The Employment Rights Act 2025 is reshaping how risk arises across the employment lifecycle and where responsibility sits for managing that risk inside organisations.
For HR professionals and people leaders, the Act will have the effect of exposing their organisation’s to employment risks earlier and, with a wider group of individuals qualifying for protection, the margin for informal or discretionary decision-making is being drastically reduced. Many of the changes sit at the intersection of law, payroll, scheduling and line management, placing HR at the centre of implementation and governance.
This guide is designed for HR teams, People managers and those with HR remit. It focuses on what the Employment Rights Act 2025 means in operational terms, how the reforms are being phased in and where HR ownership is required to manage compliance, cost and employee relations risk.
Section A: What HR needs to know about the Employment Rights Act 2025
The Employment Rights Act 2025 changes the underlying assumptions on which many HR processes were built. Understanding the nature of the Act itself is critical before addressing individual reforms.
1. Why the Act is different from previous employment law reforms
Unlike earlier reforms that introduced specific rights with clear commencement dates, the Employment Rights Act 2025 operates as a framework statute. It sets out broad reforms and then relies on commencement regulations and secondary legislation to bring individual provisions into force over time.
For HR teams, this means compliance is not a one-off exercise. The legal position evolves as new regulations are introduced, often with transitional arrangements that allow old and new rules to operate in parallel. HR systems, policies and training therefore need to remain adaptable rather than fixed.
2. HR risk themes running through the Act
Several consistent risk themes run across the Act. Rights arise earlier in the employment relationship, particularly around dismissal and family leave. Eligibility is widened, drawing in lower-paid, part-time and variable-hours workers who were previously outside scope. Discretion is narrowed, with greater scrutiny of justification and process.
For HR, these themes translate into higher exposure at recruitment, probation, scheduling and absence management stages. Decisions that were once low risk now attract legal and regulatory attention if poorly handled.
3. HR accountability under the new regime
The Act reinforces HR’s role as the central governance function for employment compliance. While line managers continue to make day-to-day decisions, the legal and financial consequences of those decisions increasingly sit with HR.
Policy design, manager training, record-keeping and escalation frameworks become critical risk controls. HR teams that retain clear oversight and decision-making discipline are better placed to manage enforcement scrutiny and tribunal exposure than those relying on decentralised discretion.
Section B: Implementation timeline and HR planning
The phased implementation of the Employment Rights Act 2025 places a planning burden squarely on HR. The challenge is not simply knowing what the reforms are, but sequencing policy changes, system updates and manager training in line with commencement dates that span several years.
Without a structured approach, HR teams risk applying rules too early, too late or inconsistently across the workforce.
1. Phased commencement and HR change management
The Act relies on commencement regulations and secondary legislation to activate individual reforms. As a result, HR teams cannot treat the Act as live in full from a single date. Each reform area needs to be tracked separately, with clarity on when obligations begin and whether transitional provisions apply.
This requires active monitoring rather than static policy updates. HR functions that build change management into their governance processes are better positioned to respond as new regulations are laid.
2. Key milestones HR teams need to track
Several reforms cluster around key dates, particularly in early 2026, while others are expected to follow later. HR teams need visibility of these milestones to align payroll configuration, contract updates, manager guidance and employee communications.
Missing a commencement date creates immediate compliance risk. Applying changes prematurely can also undermine trust and create confusion. Accurate timing therefore underpins both legal compliance and employee relations.
3. Managing overlapping legal regimes in HR operations
During transition periods, it is possible for different legal rules to apply to different employees depending on start date, earnings or the timing of events such as sickness absence or dismissal.
HR systems need to accommodate this complexity. Blanket assumptions are unsafe. Clear internal guidance is required to ensure managers apply the correct framework to each situation, particularly during periods where old and new regimes operate side by side.
4. Internal governance and change control
Effective HR planning under the Act depends on governance. Change logs, version control for policies and clear ownership for implementation tasks reduce the risk of drift or inconsistency.
