UK EMPLOYERS URGED TO PREPARE FOR BIGGEST EMPLOYMENT LAW SHAKE-UP IN A DECADE

UK employers and employees are being urged to prepare for what employment specialists describe as the most far-reaching overhaul of workplace law in more than a decade, following the passage of the Employment Rights Act 2025.

The legislation, which recently received royal assent after months of debate between the House of Commons and the House of Lords, introduces sweeping changes to employment protections and is expected to be phased in from next year. While uncertainty remains over the final detail of some provisions, legal experts warn that delaying preparation could expose organisations to significant risk.

Katie Bullimore and Rebecca Reid, employment law specialists at Derby-based law firm Smith Partnership, say businesses should already be reviewing recruitment, contracts and internal policies as the new framework begins to take shape.

“Six months is not a long period of time”

Among the most consequential changes is a reduction in the qualifying period for unfair dismissal claims, which will fall from two years to six months.

Rebecca Reid said the shift would fundamentally alter how employers approach hiring and performance management.

“I think the law in respect of unfair dismissal will be probably the biggest out of everything with the new changes, purely because it’s been reduced. It was initially proposed as a day one right, but now it’s been amended to six months. Currently, the law is two years.

“Six months is not a long period of time to decide whether somebody is fit for that role or not.”

Bullimore said the change would force employers to reassess how effectively they identify suitability early in the employment relationship.

“I think what it will do is it means that employers are going to have to be thinking about their recruitment processes, their probationary period processes, to make sure that they are sufficiently able to identify whether that person is a right fit for the business within a relatively short space of time.”

“Employers aren’t prepared yet”

Although the reforms are expected to be introduced in stages, Bullimore warned that many organisations are still unprepared.

“Not at all as yet, because we still don’t know what this law is going to look like.

“We’ve had this ping pong back and forward between the House of Commons and House of Lords with regards to various amendments”.

The final amendment was withdrawn by the House of Lords on 16 December 2025, clearing the way for the bill to pass.

“Employers will need to look at their policies to ensure they are quite stringent and cover everything that it needs to.”

“Don’t leave it until the last minute”

Some elements of the reforms are already clear. From April 2026, the current three-day waiting period before statutory sick pay can be claimed will be removed.

Katie Bullimore said this change alone should prompt immediate action.

“There are some changes that we know are happening. So statutory sick pay, for example, that three-day waiting period that we’ve got at the moment before you can claim statutory sick pay, that will be removed from April 2026.

“The reality is, employers are probably going to need to be updating sick pay policies, perhaps contracts of employment as well. That gives an opportunity anyway to do a sort of wider review of handbooks and policies.”

Rebecca Reid added that employers cannot properly assess exposure without a clear understanding of their workforce.

“You’re not going to be able to understand which areas are your risk points unless you’ve got a detailed knowledge of what your staff looks like, what your staffing body looks like.”

“We do expect an increase in disputes”

The pair also anticipate a shift in the type and volume of workplace disputes once the reforms take effect.

Rebecca Reid said: “I do think there will be (an increase), especially with employers probably getting to grasp with the changes that are coming about, an increase in the disputes that people may be having.

“It might be that we see a reduction in some other types of claims, particularly things like whistleblowing claims, potentially also discrimination claims, where employees sometimes will bring those types of claims instead because they don’t have the current two years’ service.”

Bullimore suggested employers may increasingly turn to settlement agreements as a risk-management tool.

“It might mean that we see more settlement agreements, so employers using settlement agreements in order to exit people from businesses, and indeed employees perhaps wanting settlement agreements to exit.”

Advice for employees

The experts stressed that the reforms are not solely an employer issue and that employees should also take an active role as changes are implemented.

“Awareness as well, isn’t it? Changes for employees. If their employer is making those changes, then to start reviewing those internally as to what they are looking like and as to whether they’re impacted in any way.

“If you’ve got concerns, raise those with your employer proactively, amicably and pragmatically to try and resolve those directly.”

“This will affect everyone”

Bullimore said the scale of the reform should not be underestimated.

“We’ve seen all the hype about it. This is the biggest change in employment legislation for a decade, and I don’t think that is underselling it. Everywhere will be impacted by these changes, big, small, and everything in between them, every sector. So there’s something for everybody.

“Be proactive. If you know something’s happening, do something.”

Further guidance on preparing for the Employment Rights Act 2025, including employer briefings and registration for upcoming updates, is available via Smith Partnership’s employment law resources.