Employment Essentials: Employment law changes 2026 and beyond

Policy

Making flexible working the default. Ensuring that employers accept reasonable and feasible requests.

The ERA 2025 – Section 9

Employees currently have the right to request a flexible working arrangement from their first day in a job. Employees can ask their employer for a flexible working arrangement up to two times in every twelve months, and their employer must give their decision within two months.

Employers can refuse a flexible working request for one (or more) of eight possible business reasons set out in legislation, and they must consult with the employee before rejecting a request. However, the current legislation provides no detail on how this consultation should be conducted and there is currently no requirement for employers to explain their decision.

When implemented s9 ERA 2025 will:

1. Add to the existing requirement that an employer may only reject a flexible working request based on one or more of the eight statutory reasons will be an additional requirement that "it is reasonable to refuse that application on that ground or those grounds ".
2. A new requirement that where a flexible working request is refused, the notification of the decision must state the ground or grounds for refusing the request and explain to the employee why the employer considers that decision is reasonable (subject to a national security reason exception).
3. The Secretary of State is also given powers to introduce additional steps employers will need to take for compliance with the requirement to consult before rejecting an application.

Consultation

On 5 February 2026, the Government launched the consultation Make Work Pay: improving access to flexible working, which runs until 30 April 2026. The consultation seeks views on a new statutory consultation process for employers to follow before rejecting a flexible working request.

Comment

The absence of a reasonableness element for an employer considering that one of the statutory reasons applies has been seen as a loophole for some time. The need to include an explanation for a refusal takes us back to the 2014 position. Both of these changes are in accordance with current ACAS recommend best practice.

The introduction of the reasonableness requirement may see an increase in relatively small changes being requested which an employer may find hard to turn down. Line managers need to be aware that for any decision to refuse a request, it must be refused on a reasonable basis and to clearly set out why the request has been turned down. Employers who are currently engaged in return to office debates or considering mandating increased office attendance should adopt a clear reasoned position which is clearly communicated to the workforce.

In the run up to the Act being passed, press reports warned of workers "being able to demand" compressed hours so that they can work a five-day week in four days. Requesting a compressed hours working arrangement is and has been a possibility since the right to request flexible working was first introduced over 20 years ago. The Act does not contain provisions requiring employers to agree to compressed hours working arrangements where such a working pattern is not reasonable. Nor is there a proposal for a right to a four-day working week. What is proposed is a shift in the dynamic for flexible working requests generally so that employers consider flexible working (which can be in a variety of forms) with rejections taken on a reasonable basis. So, more of a mindset shift.

Policy

Strengthening statutory sick pay (SSP) by removing the lower earnings limit (LEL) to make it available to all workers, as well as by removing the waiting period.

The ERA 2025 – Sections 10 to 13 (Statutory Sick Pay)

1. Removes the first three days waiting qualifying period for entitlement
2. Removes the LEL requirement
3. The weekly rate of SSP to be the lower of:
   1. £123.25 (the SSP applicable from 6 April 2026); and
   2. 80% of the employee's normal weekly earnings.

Comment

The removal of the waiting period (the first three days of sickness) was previously done as a temporary measure during the COVID-19 pandemic to simplify the SSP system and get help to those in need more quickly.

While the policy statement referred to "all workers", this does not represent a change. SSP will continue to apply in relation to "employees" which for SSP purposes includes all those whose earnings are subject to Class 1 National Insurance contributions – so already includes many "workers".

However, the removal of the LEL (currently £123 per week) will help low-paid casual workers. While that will be the case, a concession has been added that the rate of SSP will be set at a lower rate for low paid employees instead being 80% of their weekly pay. This concession is being included in light of business fears of those on low pay would otherwise have an incentive to take sick leave.

Next steps

These changes are being brought into force on 6 April 2026.

Policy

Strengthening the law to ensure hospitality workers receive their tips in full and workers decide how tips are allocated.

The ERA 2025 – Section 14 (Tips and Gratuities)

The Employment (Allocation of Tips) Act 2023 came into effect on 1 October 2024. It makes it mandatory for all tips, gratuities and service charges that employers have "control or significant influence" over to be passed on to workers in full and to have a written tips policy on how it handles tips. The corresponding Code of Practice encourages but does not mandate consultation with workers.

S14 ERA 2025 adds:

• a requirement that when employers draw up their tipping policy they must consult the workforce (via trade-union or elected worker representatives, or directly with workers if none exist) before publishing the policy;
• the policy must be reviewed every three years (again consulting workers); and
• employers must provide an anonymised summary of feedback from that consultation to all affected workers.

Consultation

On 5 February 2026, the Government published the consultation Make Work Pay: strengthening the law on tipping, which runs until 1 April 2026. The consultation is gathering views on the implementation of this new requirement and on updating the statutory Code of Practice on fair and transparent distribution of tips.

Comment

The provisions contained in the Act are aimed at increasing the voice of the workforce in determining the allocation of tips policy, though they do not go so far as to provide that "workers decide how tips are allocated".

As many employers have recently drafted their tipping policy in compliance with the 1 October 2024 changes, it should be noted that the first three yearly review must take place within three years from the date the initial version of the policy was issued, even if that date is before this provision comes into effect.

Next steps

These changes are expected to be brought into force on 1 October 2026.

Note, that when they are brought into force the tipping policy review provisions will apply to tipping policies which predate s14 being implemented.

Policy

Introduction of "day-one" employment rights, including entitlement to paternity leave, and unpaid parental leave.

The ERA 2025 – Sections 15 to 17 (Entitlements to leave: parental)

Sections 15 to 17 of the ERA 2025 will:

1. Remove the one-year qualifying service requirement for (unpaid) parental leave.
2. Remove the 26 weeks qualifying service requirement for paternity leave.
3. Remove the restriction on employees taking paternity leave and pay following shared parental leave and pay.

In addition to the above, a new right for bereaved fathers and partners to take to 52 weeks of paternity leave if the mother or primary adopter dies within the first year of the child’s life will also be introduced under existing powers contained within the ERA 1996.

Comment

This change makes paternity leave and parental leave a day one right bringing them in line with maternity and adoption leave. It should be noted that while the right to take paternity leave becomes a day-one right, the right to statutory paternity pay remains subject to a 26-week qualifying service into the 15th week before the week the baby is due requirement.

Allowing paid paternity leave to be taken after a period of shared parental leave, is simply correcting what appeared to be an inadvertent error following the April 2024 changes to paternity leave (extending the period in which paternity could be taken from within 56 days to within 52 weeks of birth).

Next steps

These provisions came into force on 18 February 2026, enabling employees who become newly eligible on 6 April 2026 to provide sufficient notice to take Paternity Leave and Unpaid Parental Leave.

The new right for bereaved fathers and partners to take to 52 weeks of paternity leave if the mother or primary adopter dies within the first year of the child’s life comes into force on 6 April 2026.

Also see Beyond the Bill: Parental leave & Carer's leave review below.

Policy

Establishing bereavement leave.

The ERA 2025 – Section 18 (Entitlements to leave: bereavement)

1. Extending "parental bereavement leave" to become "bereavement leave".
2. The Secretary of State is given powers to make regulations giving employees who are bereaved the right to take protected time off work, in addition to the already existing provision for parental bereavement leave. A "bereaved person" will be defined in regulations by reference to the employee's relationship with the person who has died.

