a more direct and visible enforcement risk than under previous frameworks.

When does the reduced unfair dismissal qualifying period take effect?

From 1 January 2027, the qualifying period for unfair dismissal claims falls from two years to six months. Boards should direct their CHRO to begin reviewing probationary period and performance management frameworks well ahead of that date — the compressed window leaves very little room for informal or undocumented performance management processes.

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