HR teams should define escalation points for legal review, system change and workforce communication. Where responsibility is unclear, errors are more likely to occur and are harder to defend if challenged by regulators or tribunals.
Section C: Recruitment, probation and early employment risk
The Employment Rights Act 2025 fundamentally alters the risk profile at the start of employment. For HR teams, recruitment and probation are no longer low-exposure phases where legal risk is deferred. Rights arise earlier, scrutiny is higher and poorly structured processes are more likely to lead to claims.
This section focuses on how HR should recalibrate recruitment and probation frameworks under the new regime.
1. Removal of the unfair dismissal qualifying period
The Act removes the two-year qualifying period for ordinary unfair dismissal once the relevant provisions are commenced. This means employees gain unfair dismissal protection from the outset of employment.
For HR, the immediate implication is that termination decisions during probation or early employment need to meet the same fairness standards as long-service dismissals. The absence of qualifying service can no longer be relied upon as a risk filter.
2. Probation frameworks under day-one dismissal risk
Probation clauses remain lawful, but their function changes. They can no longer operate as informal exit windows with limited process. HR teams need to ensure probation reviews are structured, evidence-based and capable of supporting a fair dismissal rationale if challenged.
Clear performance criteria, documented feedback and realistic improvement opportunities become more important. Probation decisions taken without evidence or consistency are significantly harder to defend under the new framework.
3. Recruitment documentation and decision-making
Early employment risk begins before day one. Job descriptions, offer letters and pre-employment communications now carry greater weight in unfair dismissal and detriment analysis.
HR should review recruitment materials to ensure role expectations are accurate and defensible. Misalignment between advertised roles and actual duties increases the risk that early dismissals are perceived as unjustified or procedurally flawed.
4. HR controls to reduce early-stage exposure
To manage early employment risk, HR teams should tighten approval and escalation processes for dismissals within the first months of employment. Central oversight helps ensure decisions are consistent and supported by evidence.
Manager training is also critical. Line managers need to understand that early employment decisions are no longer legally low risk and that informal handling creates exposure not only for the business, but for HR governance as a whole.
Section D: Workforce models, zero-hours contracts and scheduling
The Employment Rights Act 2025 places new pressure on workforce models that rely on flexibility, variable hours or on-demand labour. For HR teams, these reforms go beyond contract wording and reach into scheduling systems, payroll integration and manager behaviour.
This is an area where HR oversight is critical, as inconsistent application creates both legal exposure and employee relations risk.
1. HR impact of predictability of work rights
The Act introduces statutory rights for qualifying workers to request a more predictable working pattern. These rights apply where working hours or schedules vary beyond defined parameters, with eligibility and reference periods set through secondary legislation.
For HR, this requires new request-handling processes, defined business grounds for refusal and clear audit trails. Informal rejection of predictability requests is unlikely to be defensible once the rights are in force.
2. Shift cancellation compensation and payroll interaction
Compensation rights arise where shifts are cancelled, shortened or materially altered at short notice. While operational decisions may sit with managers, the financial and compliance consequences sit with HR and payroll.
HR teams need to ensure payroll systems can identify qualifying cancellations, calculate compensation correctly and apply payments consistently. Failure to integrate scheduling and payroll data increases the risk of systemic underpayment.
3. Contract design for variable-hours staff
Zero-hours contracts remain lawful, but the cost-benefit balance changes under the new regime. HR teams should reassess whether existing contract models remain appropriate once predictability rights and compensation obligations are factored in.
In many cases, minimum-hours or banded-hours contracts may provide better cost certainty and reduced administrative burden. Contract design decisions now carry direct compliance and financial implications rather than being purely operational.
4. HR data, scheduling controls and governance
Accurate data is central to compliance. HR systems need visibility over hours worked, patterns of variability and scheduling changes. Without reliable data, it becomes difficult to assess eligibility, manage requests or demonstrate compliance.