October 2025 Consultation

On 23 October 2025, the DBT published a consultation "Make Work Pay: Consultation on Leave for Bereavement, including Pregnancy Loss" which closed on 15 janaury 2026. The Consultation is in three parts:

1. Eligibility:
   • what relationship will the bereaved person need to have had with the deceased, immediate family, extended family or wider relationships (such as close friends);
   • in relation to pregnancy loss, should eligibility be restricted to the woman who has physically suffered the loss or to the wider group such as the father/mother's partner; and
   • the type of pregnancy loss to be included: miscarriage, ectopic and molar pregnancies, terminations, and IVF transfer loss. It also asks about eligibility where the employee is not the person who has suffered the pregnancy loss.
2. When and how leave can be taken:
   • Duration - the Bill sets a minimum of seven days in respect of a person other than child. The existing two-week period will remain in respect of a death of a child.
   • What should be the time period in which it may be taken? The Bill sets a minimum of up to 56 days after the death. Also outstanding is whether the leave must be taken in one block or could be split into weeks or days.
3. Notice and evidence requirement:
   • Amount of notice
   • Formally in writing or not
   • Any evidence requirements

The Government has not indicated any preferred policy choices in relation to the questions asked.

Next steps

We await the outcome of the consultation as implementing regulations will be required setting out much of the detail.

These provisions are now expected to come into force sometime in 2027.

Policy

Increasing protection from sexual harassment.

The ERA 2025 – Sections 20 to 22 (Harassment)

The ERA 2025:

1. Amends the "duty to take reasonable steps to prevent sexual harassment" (introduced on 26 October 2024) to a "duty to take all reasonable steps to prevent sexual harassment".
2. Re-introduces employer liability for third-party harassment of workers in the course of their employment. To cover all forms of harassment not only sexual harassment, subject to an "all reasonable steps" defence.
3. The Secretary of State is given powers to make regulations to specify steps which an employer must take and matters to which they must have regard for the purposes of meeting the obligations to take all reasonable steps to prevent sexual harassment.

Comment

Third-party harassment

It should be noted that unlike the duty to prevent sexual harassment, the re-introduction of employer liability for third-party harassment is not limited to sexual harassment. It also covers the other relevant protected characteristics (age, disability, gender reassignment, race, religion or belief, sex and sexual orientation).

Responding to concerns raised over the third-party harassment provisions, on 25 April 2025, the Government stated:

• It does not consider a carve-out for 'overheard conversations' is necessary as the ERB clause provides that:
  • any step by an employer that would result in a disproportionate interference with a third party's right to freedom of expression would not be a 'reasonable step'; and
  • employers only need to do what is reasonable for their specific circumstances which, in relation to third parties, are more limited than in respect of employees.
• It does not intend to introduce a 'three strikes rule' as a balanced approach is already being taken both in the definition of harassment (so a one-off incident is much less likely to create the proscribed environment) and the reasonable steps an employer could be expected to take to prevent it. 

Duty to prevent sexual harassment

On 26 October 2024, the Worker Protection (Amendment of Equality Act 2010) Act 2023 came into force. The Act introduces a new positive legal obligation on employers to take "reasonable steps" to protect their workers from sexual harassment. The test for the steps is being strengthened to "all" reasonable steps.

In addition, future regulations will set out a non-exhaustive list of obligations that are to be regarded as "reasonable" for the purpose of determining whether an employer has taken, or failed to take, all reasonable steps to prevent sexual harassment of an employee. Employers will need to ensure that they carry out those steps as well as any additional steps that they have identified as being reasonable for their organisation.

Consultation

The Government has stated it will consult before introducing the required steps regulations.

Next steps

The requirement for employers to:

• take ‘all reasonable steps’ to prevent sexual harassment of their employees;
• introducing an obligation on employers not to permit the harassment of their employees by third parties; and
• introducing a power to enable regulations to specify steps that are to be regarded as "reasonable", to determine whether an employer has taken all reasonable steps to prevent sexual harassment

are all due to come into force on 1 October 2026.

Regulations defining 'reasonable steps' expected sometime in 2027/28 after consultation.

Policy

Non-disclosure agreements (NDAs) should not be used to cover up misconduct in the workplace.

The ERA 2025 – Section 24 (Contractual duties of confidentiality)

1. Any provision in an agreement between an employer and a worker, including a settlement agreement is void in so far as it purports to prevent:
   1. an allegation of, or a disclosure of information relating to, relevant harassment or discrimination, or
   2. about how the employer responded to such allegations or disclosures.

The ban on NDAs covers discrimination and harassment/sexual harassment under the Equality Act 2010 (EqA) specifically:

• direct discrimination – section 13
• indirect discrimination – sections 19 and 19A
• discrimination arising from disability – section 15
• gender reassignment discrimination due to absence – section 16
• pregnancy and maternity discrimination – sections 17 and 18
• disability reasonable adjustments – ss 20 and 21
• harassment and sexual harassment – s26

Omitted are claims for victimisation under section 27 EqA.

2. The protection applies whether the alleged discrimination or harassment is by the employer or by another worker of the employer, and whether the victim is the complainant or another worker of the employer.
3. It applies to both current and former workers and can be extended by Regulations to include individuals such as contractors, trainees, and those on work experience.
4. It will not apply to the provision in an agreement that satisfies such conditions as specified in Regulations ('excepted agreement').

Comment

It is already the case that a NDA, irrespective of its terms, cannot validly seek to prevent a person from reporting a crime to the police under the common law and since 1 October 2025 under the Victims and Prisoners Act 2024. In addition, an NDA which seeks to prevent an individual from making a protected disclosure (whistleblowing) are void under the Employment Rights Act 1996 (s43J).

The new measures may provide claimants with more confidence over whether a purported NDA is unenforceable and the clear ability to disclose information to a claimant's support network a societal good. But there may also be an unintended consequence with fewer settlements of such claims being reached. There is commercial and reputational value to employers in settling with confidentiality irrespective of the merit or otherwise of the allegation providing considerable negotiating value to claimants. Making such confidentiality agreement void in all circumstances may disincentivise employers from settling many claims they think they can defend.

We await details of implementing regulations provisions particularly around 'excepted agreements' which will be crucial to the impact of these measures. What the Government has stated so far:

• The option of confidential settlements will remain "if the agreement is requested by the worker" (presumably this will be subject to measures to ensure workers are not coerced).
• The legitimate use of NDAs in non-harassment/discrimination circumstances will not be impacted, with the Government supporting the right of businesses to use NDAs to protect sensitive business and commercial information, trade secrets and other confidential data.

Next steps

The Government has not yet confirmed when it intends to bring these provisions into force.

Policy

Following tripartite collaboration with business groups and trade unions agreed that a six-month qualifying period for protections against unfair dismissal and the lifting of the compensatory award capo is a workable deal for both employers and employees alike.

The ERA 2025 – Section 25 (Unfair dismissal)

1. Reduces the qualifying period for protection against 'ordinary' unfair dismissal from two years to six months and will remove the power to vary the qualifying period further without primary legislation.
2. Reduces the qualifying period for employees’ right to request written reasons for dismissal from two years to six months.
3. Removes the cap on compensatory awards completely.
4. Removes the qualifying period for protection against unfair dismissal for reason of spent convictions.

