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

What is redundancy?

Redundancy is a specific form of dismissal that occurs when an employer needs to reduce its workforce. The role itself must be genuinely redundant — not the person. Using redundancy to remove a difficult employee when the role is not genuinely redundant is unfair dismissal.

There are three situations that qualify as genuine redundancy: the business is closing entirely, a specific workplace is closing, or there is a reduced need for employees to carry out a particular kind of work.

Qualifying period and rights

Under the Employment Rights Act 2025, employees need two years of continuous service to qualify for statutory redundancy pay. The unfair dismissal qualifying period remains two years until January 2027, when it drops to six months.

The correct redundancy process

Step 1 — Establish genuine redundancy

Document why the role is redundant. Write down the business reason — reduced demand, restructure, closure. This documentation is critical if the dismissal is later challenged.

Step 2 — Define the selection pool

Identify all employees doing similar work who could potentially fill the remaining roles. The pool must be fair and consistently applied. Cherry-picking who goes into the pool is a common mistake that leads to tribunal claims.

Step 3 — Set selection criteria

Use objective criteria — attendance record, skills, performance, qualifications. Avoid criteria that could discriminate — do not use age, length of service as a sole criterion (this can be age discrimination), or factors related to a protected characteristic.

Step 4 — Individual consultation

Consult individually with each at-risk employee before any decision is made. There is no statutory minimum period for individual consultation (collective consultation applies at 20+ redundancies), but adequate time must be given. Hold at least two meetings — one to explain the situation and one to confirm the outcome.

Step 5 — Consider alternatives

Before confirming redundancy, you must genuinely consider whether there are any suitable alternative roles. Offering a role the employee would clearly refuse is not adequate consideration.

Step 6 — Confirm in writing

Issue a redundancy letter confirming: the reason, the notice period, the redundancy pay calculation, the right of appeal, and the last working day.

Collective consultation — 20 or more redundancies

If you are making 20 or more redundancies at one establishment within 90 days, collective consultation rules apply. You must notify the Redundancy Payments Service (RPS) on Form HR1 before consultation begins.

Minimum consultation periods: 20-99 redundancies = 30 days. 100+ redundancies = 45 days. Failing to comply with collective consultation requirements means each affected employee can claim a Protective Award of up to 90 days' pay.

Statutory redundancy pay

The maximum statutory redundancy payment is £19,290 (20 years × 1.5 × £643). Many employers enhance this contractually — check your employment contracts.

Right of appeal

Every employee being made redundant should be given the right to appeal the decision. Set a deadline of around 5 working days. Hold a separate appeal meeting chaired by someone not involved in the original decision. Ignoring the right of appeal is a procedural failure that strengthens any tribunal claim.

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