Clear governance is also required. HR should define approval thresholds for schedule changes, escalation routes for disputes and accountability for compliance across teams and sites.
Section E: Sickness absence and SSP reform
Statutory Sick Pay reform under the Employment Rights Act 2025 has direct and immediate implications for HR teams. The expansion of eligibility brings new groups of workers into scope and alters how sickness absence costs arise and need to be managed across the workforce.
For HR, the focus shifts from eligibility gatekeeping to consistency, accuracy and control.
1. SSP eligibility expansion and HR policy impact
The Act removes the exclusion of workers earning below the Lower Earnings Limit from SSP entitlement once the relevant provisions are commenced. Lower-paid, part-time and variable-hours workers who were previously outside scope now qualify for SSP.
HR absence policies drafted around the old earnings threshold need to be reviewed. References to ineligibility based on pay level risk being incorrect and misleading once the reforms are in force.
2. Managing sickness absence for lower-paid and variable staff
The extension of SSP entitlement changes the cost profile of sickness absence. Short-term absences among lower-paid workers now trigger statutory payment obligations, even where SSP is capped at 80 per cent of average earnings.
HR teams need to ensure absence reporting, certification requirements and return-to-work processes apply consistently across the workforce. Differential treatment based on pay level is harder to justify under the expanded eligibility framework.
3. Absence triggers, certification and fairness
Many existing absence management systems rely on trigger points that assume SSP applies only above a defined earnings threshold. Those assumptions no longer hold.
HR should review trigger mechanisms, medical evidence requirements and escalation processes to ensure they remain proportionate and legally defensible. Poor alignment between policy and statutory entitlement increases the risk of dispute, particularly where sickness absence overlaps with other protected characteristics.
4. Cost modelling, payroll accuracy and HR reporting
Accurate SSP payment under the new regime depends on reliable earnings data and correct averaging. HR and payroll teams need aligned processes to avoid underpayment or overpayment.
From a planning perspective, HR should update absence cost modelling to reflect wider eligibility and more frequent SSP triggers. Historical absence data alone is unlikely to provide a reliable forecast under the reformed system.
Section F: Family leave, parental rights and workforce planning
Family-related reforms under the Employment Rights Act 2025 require HR teams to revisit how leave is triggered, recorded and managed. The changes increase eligibility and bring certain rights forward in time, creating operational challenges around cover, continuity and consistency of treatment.
For HR, the risk lies less in the statutory rates themselves and more in misalignment between entitlement, pay and protection.
1. Day-one parental rights and HR processes
The Act extends access to certain parental rights much earlier in employment. Qualifying service requirements are reduced or removed for some family-related leave entitlements, meaning employees can exercise rights soon after joining.
HR teams need to ensure onboarding materials, manager guidance and leave request processes reflect this position. Assumptions that new starters are unlikely to trigger parental leave are no longer safe and can lead to unlawful refusal or detriment.
2. Distinguishing leave entitlement from pay entitlement
A key complexity for HR is the distinction between the right to take leave and entitlement to statutory pay. While statutory pay remains subject to earnings thresholds, the right to take leave may still apply even where statutory pay does not.
HR processes need to handle unpaid or partially paid leave accurately, without creating confusion or resentment. Clear communication is essential to avoid disputes where expectations around pay do not match legal entitlement.
3. Cover planning and continuity risk
Earlier and wider access to family leave increases the likelihood of unplanned absence from newer employees. HR teams need contingency planning that goes beyond long-established parental leave patterns.
Fixed-term cover, internal redeployment and workload redistribution all require advance consideration. Where leave coincides with other reforms, such as SSP eligibility or predictability of work rights, the operational impact can be compounded.
4. Managing discrimination and detriment risk
Employees exercising family-related rights are protected against detriment and dismissal. Under the expanded framework, inconsistent handling of requests, informal decision-making or poorly documented refusals carry heightened risk.