Comment 

Six-month qualifying service

The Government had rowed back on its plans to make unfair dismissal a 'day one' right was welcomed due to the potential headaches that would have been caused by employees immediately benefitting from unfair dismissal rights and the proposed 'lighter touch' process that employers would have been permitted to follow for capability and conduct dismissal in the "initial period of employment" have now been avoided.

However, the reduction to the qualifying period remains a significant change – many more employees will benefit from this protection and it will significantly change the risk profile of dismissals that take place between six months and two years of service.

The reduction in the qualifying service to two years will have an impact on contractual probationary periods. If an employer has a six-month probationary period then if wishing to dismiss at the end of the six-month probationary period, the employee will have their full unfair dismissal rights. Employers should reduce probationary periods to five or even four months to allow for an extension period, to enable dismissal at the end of the probationary period without the potential for an ordinary unfair dismissal claim. Remember under s97 ERA 1996 the effective date of termination (EDT) is extended where statutory notice is not given for the purpose of determining the qualifying period for an unfair dismissal claim (section 108(1)) ERA 1996) – this provision is unchanged by the ERA 2025.

To help mitigate the risk of claims, employers should:

• Ensure that they have robust recruitment and on-boarding procedures in place, to minimise recruitment mistakes.
• Review their probationary processes to make sure that these are clear and well-communicated, with line managers proactively identifying and managing any performance or conduct issues that arise in the early stages of employment.
• Review probationary policies and contractual wording on probationary periods. It is important to consider the length of the probationary period and how any extensions of probation might operate – if the employee is dismissed once they have six months’ service or, in some cases, when their statutory notice period would tip them over that six-month mark, they will have full unfair dismissal protections. Carrying out thorough and timely probationary reviews will be crucial.
• Run additional line manager training to ensure that they can confidently deal with issues at all levels of the organisation and, where relevant, can affect fair dismissals. The focus of this training should be two-fold:
  1. effective management during the probationary period; and
  2. training on the full processes that will need to be carefully followed for any employee who has attained qualifying service.

Removal of the compensatory award cap

Currently, the compensatory unfair dismissal award is capped at the lower of £118,223 or 52 weeks’ pay. In many cases, the removal of the compensation cap for unfair dismissal claims will not change the amount awarded by a tribunal (given the claimant’s duty to mitigate their loss). In a House of Commons debate about the removal of the cap, the Government cited the median award for unfair dismissal compensation, which it said for 2023-24 was £6,746, as evidence of very few compensatory awards getting near to the existing cap.

However, to date, highly paid employees often do not file unfair dismissal claims primarily because the statutory compensation cap makes the process financially unappealing. The removal of the cap on the compensatory award removes this significant downside and greatly increases the incentive for highly paid/rewarded employees to institute an unfair dismissal claim before an employment tribunal which is a largely costs free judicial forum.

Under s23(2)(b) of the ERA 1996 the loss of any benefit which a claimant might reasonably be expected to have received, but for their dismissal, should be considered in the context of compensation. It is not necessary that the benefit is contractual, provided the claimant has a reasonable expectation of receipt. Common examples include benefits in kind or "perks" such as a company car, private medical or health insurance, low-interest loans or pensions loss. Also included could be bonuses (even where discretionary) and commission. The value of any share options which the employee will lose out on as a result of termination of employment could also be included, although the quantification of that loss may prove tricky.

With the removal of the cap:

• the potential settlement range significantly widens;
• bonus "loss of opportunity", deferred award forfeiture and the value impact of equity vesting/lapse/forfeiture decisions become front-and-centre in schedules of loss; and
• where relevant, the ACAS Code uplift (up to 25%) becomes more material where the underlying compensatory award is no longer capped.

As a result "reward governance" and paper trails are more important than ever.

Reduction in qualifying service and removal cap taken together

Given the increase in the number of employees eligible to bring ordinary unfair dismissal claims, we are likely to see an increase in the number of these claims being issued in an already overloaded employment tribunal system. One of the Government’s aims in removing the compensation cap for ordinary unfair dismissal claims is to remove what it calls the "systemic incentive" for claimants to construct whistleblowing and discrimination claims in order to bypass the cap. The Government’s view is that this should help to decrease the burden on the tribunal system. Whether or not the broadening of ordinary unfair dismissal rights will in fact result in fewer whistleblowing and/or discrimination claims being issued remains to be seen. Furthermore, an increase of claims form highly rewarded individuals requiring complex loss assessments leading to lengthy remedy hearing is likely to offset any claim reduction.

Spent convictions

Currently, the existence of a spent conviction, or a failure to disclose it, is not a "proper ground" for dismissal (section 4(3)(b), Rehabilitation of Offenders Act 1974). In consequence, unless the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 (SI 1975/1023) (Exceptions Order) applies, any dismissal on these grounds would likely be automatically unfair. Nevertheless (together with a TUPE related dismissal) while automatically unfair the ordinary minimum qualifying service (that is, currently two years) applies to such unfair dismissal claims.

Schedule 3 of the ERA 2025 also removes the qualifying period for protection against unfair dismissal for reason of spent convictions.

Next steps

The above package of dismissal changes come into force on 1 January 2027. The Government is adopting a commencement approach, meaning from 1 January 2027 extend protection against ‘ordinary’ unfair dismissal is immediately given to employees who already have six months’ service or more. Other employees will gain this protection once they reach six months’ service.

Policy

Strengthening rights for pregnant workers.

The ERA 2025 – Sections 26 and 27 (pregnancy/family leave dismissals)

1. The Secretary of State is given powers to make provision in regulations about redundancy during or after a protected period of pregnancy and maternity leave.
2. The Secretary of State is given new powers to make provision in regulations about dismissal for reasons other than redundancy, during or after a protected period of pregnancy and maternity leave.
3. Supplementary regulations may be made setting out:
   • the circumstances in which it will be fair to dismiss a pregnant woman or new mother;
   • the length of the period of this enhanced protection after the employee has returned to work; and
   • any procedural elements, such as notice and evidence requirements.
4. The Secretary of State is also given powers to extend the protections to a wider set of parents returning from other family related leaves, for example Adoption Leave.

Consultation

On 23 October 2025, the Consultation: Make Work Pay: enhanced dismissal protections for pregnant women and new mothers was published and closed on 15 January 2026.

The consultation sets out two options regarding when the dismissal of a pregnant woman or new mother should be permitted:

Option 1: A new general test of fairness

• The existing five potentially fair reasons for dismissal would continue to apply, but employers would also need to meet a stricter new standard when relying on that reason to dismiss in the case of a pregnant woman or new mother.

Option 2: A narrower application of the existing reasons

• The existing five potentially fair reasons could be narrowed, or removed altogether, in the case of pregnant women and new mothers. The consultation then considers each potentially fair reason in turn.

We await the Government's response.

Comment

Pregnant women and new mothers also already have enhanced protections against redundancy dismissals. This covers the pregnancy period, the time spent on maternity leave and a return-to work period. The protections give those employees priority for being offered suitable and alternative roles if any are available and place them ahead of other employees who are also at risk of redundancy.

