Changes under the Employment Rights Act 2025

The Employment Rights Act 2025 ('ERA 2025') is being implemented in stages. Whilst some key changes are already in force (the most recent provisions came into force on 30 October 2026) more are due to come into force on 1 January 2027. 

Charities should not wait until the final commencement date to act. The most immediate priorities are to update template contracts, review HR processes (including recruitment, probation and dismissal), strengthen harassment prevention measures, and assess the increased financial risk associated with future dismissals.

Key changes already in force:

Collective consultation on mass redundancies

In April 2026, the maximum 'protective award' for employers failing to consult unions or employee representatives on mass redundancies doubled from 90 to 180 days' pay per employee.

Extended Employment Tribunal time limits

The usual Employment Tribunal claim deadline has increased from three to six months for acts complained of occurring on or after 1 October 2026. 

Workers must normally initiate Acas early conciliation before bringing a claim. This can now last 12 weeks; with tribunal processing time, charities may wait around 10 months to learn whether an anticipated claim has been filed.

Right to work checks

Separate rules effective from 1 October 2026 extend right to work obligations and civil penalty exposure to certain contractors, sub-contractors and gig-economy or platform-matching arrangements. Charities may need wider supply-chain checks beyond those that they directly employ, this could include where specialist activities such as telephone fundraising are outsourced. 

Key changes which took effect on 30 October 2026:

Harassment prevention duties

Employers must take 'all' reasonable steps to prevent sexual harassment of employees by anyone. Missing a reasonable step risks a compensation uplift on a successful claim and/or EHRC enforcement.

A separate duty requires all reasonable steps to be taken to prevent unlawful harassment of employees by third parties, including clients, suppliers and contractors. Failure may expose employers to a new 'permitting harassment' claim. 

A risk assessment is the starting point for identifying reasonable preventative steps. These will vary from workplace to workplace, and policies and training alone are unlikely to be sufficient. We are awaiting formal government guidance, which might help employers satisfy the new duty. 

Trade union access to workplaces

Trade unions gain a statutory right to greater workplace access, supported by a new Code of Practice. This is likely to bring unions into contact with a wider range of organisations and industries. 

Key changes taking effect on 1 January 2027:

Unfair dismissal reforms will widen eligibility and increase potential compensation. Together with longer claim deadlines, they are expected to increase claims.

Unfair dismissal: qualifying period of employment reduced

The qualifying period for ordinary unfair dismissal claims has been reduced from two years to six months where the effective date of termination ('EDT') is on or after 1 January 2027. Employees appointed by early July 2026 will therefore benefit immediately. 

It is best to avoid running too close to the six-month deadline where possible. The EDT is a defined legal concept and may differ from the employer's understood dismissal date and can be extended where statutory minimum notice obligations are unmet.

Charities should review their recruitment, contract terms, performance review and other HR processes.

Unfair dismissal: removal of the compensatory award cap

The compensatory award cap, which is currently £123,543 or 52 weeks' pay if lower, is being removed for dismissals with an EDT on or after 1 January 2027. Exposure may rise substantially, particularly for high earners or employees facing prolonged unemployment.

Unfair dismissal: restrictions on 'fire and rehire'

The Government expects to bring in restrictions from 1 January 2027 on dismissing employees to impose contractual changes and rehiring them, or replacing them, on new terms.

Dismissals to impose 'restricted variations' will be automatically unfair, with no qualifying period of employment required, subject to a narrow potential exception for extreme financial distress. 'Restricted variations' include reductions in pay or time-off, changes to working hours or pensions, and introducing contractual powers to make those changes.

Dismissal to replace employees with non-employees, such as agency workers, doing substantially the same activities will also be automatically unfair unless attributable to reduced demand for those activities. The financial distress exception may apply.

Even where automatic unfairness does not apply, it will need to ensure that the dismissal is fair under ordinary unfair dismissal principles. In the fire and rehire context, greater emphasis is being placed on individual and collective consultation, as well as incentives to agree changes.

Pre-existing variation clauses remain unaffected, and new joiners' contracts may include them, but acceptance and effectiveness are not guaranteed. Template contracts should be reviewed accordingly. 

Statement of trade union rights

A duty is expected to come into force on 1 January 2027 for employers to provide workers with a standardised written statement of their right to join a union.

New workers will need to be given this when they join and it should be delivered annually to existing workers, by 5 April or kept continuously and reasonably accessible, with an annual reminder. 

Conclusion

A list of further reforms and the Government's timetable for implementing the ERA 2025 (past and future) is here.

Our employment team can help charities assess their exposure, update contracts and policies and prepare a proportionate implementation plan. Please contact them to receive the employment team's regular email and WhatsApp updates.