The UK’s Biggest Employment Law Reform in Decades Is a Business Issue — Not Just an HR Issue

A wider business issue

The United Kingdom’s most significant employment-law reform in decades is not simply an HR issue. It is a wider business issue. Many organisations are focusing on what is changing under the Employment Rights Act 2025. The more important question is how these reforms will affect the way businesses hire, manage, schedule and retain talent. The Act received Royal Assent on 18 December 2025, but its measures are being implemented in stages. Employers should avoid assuming that every reform takes effect at the same time.

1. Earlier unfair-dismissal protection

The qualifying period for ordinary unfair-dismissal protection is scheduled to reduce from two years to six months for dismissals from 1 January 2027. This is not a general day-one right to ordinary unfair-dismissal protection. Business impact: probation periods, performance discussions and employment documentation will need to become more structured from the beginning of employment. Managers will need better training, and businesses will need clearer evidence of performance expectations, support, feedback and decision-making.

2. Zero-hours and guaranteed-hours reforms

The Act introduces reforms intended to give qualifying workers greater certainty over hours where their working pattern becomes regular. It also strengthens protections around shift scheduling, notice and proportionate payment for certain cancelled, moved or curtailed shifts. Detailed implementation remains subject to regulations and consultation. Business impact: industries relying heavily on flexible labour — including retail, hospitality, healthcare, events, logistics and customer support — may need to reconsider workforce planning, rota systems and labour-cost forecasting.

3. Enhanced Statutory Sick Pay

From 6 April 2026, the lower earnings threshold and waiting period for Statutory Sick Pay were removed, allowing eligible employees to qualify regardless of earnings and receive payment from the first full qualifying day of sickness. Business impact: employers should review payroll configuration, absence-reporting processes and sickness policies. The aim should be to meet legal obligations while maintaining appropriate absence management and employee-wellbeing support.

4. Restrictions on fire and rehire

The reforms create stronger protections around dismissal and re-engagement where employers seek to change contractual terms, with key protections scheduled for January 2027. Business impact: organisations planning restructures or contractual changes will need to place greater emphasis on meaningful consultation, communication, financial justification and change management. Fire and rehire should not be treated as an easy operational shortcut.

5. Stronger responsibility for preventing harassment

The framework strengthens employer responsibility for preventing workplace harassment and reinforces the expectation that employers act proactively rather than relying only on written policies. Further duties, including taking all reasonable steps to prevent sexual harassment and addressing third-party harassment, are being implemented in stages. Business impact: compliance depends on leadership behaviour, manager capability, employee training, reporting systems, investigations and organisational culture. A policy alone will not be sufficient if it is not implemented consistently.

Preparing the organisation

These reforms encourage organisations to invest in better people management, stronger documentation, more capable line managers, clearer workforce planning, improved governance and safer workplace cultures. Preparation should be phased and connected with operational realities.

• Review employment contracts and handbooks
• Strengthen probation and performance-management processes
• Assess zero-hours and variable-hours arrangements
• Update payroll and sick-pay procedures
• Train managers
• Review harassment-prevention measures
• Prepare a phased implementation roadmap

Reference sources

• GOV.UK — Employment Rights Act 2025 factsheets
• GOV.UK — Plan to Make Work Pay and Employment Rights Act timeline
• GOV.UK — Statutory Sick Pay changes from 6 April 2026