Ready or not: Why employers must act now on the Employment Rights Act

Ready or not: Why employers must act now on the Employment Rights Act

Inna Ratsebarska, Employment Law & HR

The Employment Rights Act represents one of the most significant shifts in UK employment law in recent years. The provisions within the Act will come into force over a phased two-year period.

With key reforms expected to take effect from January 2027, businesses should already be preparing. The organisations that adapt early will be best placed to manage legal exposure, control costs and maintain a positive workplace culture.

Recruitment
A major change is the extension of unfair dismissal protection to employees with six months’ service. Combined with the removal of the compensation cap for unfair dismissal claims, recruitment decisions will carry greater financial risk.

Employers should hire the right people for the right roles. That means:

• Clearly defining roles and expectations before advertising
• Using structured interviews and objective assessment criteria
• Adequately testing both skills and behavioural fit
• Ensuring fair and inclusive candidate selection

Managing well
Employers must ensure that probationary periods are used effectively from day 1 of employment when considering employees with six month service as at 1 January 2027 will be able to pursue unfair dismissal claims. Thought should also be given as to whether probationary periods should be shortened or have more regular interim reviews with progress made and areas for improvement well documented.

Strong onboarding helps employees understand expectations and engage with organisational values early. Regular check-ins, performance feedback and accessible support systems are essential.

Many organisations rely on “accidental managers”, technically strong individuals with little people-management training. Under the new framework, this approach carries risk. Culturally, it is time to make a shift and invest in training managers who are equipped with the skills to lead.

Zero-hours contracts
The Act proposes significant protections for zero and low-hours workers, including:

• A right to guaranteed hours based on an average amount of hours that they have worked over a reference period
• Reasonable notice of shift changes
• Compensation for cancelled or curtailed shifts
• Protections extending to agency workers

Businesses with fluctuating demand, particularly seasonal sectors, should review their use of such contracts now. Alternatives such as annualised hours contracts may provide the flexibility needed, for example, and financial planning will also be key.

Sickness absence
Statutory sick pay will become an entitlement from day one of absence with the 3-day waiting period removed. This may increase sickness absence levels.

Employers should review how they manage sickness absences and introduce appropriate policies relating to the reporting of absences and when the instigation of return-to-work interviews, formal sickness absence processes and Occupational Health referrals are appropriate.

Proactive wellbeing support can also help reduce absences.

Equality, flexibility and workplace culture
Although flexible working reforms appear subtle, requiring employers to state why a flexible working request is unreasonable, it is clear that there is to be a continued focus on strengthening protection for workers from an equality and diversity perspective.

Larger employers with over 250 employees will need Equality Action Plans, and duties to prevent harassment will be extended. A wider review of family and parental leave is also expected.

Employers should urgently review their equality, diversity and inclusion strategies to ensure that those who are protected under the Equality Act 2010 are being adequately supported.

Trade unions
The Act will also make trade union recognition easier. For some employers, this may require a cultural shift in respect of their engagement with the trade unions.

How we can help
Employers who plan early will not only reduce legal risk but also build more resilient, inclusive and productive workplaces. Hay & Kilner’s Employment Team is already supporting organisations in preparing for these changes through policy reviews, contract updates, strategic advice and training for managers. Get in touch to find out how Hay & Kilner’s Employment Team can help you.