Employment Rights Act, New Laws & Reform

Reports “that sexual harassment has occurred, is occurring or is likely to occur” will be added to the list of protected disclosures. This change is due to take effect in April 2026. 

The three-day waiting period for SSP will be removed so that SSP will be payable from day one of the absence. In addition, the Lower Earnings Limit will be removed. 

These changes are due to take effect in April 2026.

The practice of ‘fire and rehire’ will be severely limited under the Employment Rights Act. 

Unless an employer meets the definition of financial difficulty, an attempt to impose a “restricted variation” to an employee’s contract — without the employee’s consent — will lead to an automatically unfair dismissal. This applies where the reason for the variation is to re-engage the employee or employ another individual to carry out the same duties or substantially the same duties and the employee hasn’t agreed to the proposed changes.

These measures are due to take effect in October 2026. 

The Employment (Allocation of Tips) Act 2023 was introduced in October 2024 and employers are now required to pass 100% of tips, gratuities and service charges to workers without deductions. Employers are further required to have a written policy about allocation of tips and the Act proposes to require employers to:

• Consult with recognised trade unions or relevant workers’ representatives before implementing the first version of a written policy.
• Review the policy at least every three years, consulting with these groups as part of the review process.
• Provide all workers at the place of business where the policy applies with an anonymised summary of views put forward during the consultation.

These changes are expected to take effect in October 2026.

With effect from October 2026, the Act will introduce employer liability for third-party harassment of employees unless the employer can show that it took all reasonable steps to prevent it (and not just ‘reasonable steps’). This relates to all relevant protected characteristics, not just sexual harassment.

For the vast majority of claims, the time limit to bring a claim will be extended to six months less one day. This is due to take effect in October 2026. 

Employers with 250 or more employees must develop and publish equality action plans. These must detail the steps that the employer is taking regarding certain specified matters relating to gender equality, including the gender pay gap and supporting employees through the menopause. 

It’s anticipated that these changes will take effect in 2027, with employers being able to comply with the requirement on a voluntary basis from 2026. 

This makes it unlawful to dismiss an employee who’s pregnant, has been pregnant or is taking or returning from statutory family leave. 

This is due to take effect in 2027.

As a result of the Act, umbrella companies will be:

• Covered by the introduction of a new wider definition of ‘employment business’ which forms the foundation of the Conduct of Employment Agencies and Employment Businesses Regulations 2003, often referred to as the ‘Conduct Regulations’.
• Regulated by the Employment Agency Standards Inspectorate (EASI), which will subsequently become part of the Fair Work Agency.

It's likely that most umbrella workers will not be able to opt out of the Conduct Regulations. 

Regulations will provide more details and these changes are expected to come into effect in 2027. These changes as a result of the Bill form part of wider reform for umbrella companies and those that use them. 

Employers will be required to act ‘reasonably’ if they refuse a flexible working request based on one or more of the existing statutory grounds.

Additionally, the employer will need to inform the employee of the ground(s) for refusing the application, setting out why the employer considers that it’s reasonable to refuse the application.

These changes are expected to come into effect in 2027.

This new day-one right for employees is due to take effect in 2027. It has been expanded to include bereavement leave for parents experiencing pre-24 weeks pregnancy loss. 

Employers will be restricted in their ability to use NDAs to prevent workers from making an allegation or a disclosure of information relating to harassment and discrimination.