Overview of ERA 2025

The Employment Rights Act 2025 is the most significant reform to UK employment law in a generation. Its provisions are being implemented in stages between 2025 and 2027. The most impactful changes for most employers came into force on 6 April 2026.

SSP from day one — 6 April 2026

From 6 April 2026, Statutory Sick Pay (SSP) is payable from the first day of absence. The three waiting days that previously applied have been abolished.

This means that for every day an employee is sick from their first day, you must pay SSP. A two-day illness that previously cost you nothing now costs you two days of SSP. Budget accordingly and ensure your payroll is updated.

Day-one family leave rights — 6 April 2026

From 6 April 2026, the following are day-one rights — no qualifying period applies:

• Paternity leave — previously required 26 weeks' continuous employment. Now a day-one right.
• Unpaid parental leave — previously required one year's continuous employment. Now a day-one right.
• Bereavement leave for bereaved partners — new right, up to 52 weeks, day-one right.

Maternity leave and adoption leave remain day-one rights as before. The change means that an employee who starts work on Monday and whose partner gives birth on Friday is immediately entitled to paternity leave.

Unfair dismissal qualifying period — from January 2027

Currently, employees need two years' continuous employment before they can claim unfair dismissal. From 1 January 2027, this drops to six months.

This is one of the most significant changes for employers. From January 2027, you are effectively exposed to unfair dismissal claims from an employee's seventh month of employment. Implications:

• Probation periods and performance management processes become more important from day one
• Document all performance concerns, warnings, and disciplinary steps from the start of employment
• Any dismissal within the first two years that might previously have been straightforward now needs to follow a fair process
• Compensatory award cap is also being removed from January 2027 — currently £123,543

National Minimum Wage 2026

Ensure all employment contracts, offer letters, and payroll systems reflect the April 2026 rates. Paying below NMW is a criminal offence with penalties of up to £20,000 per worker.

What you must update in employment contracts

• Remove any reference to three SSP waiting days
• Remove any reference to the Lower Earnings Limit for SSP eligibility
• Update paternity leave to reflect day-one right (no qualifying period)
• Update parental leave to reflect day-one right
• Add bereavement partner leave provisions
• Update NMW rates if referenced in the contract
• Review and update probation period terms given the January 2027 unfair dismissal changes
• Trade union notification requirement — add to written statement from October 2026

Day-one written statement requirement

Since April 2020, employers have been required to provide a written statement of employment particulars to all employees and workers on or before their first day of work — not within two months as was previously the case.

The Employment Rights Act 2025 has added further requirements to what that statement must contain. Using a contract drafted before 2025 almost certainly means it is missing legally required terms.

What must be included — the full list

• Names of employer and employee
• Start date and, if relevant, the date continuous employment began
• Scale or rate of pay and the interval at which it is paid
• Hours of work — including whether hours may vary and how
• Holiday entitlement — including public holidays and holiday pay
• Job title or brief job description
• Place of work — or if the employee is required to work at various places, an indication of that
• Any probationary period — its length and conditions
• Any training entitlement provided by the employer
• Sick pay and sick leave entitlements
• Any other paid leave entitlements
• Pension arrangements
• Notice periods required from both employer and employee
• Whether the employment is permanent or fixed-term
• Any collective agreements that directly affect the terms
• If the employee will work outside the UK for more than a month, the relevant terms

ERA 2025 changes that affect employment contracts

SSP from day one

Statutory Sick Pay now applies from the first day of sickness absence — the previous three waiting days are abolished. Your contract must reflect this if it references SSP or waiting days.

Day-one family leave rights

Employees now have day-one rights to paternity leave, unpaid parental leave, and bereavement leave. Contracts that state qualifying periods for these rights are no longer accurate.

Zero hours and guaranteed hours

Workers on zero-hours arrangements who regularly work consistent hours now have the right to request a guaranteed hours contract. Any zero-hours contract should include the correct ERA 2025 language around this right.

Unfair dismissal — January 2027

From January 2027, the qualifying period for unfair dismissal drops from two years to six months. This does not change what must be in the contract, but it changes your exposure significantly — every new starter will have unfair dismissal protection within six months.

Clauses that are commonly missing

Beyond the statutory minimum, well-drafted employment contracts include:

• Garden leave clause — allows you to keep the employee away from the business during their notice period while still paying them
• Intellectual property assignment — ensures anything created during employment belongs to the employer
• Post-termination restrictions — non-solicitation, non-compete (must be reasonable in scope and duration to be enforceable)
• Confidentiality clause — survives termination of employment
• Data protection clause — employee consent to hold and process personal data
• Variation clause — allows you to make minor changes to terms with notice

What makes a restrictive covenant unenforceable

Post-termination restrictions are only enforceable if they protect a legitimate business interest and go no further than is reasonably necessary. Courts regularly strike down restrictions that are too wide in geographic scope, too long in duration, or too broad in the activities they restrict.

A 12-month non-compete covering the entire UK for a junior employee is almost certainly unenforceable. A 6-month non-solicitation of specific clients for a senior salesperson is likely to stand.

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