HR oversight is critical. Clear procedures, documented reasoning and consistent manager training reduce the likelihood that family leave requests escalate into discrimination or automatic unfair dismissal claims.
Section G: Employee relations and trade union reforms
The Employment Rights Act 2025 reshapes the employee relations landscape, with particular implications for HR teams operating in unionised or partially unionised environments. The reforms reduce procedural barriers to industrial action and strengthen protection for trade union activity, shifting both risk and responsibility towards earlier engagement and disciplined management.
For HR, the emphasis moves away from legal containment and towards relationship management and prevention.
1. Industrial action risk under the new framework
Changes introduced under the Act lower the procedural thresholds for lawful industrial action and remove minimum service level regimes that previously limited operational impact in certain sectors.
HR teams need to plan on the basis that industrial action is more likely to proceed lawfully and with fewer opportunities for technical challenge. Disruption risk is therefore higher, particularly in labour-intensive and public-facing organisations.
2. HR’s role in consultation and engagement
With fewer procedural defences available, early consultation and meaningful engagement become primary risk controls. HR plays a central role in ensuring consultation processes are credible, documented and aligned with statutory expectations.
Token engagement or late-stage consultation increases both legal exposure and industrial relations fallout. HR oversight helps ensure engagement is structured, timely and capable of withstanding scrutiny.
3. Managing disputes without procedural defences
The reduced scope for procedural challenge means employers can no longer rely on technical defects to delay or prevent industrial action. HR teams need alternative strategies for dispute management, including escalation frameworks, mediation and senior-level intervention.
Clear internal protocols help prevent inconsistent responses that could undermine the employer’s position during a dispute.
4. Training managers during disputes
Manager conduct during periods of industrial tension is a key risk area. The Act strengthens protection against detriment linked to trade union activity, making poorly judged managerial responses more likely to attract claims.
HR teams should provide targeted training and clear guidance to managers involved in disputes. Consistent messaging, disciplined decision-making and careful documentation reduce the risk of inadvertent breaches during high-pressure situations.
Section H: Fire and rehire restrictions – HR safeguards
The Employment Rights Act 2025 tightens the legal framework around dismissal and re-engagement, placing HR teams at the centre of risk control. While contractual change remains possible, the margin for error is significantly reduced and scrutiny of employer decision-making is much higher.
For HR, this is an area where early intervention and governance make the difference between managed change and high-risk exposure.
1. When dismissal and re-engagement becomes high risk
The Act raises the threshold for relying on dismissal and re-engagement as a means of implementing contractual change. HR teams need to treat proposals involving termination and re-engagement as inherently high risk, particularly where change affects pay, hours or core terms.
Situations involving collective change, unionised workforces or protected groups carry additional exposure. The use of fire and rehire as leverage rather than as a genuine last option is far more likely to be challenged.
2. HR evidence and consultation standards
Under the reformed framework, process alone is not enough. HR needs to ensure there is clear, contemporaneous evidence supporting the business rationale for change and showing that alternatives were meaningfully explored.
Consultation needs to be genuine, structured and documented. HR oversight is critical to ensure that consultation is not treated as a formality and that decision-making reflects a proportionate response to the business issue relied upon.
3. Aligning HR strategy with business change
HR teams play a key role in aligning workforce strategy with commercial objectives in a way that remains legally defensible. This includes advising on sequencing, phased change, voluntary variation and incentive-based approaches as alternatives to dismissal.
Early HR involvement reduces the likelihood that business plans harden into legally vulnerable positions before risk has been properly assessed.
4. HR escalation and sign-off controls
Given the level of exposure, HR should define clear escalation and approval thresholds for any proposal involving dismissal and re-engagement. Decisions should not rest solely at line manager level.
Senior HR sign-off, legal input where appropriate and documented rationale all form part of a defensible governance framework. Without these controls, the risk of inconsistent or poorly justified action increases significantly.