However, redundancy is only one of the five potentially fair reasons for dismissal. Individuals can also be dismissed because of conduct; capability; a statutory prohibition on their employment; or some other substantial reason which justifies dismissal. The new enhanced dismissal protections may cover some or all of these reasons.

Next steps

Any provisions to be introduced are not expected to come into force until sometime in 2027.

Policy

End unscrupulous fire and rehire tactics.

The ERA 2025 – Section 28 (Variation of contract dismissals)

Under section 28:

1. It will be an automatically unfair dismissal if an employee is dismissed or replaced in order to make changes to core terms in their employment contract (protected as 'restricted variations').
2. 'Restricted variations' will cover changes to:
   1. pay (widely defined),
   2. pensions,
   3. number of hours work,
   4. timing or duration of shifts,
   5. holiday entitlement, and
   6. anything else the Secretary of State sets out in Regulations.

In other words, a variation in relation to pay, hours and holidays.

3. A restricted variation dismissal will not be 'automatically' unfair where an employer can show:
   1. The reason for the variation was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer's ability to carry on the business as a going concern.
   2. Where an employer does not operate on a going concern basis, for example certain public sector bodies, the employer would have demonstrated the reason for the variation was to eliminate, prevent, significantly reduce or significantly mitigate the effects of financial difficulties which, at the time of the dismissal, were affecting the employer's ability to carry on activities constituting the business; and
   3. in all the circumstances the employer could not reasonably have avoided the need to make the variation.


4. Where an employer can show a s104I dismissal is not automatically unfair, when determining whether a dismissal was fair or unfair consideration must be given to:
   1. whether any consultation was carried out by the employer with the employee, an independent trade union or another employee representative about the variation of the employee's contract of employment, and
   2. whether the employer offered the employee anything in return for agreeing to a variation.
5. A dismissal for failing to agree to a 'not restricted variation' (for example a change of location or job role) will not be automatically unfair, however consultation will be required. The question of fairness must be judged on the basis of:
   1. the reason for the variation;
   2. any consultation carried out by the employer with the employee, and recognised trade union or employee representatives (if applicable)
   3. anything offered to the employee by the employer in return for agreeing to the variation;
   4. any matters specified in regulations made by the Secretary of State.
6. The Act also provides that variations to expenses, payments and benefits in kind and to shift patterns may be excluded from the definition of a restricted variation. The consultation, which closes on 1 April 2026, seeks views on the scope of those potential exclusions.

Comment

The changes go far beyond what many employers would consider an unscrupulous use of 'fire & rehire' tactics. From 1 January 2027, where such a change amounts to a restricted variation, it will no longer be possible (outside of a financial distress situation) to insist an employee agrees to a variation no matter how compelling the justification for the variation.

Back in May 2024, Labour set out its ambition to end the "scourge of fire and rehire". However, the mechanism through which the Government is seeking to achieve this is not by overtly preventing the employer from firing someone, but rather by restricting an employer’s ability to change certain core contractual terms and conditions of employment (known as "restricted variations"). Crucially, the employer’s justification for the "restricted variation" is irrelevant. Even a fair and well‑reasoned business rationale will not prevent the dismissal from being automatically unfair. The only exception is where the employer is facing very serious financial distress - effectively on the brink of insolvency. That is a high threshold, and routine cost‑saving measures during a difficult trading period, will not suffice.

Variations relating to an employee's duties as long as pay, hours ad holidays stay the same are not "restricted variations". But beware if in a reorganisation an employee is downgraded, subject to a time-limited red circling of pay, such a variation is highly likely to still be a 'restricted variation' – no doubt future legal arguments and judicial scrutiny will follow.

As for non-restricted variations, the ERB also has provisions that in considering the fairness of a dismissal for refusing to agree to a variation that is not a restricted variation the Tribunal must consider:

• The reason for the variation
• Any consultation carried out; and
• Anything offered to the employee for agreeing to the variation.

As matters tribunals already take into consideration, this is unlikely to result in any changes.

As originally drafted the fire and rehire provisions would not apply in a situation where the employer sought to make the change by dismissing its employees and replaced them with people who would not be employees – such as agency workers or independent contractors. This potential loophole has been closed as the new provisions now contain a section headed “Redundancy: replacement of employees with people who are not employees” (Clause 104K). Potentially more significant that it appears at first blush, it should be noted:

• It does not depend on an employer seeking to engage people on varied terms and conditions. It applies whenever an employer dismisses employees for the principal reason of replacing them with people who are not employees.
• Such a dismissal will be automatically unfair provided the new individual is carrying out substantially the same activities as the employee and the dismissal is not wholly or mainly attributable to the fact that the employer’s need for those activities have ceased or diminish.

For example, if an employer replaces an administration clerk employee with a self-employed contractor who only works occasional hours then that will not be automatically unfair if the change has been prompted by the fact that the employer no longer has enough administration work to justify having an employee to do it. But, if on the other hand, the employer simply wants to replace its employee with a self-employed contractor or agency worker because that would be cheaper, then any dismissals would be automatically unfair.

Consultation

On 4 February 2026, the Government published the consultation Make Work Pay: fire and rehire – changes to expenses, benefits, and shift patterns, which runs until 1 April 2026.

1. As regards changes to expenses, payments and benefits in kind, the Government has identified two options:
   • Option 1 (Government preferred option): variations to expenses, payments and benefits in kind would not be treated as restricted variations at all. Employers would, therefore, be able to make changes to these terms, and while an employee dismissed for refusing to accept the change might still pursue an ordinary unfair dismissal claim, they would not benefit from the enhanced protection of automatic unfair dismissal.
   • Option 2: Exclude changes to expenses and benefits in kind from being restricted variations except for variations to certain share schemes, travel expenses and accommodation which would be protected.
2. As regards shift patterns, the two options under consideration are:
   • Option 1 (Government preferred option): treat changes from day to night working (and vice versa), and from weekday to weekend working (and vice versa), as restricted variations. Other changes to shift patterns would fall outside the automatic unfair dismissal regime.
   • Option 2: no changes to shift patterns should be treated as a restricted variation.

Next steps

The changes come into force on 1 January 2027.

Policy

Strengthen provisions on collective redundancy.

The ERA 2025 – Section 29 (Consultation thresholds)

1. The obligation under s188 TULRCA 1992 to collectively consult and an HR1 form submitted when an employer proposes within a 90-day period either:
   • 20 or more employees at one establishment; or
   • at least the "threshold number of employees", without the 'at one establishment' requirement.


2. The Secretary of State is given the power to make regulations specifying the threshold number of employees. The threshold number, which cannot be lower than 20, is yet to be determined and may be a specified number, a specified percentage of the employees or a combination of both. The detail on how the additional trigger will operate (including what the threshold number or percentage will be) will be set in future regulations.
3. If the additional trigger applies, the employer will need to count redundancies across its whole business as opposed to at individual sites, to determine if the obligation to collectively consult is triggered.
4. Where the employees whom the employer is proposing to dismiss as redundant are not all at one establishment:
   1. an employer will not be required to consult all appropriate representatives together, nor to undertake consultation with a view to reaching the same agreement with all the appropriate representatives.
   2. employers will be required to disclose in writing to the appropriate representatives the total number of employees it is proposing to dismiss and the establishments in which they are employed.