Section I: Policies, contracts and documentation review
The scale of reform introduced by the Employment Rights Act 2025 means HR teams need to approach documentation review as a coordinated programme rather than a series of isolated updates. Policies, contracts and internal guidance that were lawful and workable under the previous framework may now be incomplete, misleading or misaligned with statutory rights.
For HR, document control becomes a core compliance function.
1. Priority policies for immediate review
Certain policies are directly affected by the Act and should be prioritised. These include sickness absence, family leave, flexible working, disciplinary and grievance procedures and policies governing contractual change.
HR teams need to ensure these policies accurately reflect current entitlement, eligibility and process. Policies that reference qualifying service thresholds or earnings-based exclusions require particular attention as those assumptions are increasingly displaced by statute.
2. Employment contracts and template risk
Employment contracts and offer letter templates often embed outdated assumptions about rights and risk. Clauses covering probation, notice, variation of terms and working hours should be reviewed for alignment with the new legal framework.
HR teams should also assess whether contractual wording inadvertently suggests rights are more limited than the law now provides. Such discrepancies are likely to be interpreted against the employer in disputes.
3. Handbooks, intranet guidance and version control
Staff handbooks and internal guidance shape expectations and influence how managers apply policies. Where guidance remains anchored in pre-2025 law, HR risks inconsistent application and erosion of trust.
Version control is critical. HR should maintain clear records of updates, effective dates and superseded guidance to demonstrate compliance and manage queries during transition periods.
4. Communicating change to staff
Communication forms part of compliance. Poorly explained changes can generate confusion, resistance or unnecessary disputes.
HR teams should plan communications that explain what has changed, when it applies and how staff should raise questions or requests. Clear, consistent messaging reduces misinterpretation and supports smoother implementation of the new framework.
Section J: Enforcement risk and HR compliance exposure
The Employment Rights Act 2025 significantly increases enforcement risk for organisations by shifting the system away from reliance on individual complaints and towards proactive regulatory oversight. For HR teams, this means compliance failures are more likely to be identified through inspection, data analysis or sector-wide intelligence rather than only through tribunal claims.
HR functions therefore need to treat enforcement readiness as an ongoing operational requirement.
1. Fair Work Agency and proactive enforcement
The Act establishes the Fair Work Agency as a central enforcement body with responsibility for monitoring compliance across a broad range of employment rights. Its remit includes statutory pay, working time, contractual compliance and other core protections affected by the Act.
Unlike the previous fragmented enforcement model, the Agency has powers to act without waiting for an individual complaint. For HR, this removes the assumption that issues will only surface if an employee decides to challenge them.
2. HR audit readiness and record-keeping
Accurate records are a primary defence under the new enforcement framework. HR teams need to ensure documentation relating to pay, hours worked, sickness absence, leave, contractual changes and decision-making is complete and accessible.
Inconsistent or incomplete records make it difficult to demonstrate compliance and increase the likelihood of adverse findings. Regular internal audits help identify gaps before they attract regulatory attention.
3. Managing regulatory engagement
Where the Fair Work Agency or another regulator engages with an organisation, HR will typically act as the primary point of contact. How that engagement is managed can influence outcomes.
Clear internal protocols help ensure information requests are handled consistently and responses are accurate and timely. Escalation routes for legal advice should be defined in advance rather than improvised under pressure.
4. Embedding compliance into HR operations
Under the Employment Rights Act 2025, compliance is not a one-off exercise. HR teams need to embed monitoring and review into routine operations, including policy reviews, manager training and workforce data analysis.
Organisations that treat compliance as part of everyday HR governance are better placed to manage enforcement exposure than those responding only once issues are raised externally.
Section K: Tribunal risk management for HR teams
The Employment Rights Act 2025 increases both the likelihood of tribunal claims and the complexity of defending them. Wider eligibility, earlier access to rights and stronger protection against detriment mean that disputes are more likely to escalate quickly and at an earlier stage of employment.