5. The trigger for the obligation to notify the Secretary of State will be aligned. Where the employer is proposing to dismiss as redundant 100 or more employees, the notification will be required at least 45 days before the first dismissal takes effect, instead of 30 days.


6. The trigger for consultation obligations on a TUPE transfer will be aligned with the trigger for collective consultation obligations.

Comment

No doubt the policy remains aimed at closing the perceived Woolworths loophole (there was a closure of all stores nationally, but as each store a separate 'establishment' only employees at the larger stores had collective consultation rights triggered). The Government's explanatory statement to these amended provisions, confirms that its intention is that, where employees are being made redundant at more than one establishment across a business, the trigger for collective consultation under s188 and notification under s193 can be set at a higher number than 20 employees (which will remain the trigger in relation to redundancies at one establishment).

We await the crucial detail as to when collective consultation across more than one establishment will be required. We do not yet know what the threshold number or percentage will be, but no doubt the change will see the duty to consult triggered more frequently. Employers with multiple sites should consider how they can better track and record redundancies across their business. Without such systems in place, the change would increase the risk of inadvertent breaches even if robust and otherwise generally fair (non-collective) redundancy exercises have been carried out at individual sites.

Next steps

An additional consultation is to be launched on the content of the implementing regulations.

As for implementation, the as yet to be finalised new threshold provisions to be implemented sometime in 2027.

Policy

Strengthen provisions on collective redundancy.

The ERA 2025 – Section 30 (Protective awards)

The maximum period of the protective award (the remedy a tribunal can award when an employer fails to meet its collective redundancy consultation obligations, requiring the employer to pay remuneration to employees) will be doubled from 90 to 180 days’ pay per affected employee.

Comment

The change to the protected period for a protective award will make the cost of non-compliance with collective consultation obligations significantly more expensive for employers. To address non-compliance as a result of employers misunderstanding the complex collective consultation framework, the Government has committed to produce guidance for employers of all sizes on compliance with collective consultation obligations "in due course".

Note, it will remain the case that where a company is insolvent the eight-week cap for payment by the Insolvency Service will remain unchanged (the balance instead being an unsecured debt in the insolvency).

Next steps

The provisions doubling the protective award period are due to come into force on 6 April 2026.

Policy

Improved protection of workers in public sector outsourcing.

The ERA 2025 – Section 32 (Public sector)

S32 empowers Ministers of the Crown, Scottish and Welsh Ministers to reinstate and strengthen the two-tier Code (the ‘Code’) through both regulations and a statutory code of practice that will apply to procurements where transferred public sector staff and private sector employees will be working alongside each other to deliver an outsourced public sector services contract.

This power can be used, amongst other things, to set out minimum requirements and the circumstances in which they should be applied.

Comment

The intention of this provision is to ensure parity of treatment between individuals transferring from the public sector and those employed by the private sector supplier. The Government has separately indicated that measures ensuring that outsourcing of services can no longer be used by employers to avoid paying equal pay will be delivered through the Equality (Race and Disability) Bill.

Next steps

The two-tier Code of Practice is expected to be in force on 1 October 2026.

Policy

Strengthening working women's protections from maternity and menopause discrimination and introduce gender pay gap action plans.

The ERA 2025 – Sections 33 & 34 (Employer duties to equality)

1. Equality plans

1. The Secretary of State is given power to make regulations which require employers with 250 or more employees and some public sector employers to:
   1. develop and publish an equality action plan showing the steps that they are taking in relation to their employees with regard to matters related to gender equality; and
   2. publish prescribed information relating to the plan.
2. Regulations may not require an employer to publish information more frequently than every 12 months.
3. A matter is related to gender equality if it is related to "advancing equality of opportunity between male and female employees" and include:
   1. addressing the gender pay gap; and
   2. supporting employees going through the menopause. 

2. Outsourced workers

1. The Secretary of State is given power to make regulations requiring require private and voluntary sector employers with at least 250 employees in Great Britain to publish information about the service providers that they contract with for outsourced services.

Comment

Gender pay gap report

Employers who are already required to publish gender pay gap reports will also be required to develop and publish an 'equality action plan' showing the steps that they are taking with regard to gender equality, including addressing the gender pay gap and supporting employees going through the menopause.

The implementing regulations may also set out certain requirements in respect of the plan, such as its contents, frequency of publication and any requirements for board approval.

See our blog on Menopause Action Plans - a new milestone on the Employment Rights Bill roadmap.

Outsourced workers information

Before the Public Bills Committee, it was made clear that the provisions of the Bill are limited to "getting large employers to disclose who they have outsourcing relationships with". In other words, large employers will only need to disclose with whom it contracts for outsourced workers. It will not extend to including pay data of outsourced workers within the end-users pay gap reports. Instead, the measure will simply link the outsourced workers' employer's pay gap reporting to the end-user.

Next steps

The mandatory inclusion of gender pay gap and menopause action plans in Gender Pay Gap Reports is expected to come into force from April 2027 with introduction on a voluntary basis from April 2026.

As for the gender pay gap outsourcing measures, implementation of those provisions is yet to be set due to related changes under the related Equality (Race & Disability) Bill.

Policy

Reinstating the School Support Staff Negotiating Body (SSSNB), to establish national terms and conditions, career progression routes, and fair pay rates.

The ERA 2025 – Section 38 (SSSNB)

• Establishing and setting out the remit for a new SSSNB.
• Outlines matters within the SSSNB's remit to include remuneration, terms and conditions, training, and career progression for school support staff.
• Gives the Secretary of State the power to refer matters to the SSSNB and ratify their agreements through regulations, which incorporate new terms and conditions in the employment contracts of school support staff.
• Regulations made by the Secretary of State cannot worsen existing terms of employment or prevent more favourable terms being offered to school support staff.

Comment

The SSSNB will bring together employer and employee representatives to negotiate minimum pay, terms and conditions for support staff in the school sector – similar to national level collective bargaining.

Agreements ratified by the Secretary of State on pay, terms and conditions will be incorporated into individual employee contracts, where they are currently on terms below the new statutory minimums agreed by the SSSNB to establish a consistent national 'floor' that all school support staff can expect, whilst protecting individual employee entitlements beyond this.

School support staff covers those employed by local education authorities (LEAs) in England and governing bodies maintained by LEAs in England under a contract of employment providing for the person to work wholly at one or more schools maintained by an LEA in England, and those employed by academies.

Next steps

We await the publication of the Government response to the Setting up the SSSNB consultation which ran from 11 June-18 July 2025. Further consultation with the TUC is expected thereafter.

Outcomes arising from the SSSNB will be incorporated in school support staff contracts from the 2027-28 financial year at the earliest.

Policy

A new fair pay agreement in the adult social care sector will help to establish national terms and conditions and fair pay rates.

The ERA 2025 – Sections 39 to 55 (Social Care Workers)

• Introduction of sectoral agreements in the adult social care sector in England and to adult and child social care in Wales and Scotland.
• The Secretary of State is given power to establish a Fair Pay Agreement (FBA) and to create Social Care Negotiating Body (SCNB).
• Outlines matters within the SCNB's remit to include the remuneration and terms and conditions applicable to social care workers, and 'any other specified matters' relating to their employment.
• 'Social care worker' means any person who is employed (meaning as an employee or worker) wholly or mainly in, or in connection with, the provision of adult social care in England and to adult and child social care in Wales and Scotland defined as:

"Any form of personal care or other practical assistance provided for individuals who, by reason of age, illness, disability, pregnancy, childbirth, dependence on alcohol or drugs or any other similar circumstances, are in need of such care or other assistance".

• If a Fair Pay Agreement is ratified:
  • Social care workers' pay will be determined by and paid in accordance with the agreement; and
  • Terms and conditions in the agreement will have effect as a term of their employment contract with inconsistent terms having no effect.
• The Secretary of State is given power make regulations regarding:
  • how the SCNB may consider matters within its remit, the procedure for reconsideration, provisions relating to disagreements and ratification, and the ability of the Secretary of State to 'step in' where agreement cannot be reached;
  • allow for guidance and codes of practice to be issued;
  • impose record keeping obligations on employers; and
  • amend the National Minimum Wage Act 1998.

Comment

The Government originally committed to establishing sector-wide collective bargaining through which unions would negotiate fair pay agreements with employers across an entire industry (instead of merely a single employer or workplace). Instead, there will be the introduction of a fair pay agreement limited to parts of the social care sector where the Government has identified issues relating to relatively high turnover and vacancy rates. A fair pay agreement is aimed at empowering workers, trade unions and employers to negotiate fair pay, terms and conditions, and training standards.

Consultation

On 30 September 2025, the Government launched a consultation "Fair pay agreement process in adult social care" which runs until 16 January 2026. This consultation aims to gather views from the sector on how to establish the best way to collectively agree a fair pay agreement.

Next steps

1. By October 2026: Social Care Negotiating Bodies established
2. By Autumn 2027: Establish negotiating process and set the parameters of the first fair pay agreement and conduct and conclude negotiations.
3. By April 2028: Ratify the fair pay agreement through regulations.
4. 2028/29: Fair Pay Agreements comes into effect and applied to workers’ contracts.

Policy

Strengthening trade union legislation and simplifying the process of statutory recognition.

The ERA 2025 – Sections 58 to 66 (Trade Unions)

A. Repeal of the Trade union act 2016

The Employment Rights Act repeals the great majority of the Trade Union Act 2016 resulting in the following changes:

1. New members joining a trade union will automatically be opted in to contribute to a political fund, unless they expressly opt out.
2. Trade unions will no longer have to pay for the administration of check-off in the public sector.
3. The requirement for public sector employers to publish information on the amount of facility time taken by union officials will be removed. The power to impose a cap on facility time in the public sector will also be removed.
4. Trade unions will no longer have to adhere to certain reporting requirements relating to industrial action. This includes providing additional information on the voting paper, to members and employers, and to the Certification Officer in their annual return.
5. The requirement to consult and publish a review on electronic balloting will be removed. The Government is committed to introducing the use of modern and secure electronic balloting for trade union statutory ballots.
6. The Certification Officer will no longer have various investigatory powers to undertake investigations into a trade union. However they will continue to have the power to investigate financial affairs, which was brought in prior to the Trade Union Act 2016.
7. The power requiring trade unions and employers’ associations to pay a levy to the Certification Officer will be removed.

B. Right to access workplaces

1. Right to statement of trade union rights: Employers will be required to provide to an employee a written statement of the worker's right to join a trade union. This statement must be given at the same time as the employer provides the statement of their employment particulars, and at 'other prescribed times' that will be set out in regulations.
2. Right for trade unions to access workplaces: A new statutory framework through which trade unions can negotiate with an employer physical and/or virtual access to workplaces. Where these negotiations are unsuccessful, the Central Arbitration Committee (CAC) can impose access terms, subject to various factors.

C. Trade union recognition

1. Replacing the 10% application threshold for the CAC to accept a trade union recognition application with a new 'required percentage test' (to be set between 2% and 10%).
2. Removal of the requirement at the application stage (and at other stages of the recognition scheme) for a union to demonstrate that there is likely to be majority support for trade union recognition.
3. Removal of the 40% support threshold at the recognition ballot stage (reverting to a simple majority threshold).
4. Extend the prohibition on unfair practices to the entirety of a recognition or derecognition process and ensure the CAC can make orders in relation to unfair practice regardless of whether the practice in question changed voting behaviour.
5. Increase the time limit for making claims in relation to unfair practices (from one day after the ballot has closed to five working days after the ballot has closed).
6. Provides for binding access agreements giving unions access to workers throughout a recognition or derecognition process, to be concluded in a 20-day negotiation window after which, if no agreement is reached, the CAC can intervene to adjudicate unless both parties request a delay (capped at ten working days) to allow negotiations to conclude.
7. Prevents workers who joined the bargaining unit after a recognition application being received by the CAC from being counted for various purposes.
8. Prevents a new recognition agreement entered into by an employer with a non-independent union (so-called sweet-heart unions) from stopping a recognition process.
9. Under section 4 of the Employment Relations Act 200, the Government already has the power to introduce electronic and workplace balloting for Statutory Trade Union Ballots.

Comment

The Bill will simplify the route to statutory recognition by revising the relevant voting thresholds and will introduce rights for unions to access workplaces for recruitment and organisation purposes. It also increased protections and facilities for union representatives. The removal of the 10% application threshold for statutory recognition. Just where the application threshold will be set, which could be as low as 2%, will be the subject of future consultation.

Expanding the new right of access for trade unions to the workplace to include digital/virtual access is a long-standing goal of the trade union movement, which could potentially help them to modernise the ways they organise and campaign in workplaces. Further detail on what this involves is to be set out in subsequent regulations.

The specification that after the CAC receives a recognition application from a union, the number of workers in the proposed bargaining unit cannot be increased for the purposes of the recognition process is designed to stop the recruitment of new workers for the purpose of diluting union membership during recognition campaigns, though this would already be a highly unusual tactic in practice. Note, while the number cannot go up, it can still go down for this purposes of the recognition process.

The amendments do not, however, cover the membership requirement for an application for union recognition. This is currently 10% of the bargaining unit. The ERB gives the Government the power to reduce the required threshold for union membership to as low as 2% of the proposed bargaining unit through future secondary legislation, but the consultation response does not provide any more information.

Consultations

Make Work Pay: duty to inform workers of right to join a union - Consultation launched 23 October 2025. Closed on 18 December – Government Response awaited. Sought views on content, format, delivery and frequency of statement of right to join a union.

Make Work Pay: trade union right of access - Consultation launched 23 October 2025. Closed on 18 December – Government Response awaited. Sought views on the operational detail of how the right to access will work.

Make Work Pay: recognition code of practice and e-balloting unfair practices - Consultation launched 4 February 2026. Closes 1 April 2026. Currently, Statutory Recognition and Derecognition ballots may only be carried out using postal or workplace balloting. The Government committed to allow unions to use modern and secure electronic and workplace balloting for statutory ballots.

Statutory Recognition and Derecognition ballots may be carried out using postal or workplace balloting.

In addition to the existing postal voting, the Government plans to permit three new voting method:

1. Pure electronic voting - for use in points a to d above.
2. Hybrid electronic voting (a combination of electronic and postal voting) - for use in points 'a' to 'd' above.
3. Workplace balloting (in person via a physical ballot box) - for use in point 'a' above only.