For HR teams, effective tribunal risk management depends on preparation, consistency and disciplined decision-making rather than reactive defence.
1. Increased claim volume and earlier disputes
With qualifying service requirements removed for key rights, claims are more likely to arise during probation or shortly after employment begins. Situations that were previously regarded as low risk, such as early dismissals, sickness absence disputes or refusal of flexible arrangements, now carry tribunal exposure.
HR teams should expect a higher volume of claims and a shift in timing, with disputes arising sooner and often before issues have been fully embedded or resolved internally.
2. HR decision-making under scrutiny
Tribunals increasingly focus on the quality of employer decision-making rather than outcomes alone. Under the expanded framework, HR involvement, oversight and rationale are likely to be examined closely.
Inconsistent handling, undocumented decisions or reliance on informal practices weaken an employer’s position. HR teams need to ensure that key decisions are supported by evidence, aligned with policy and capable of explanation against statutory criteria.
3. Early resolution strategies and escalation
Earlier access to rights increases pressure on early resolution. HR teams need clear criteria for when disputes should be escalated, when settlement discussions are appropriate and when a defended position is justified.
Early conciliation remains a key mechanism, but its effectiveness depends on preparation. HR teams that understand the legal merits and commercial context of a dispute are better placed to resolve issues proportionately.
4. Learning from claims and closing risk loops
Tribunal claims provide valuable insight into systemic weaknesses. HR teams should use outcomes, whether settled or defended, to identify patterns in manager behaviour, policy gaps or training needs.
Closing these feedback loops reduces repeat exposure and supports continuous improvement. Organisations that treat claims as isolated events miss opportunities to strengthen governance under the new regime.
Section L: HR governance and operating model changes
The Employment Rights Act 2025 does not just increase legal obligations, it changes where accountability sits inside organisations. HR operating models built around decentralised discretion and light-touch oversight are more exposed under the new framework.
To manage risk effectively, HR governance needs to be more structured, more visible and more embedded in day-to-day decision-making.
1. HR ownership versus line manager discretion
Many of the risks introduced by the Act arise from routine manager decisions, including dismissals, scheduling changes, responses to sickness absence and handling of parental leave requests. While managers continue to operate on the front line, HR now carries greater responsibility for ensuring those decisions are lawful and defensible.
Clear boundaries are needed. HR should define which decisions require consultation or approval and which can be handled locally. Where discretion is left unchecked, inconsistency and exposure increase.
2. Manager training and capability building
Training becomes a core compliance tool under the new regime. Managers need to understand not only what the law says, but how their actions create risk for the organisation.
HR teams should prioritise training on early-stage dismissals, sickness absence handling, scheduling practices and responses to protected activity. Without practical guidance, managers are likely to default to outdated assumptions that no longer reflect legal reality.
3. Escalation thresholds and decision sign-off
Effective governance depends on knowing when issues need to be escalated. HR should establish clear thresholds for escalation to senior HR, legal advisers or executive leadership, particularly in high-risk areas such as fire and rehire, industrial disputes and early dismissals.
Documented sign-off processes provide both consistency and protection. They also support audit readiness and demonstrate active governance if decisions are later challenged.
4. Integrating HR governance into business operations
Under the Employment Rights Act 2025, HR governance cannot operate in isolation. Workforce planning, scheduling, payroll and operational decision-making all interact with statutory rights.
HR teams that integrate governance into business processes, rather than reacting after decisions are made, are better placed to manage compliance and cost. Early HR involvement in planning discussions reduces the likelihood of legally vulnerable outcomes.
Author
Gill Laing is a qualified Legal Researcher & Analyst with niche specialisms in Law, Tax, Human Resources, Immigration & Employment Law.
Gill is a Multiple Business Owner and the Managing Director of Prof Services - a Marketing & Content Agency for the Professional Services Sector.