The above is Phase 1 of the plans on introducing electronic and workplace balloting, In Phase 2, it plans to permit 'pure' electronic balloting to be used for statutory recognition and derecognition ballots. Phase 3 will be to assess the implementation of the new methods and scope enhancements.

Next steps

The repeal of the provisions under the Trade Union Act 2016 came into force on 18 February 2026.

The provisions on simplifying the trade union recognition process are to come into force on 6 April 2026.

The introduction of electronic balloting for recognition and derecognition ballot is expected to be introduced in August 2026.

The provisions regarding the new right of access to the workforce, statements of trade union rights and facilities are to come into force on 1 October 2026.

Policy

Modernise the rules on blacklisting.

The ERA 2025 – Section 67 (Blacklists)

1. Extends prohibitions to lists that are not prepared for the purposes of discrimination, but that subsequently are used for that purpose.
2. Gives the Secretary of State power to widen the scope of the existing power in relation to third parties compiling lists and third-party use of blacklists.

Comment

Section 67 widely expands what may amount to a 'prohibited list'. Currently it is unlawful for employers, employment agencies and others to compile, sell, supply or use a 'prohibited list' of trade union members or activists for discriminatory purposes such as employment vetting. To be a 'prohibited list' the list must:

• contain details of persons who are or have been trade union members or persons taking or have taken part in trade union activities; and
• be "compiled with a view to it being used by employers or employment agencies for the purposes of discrimination in relation to recruitment or in relation to the treatment of workers".

The proposed change will mean that legitimate lists kept by employers such as payroll or attendance lists will become a 'prohibited list' ('blacklist') if or whenever it is used for the purpose of trade union discrimination.

The second provision will enable regulations to be brought in to ensure that where AI compiles a list, where that list is subsequently used or sold or supplied by a person with a view to discriminate, that list becomes a prohibited list at that point.

Next steps

A consultation is expected to be launched soon on a package of trade union measures including protection against detriments for taking industrial action and blacklisting.

While the power to make regulations will come into force two months after the ERB is passed, the Government does intend to do so until sometime in 2027.

Policy

Strengthen the collective voice of workers.

The ERA 2025 – Sections 68 to 75 and 78 (Industrial Action ballots) .

A. Repeal of the Strikes (Minimum Service Levels) Act 2023

B. Repeal of the Trade union act 2016

The Employment Rights Act repeals the great majority of the Trade Union Act 2016 resulting in the following changes:

1. Removal of the provisions which introduced strike ballot minimum turnout thresholds of 50% of those entitled to vote and for key public sectors, an additional support threshold of 40% of the entire membership must vote in favour of strike action. Trade unions will need a simple majority of members who respond to an industrial action ballot to vote in favour of industrial action. But note that following consultation the repeal of the 50% turnout threshold will not be enacted immediately but instead require separate implementing regulations (see below).
2. Removal of the requirement for union supervision of picketing.
3. The requirement to consult and publish a review on electronic balloting will be removed.

C. Modified Trade Union Act 2016 provisions

1. Retaining the ballot mandate expiration date (but increasing it from 6 to 12 months);
2. Shortening the 14-day notice period for industrial action from 14 to 10 days.
3. Retaining the independence of the Certification Officer from political control.

D. Ballot Notices

1. Removal of the provisions which require certain information to be included on the ballot paper (summary of the trade dispute, specify the type of industrial action if other than a strike and the time period the industrial action is to take place).
2. Removal of the requirement for unions to provide information to the employer on how many members were entitled to vote and whether the minimum thresholds have been met.

Comment

The removal of the strike ballot minimum turnout thresholds of 50% of those entitled to vote and for key public sectors, an additional threshold of 40% of the entire membership must vote in favour of strike action, results in a return to the pre-March 2017 position. This means that provided the union allows all those being called upon to take action to vote, only a simple majority of those who actually vote is needed to validate the action. As such, if there is a very low turnout to vote, a strike could be called based on a small percentage of the actual membership who turned out to vote and voting in favour. As such, teh Government has agreed to link this to the introduction of e-balloting, which is expected to increase voting participation, it is unsurprising that it additional consideration will be given to its impact before making the implementing regulations.

As regards the repeal of the information provisions, this will mean that the law will revert to requiring a trade union to ask its members on the ballot paper which type of industrial action they want to take part in, expressed in terms of whether it is strike action or simply action short of a strike. The type of action that a majority of members vote for will then (assuming other legal requirements are met) be protected and immune from legal action by the employers or others.

Consultation

Make Work Pay: draft code of practice on electronic and workplace balloting for statutory union ballots - Consultation launched 19 November 2025. Closed on 28 January 2026 – Government Response awaited.

Next steps

The repeal of the MSL provisions which will come into force immediately upon the passing of the Act on 18 December 2025.

The repeal or the modification of the provisions under the Trade Union Act 2016 and changes to ballot notifications came into force on 18 February 2026.

The introduction of electronic balloting for recognition and derecognition ballot with linked removal of the 50% turnout thresholds expected to be introduced in August 2026.

Policy

Strengthen the collective voice of workers

The ERA 2025 – Sections 76 & 77 (Protection for taking Industrial Action)

1. Protection against detriment for taking industrial action. A worker will have the right not to be subjected as an individual to detriment by an act, or any deliberate failure to act, by the worker's employer, if the act or failure takes place for the sole or main purpose of preventing.
2. Employees will be protected against dismissal for taking part in industrial action for the length of the strike action by removing the current protected period (first 12 weeks).

Consultation

Make Work Pay: protection from detriments for taking industrial action - Consultation launched 26 February 2026, closes 23 April 2026.

The Government is seeking views on what the "prohibited detriments" protected under the new provisions - protection from being subjected to a detriment for the sole or main purpose of penalising, preventing or deterring them from taking industrial action - should be under the new s236A TULRCA 1992 inserted by the ERA 2025. Options being considered:

1. Prohibit all detriments (Government preferred option).
2. Create a list of prohibited detriments

The consultation is also seeking views on whether detriment claims under s 236A TULRCA 1992 should be added to the list of claims to which the 25% uplift for failure to comply with the Acas Code of Practice on Disciplinary and Grievance Procedures.

Comment

In April 2024, in the case of Secretary of State for Business and Trade v Mercer, the Supreme Court made a declaration of incompatibility in relation to the lack of statutory protection from detriment for taking part in lawful industrial action (for example, withdrawing discretionary benefits). The Court found that section 146 of the Trade Union and Labour Relations (Consolidation) Act 1992, which protects workers from detriment for taking part in trade union activities, does not provide protection from detriment for participating in lawful strike action. The Bill will rectify this perceived loophole.

Next steps

The extension of the unfair dismissal protected period came into force on 18 February 2026.

The provisions extending protections against detriments for taking industrial action are to come into force on 1 October 2026.

Policy

Establishing a new single enforcement body, also known as a Fair Work Agency, to strengthen enforcement of workplace rights.

The ERA 2025 – Part 5 (Enforcement of Labour Market Legislation)

1. The Act provides that the Secretary of State has the function of enforcing certain specific 'labour market legislation' and allows for 'enforcement officers' to be appointed.
2. The legislation in scope includes (but is not limited to) the enforcement of:
   1. statutory sick pay (SSP) and the national minimum wage (NMW) – including entitlement to and record-keeping requirements;
   2. the right to paid annual leave;
   3. certain rules relating to the conduct of employment agencies and businesses;
   4. the financial penalties for a failure to pay compensation awarded or settled by the employment tribunal in a COT3; and
   5. some offences relating to gangmasters and modern slavery.
3. Detailed provisions are included in respect of the delegation of functions, the appointment of an Advisory Board, the requirement for a labour market enforcement strategy and reports, and various enforcement powers.
4. Enforcement notices
   1. The Secretary of State will be given power to issue a notice of underpayment to a "liable party" who has failed to pay a sum due to an "underpaid individual" under a provision of the labour market legislation set out in a schedule to the ERB. This includes NMW, SSP and holiday pay.
   2. A notice of underpayment will require the liable party to pay the required sum within 28 days. A notice may be issued even where the sum has been paid by the time of giving the notice but may not be issued where proceedings have been brought in respect of the matter.
   3. Regulations may provide for the sum that must be paid to be calculated at the date of giving the notice, if that would be greater, to take account of any uprating in line with legislative changes.
   4. A notice of underpayment must require the "liable party" to pay a penalty to the Secretary of State of 200% of the sum specified in the notice, subject to a maximum of £20,000 for each individual and a minimum of £100 within 28 days. If paid within 14 days, the liable party is only required to pay the required sum due plus 50% of the penalty.
   5. A notice of underpayment may only relate to sums falling due in the six-year period before the date of the notice.
5. Power to bring employment tribunal proceedings
   1. In any case where a "worker" has the right to bring employment tribunal proceedings in England, Wales or Scotland, and it appears to the Secretary of State that the worker is not going to bring proceedings, the Secretary of State may, in place of the worker, bring those proceedings.
6. Power to provide legal assistance
   1. The Secretary of State is being given power to assist a person who is, or may become, party to civil proceedings in England, Wales or Scotland "relating to employment or trade union law or the law of labour relations" including the provision of legal advice and representation.
7. Power to recover costs of enforcement
   1. Regulations may be made to require a person who has failed to comply with any relevant labour market legislation to pay a charge relating to the enforcement costs incurred. The amount may be a fixed amount or be calculated by reference to an hourly rate.
8. Fraud
   1. Certain offences of fraud under the Fraud Act 2006, when committed in relation to a worker or work-seeker, are added to the list of "relevant labour market legislation" that may be enforced by the Secretary of State (or delegated to the Fair Work Agency (FWA)).

Comment

The Government states it will establish the FWA to bring together existing enforcement functions in relation to the above. The aim is to improve workforce retention by strengthening the employment rights framework to provide clarity for employers, tackling the undercutting that good employers currently face when trying to do the right thing.

Many of these areas are already covered by existing enforcement agencies which will be combined into one agency – the FWA. The Bill will combine the Employment Agency Standards Inspectorate, HMRC's National Minimum Wage Enforcement Team, and the gangmasters and Labour Abuse Authority and abolish the Director of Labour Market Enforcement (DLME), who currently oversees the work done by these bodies.

A significant new addition is enforcement of rights to holiday pay. This is not currently subject to enforcement by a state agency, and it is also a notoriously complex area where employers may make inadvertent mistakes.

Since 2016, an employer who fails to pay a tribunal award/settlement can be subject to a penalty payable to the Secretary of State if the claimant completes an enforcement form. This is little used, indicating its inclusion is intended to bolster enforcement.

The powers to bring enforcement notices and employment tribunal proceedings are potentially a highly significant potential game changer to employment law enforcement. When it comes to brining proceedings, it appears that this power will extend to any employment tribunal proceedings and not just in relation to the "relevant labour market legislation". The ability of a governmental enforcement agency to step into a worker's shoes and bring employment tribunal litigation on their behalf is a truly significant change to the existing regime. It remains to be seen how this will work in practice and how often these powers will be utilised. A best guess will be that the FWA will prioritise use of enforcement notices while using the power to bring employment tribunal proceedings sparingly.

As for the power to assist, this is another substantial new power not seen before in the employment litigation. No detail has been provided as to which cases may be chosen for assistance and what kind of assistance may be provided other than legal advice and representation which does not extend to the provision of facilities to settle a dispute. The ability for the Secretary of State to claw back its costs will also need careful consideration. Similar to the power to bring employment tribunal proceedings on behalf of a worker (see Power to bring employment tribunal proceedings), this new power will also need appropriate levels of funding.

How effective of a body the FWA will be and how widely it will use its new extensive powers will largely come down to a question of financial resources and priorities for enforcement.

Next steps

The Fair Work Agency body will be established on 7 April 2026. However, it will not become operational before the 2026/2027 financial year at the earliest.

Policy

Make settlement of holiday pay claims easier.

The ERA 2025 – Section 35 (Annual leave records)

A new reg 16B to be added to the Working Time Regulations 1998 imposing new obligations on employers to keep certain records relating to compliance with annual leave and pay for annual leave, including in relation to irregular hours and part-year workers.

Such records will need to be kept for six years, in such manner and format "as the employer reasonably thinks fit".

Failure to do so will constitute an offence, punishable by a fine.

Comment

This will sit alongside the existing requirement to keep and maintain for two years, adequate records to show compliance with the working time limits on average working time, night work and provision of health and safety assessments.

The six-year period for annual leave records ties in with the up to a six year period for which an enforcement issued by the Fair Work Agency will be able to relate (see Labour market enforcement above).

Next steps

The implementation date for the annual leave record keeping requirements has not been included in the Government's Implementation Timeline, though likely to be tied to the Fair Work Agencybecoming operational.

Policy

The time limits within which employees are able to make an employment claim is to be increased from three to six months.

The ERA 2025 – Section 153 (tribunal time limits)

The Act increases the time limits to bring the vast majority of employment tribunal claims from three months to six months.

Comment

The claims for which the time limit is being extended is set out in Schedule 12 of the ERB and is a very extensive list of claims including those under the Employment Rights Act 1995, TUPE 2006, the Working Time Regulations 1998, Trade Union and Labour Relations (Consolidation) Act 1992, the Equality Act 2010, as well as others. It leaves very few stones unturned. An exception are breach of contract claims after employment has ended up to a value of £25,000.

The increase in time limits from three to six months is likely to lead to an increase in tribunal claims giving potential claimant longer to seek legal advice and also conclude internal grievances/appeals before deciding to initiate legal proceedings.

It should be noted that while the basic time limit is being extended from three to six months, Acas Early Conciliation with its 'stop the clock' provisions will continue to apply. In addition, tribunals will retain their ability to extend the time limits for example "where it is just and equitable" in discrimination case and "where it was not reasonably practicable to bring the claim earlier" in unfair dismissal cases. So, while the default has doubled, the margin for extensions remains.

Next steps

The increase in tribunal time limits will come into effect "no earlier that October 2026".

Policy

Support of public service.

The ERA 2025 – Section 19 (entitlement to leave)

The Secretary of State to review the scope of the right to time off for public duties generally to specifically include performing the functions of a special constable and to publish its findings within 12 months of the Bill being passed'.

Comment

A future review of the public duties for which employees should have the right to time off for has been under consideration for some time.

Next steps

Review to be concluded by 18 December 2026.