Employment Rights Act 2025: A Timeline of Changes for Small Businesses

The Employment Rights Act 2025 is not a single moment of change, but a phased programme of reform running from 2026 through to 2027. For small businesses, understanding when each obligation takes effect is just as important as understanding what changes.

Below I look at the practical timeline for the changes, setting out the reforms in the order they are expected to be implemented, with an emphasis on the areas most likely to affect SMEs: paternity leave, statutory sick pay, unfair dismissal, and zero-hours working.

April 2026: Day-One Rights and Statutory Sick Pay Reforms

The first major wave of change arrives in April 2026, and this is where many small businesses will feel the impact most immediately.

From this point, statutory paternity leave becomes a day-one right. Employees will no longer need a qualifying period of service to take paternity leave following the birth or adoption of a child. While statutory pay rates remain unchanged, the absence itself may be more disruptive for small teams, particularly where roles are specialised or coverage is limited.

At the same time, statutory sick pay (SSP) undergoes a significant reform. SSP will become payable from the first day of sickness absence, and the lower earnings limit will be removed. This brings many low-paid and part-time workers into scope for the first time.

For small employers, April 2026 marks a clear shift: early employment is no longer a low-cost period. Short absences will generate immediate payroll costs, and sickness management will require greater consistency and documentation to avoid disputes later.

Mid-to-Late 2026: Unfair Dismissal and “Fire and Rehire” Restrictions

The next phase of reform is expected during mid-to-late 2026 and focuses on how dismissals and contractual changes are handled.

During this period, the Act introduces tighter controls on “fire and rehire” practices. Dismissing employees in order to re-engage them on less favourable terms will only be lawful in narrowly defined circumstances, typically where the change is necessary to preserve the viability of the business and proper consultation has taken place.

While the qualifying period for unfair dismissal does not change at this stage, employers should expect greater scrutiny of dismissal decisions, including those involving newer employees. Informal or poorly documented dismissals will increasingly carry risk, particularly where they overlap with sickness absence, family leave, or contractual change.

For SMEs, this phase signals the beginning of a cultural shift: dismissal decisions need to be defensible in substance and process, even where employees have relatively short service.

Late 2026: Zero-Hours Contracts and Predictable Working Patterns

Later in 2026, reforms affecting zero-hours and variable-hours contracts are expected to take effect.

Workers who have worked regular hours over a sustained period will gain enhanced rights to request a predictable working pattern that reflects their actual working arrangements. Employers will be required to consider these requests reasonably and to provide clear, evidence-based reasons where they are refused.

In addition, protections against short-notice shift cancellation will be introduced, with compensation payable where work is cancelled at short notice.

For small businesses, this does not mean zero-hours contracts are banned. However, it does mean that long-term reliance on the same individuals for regular work will need to be reflected accurately in contracts. Dismissing or penalising workers for requesting predictability will increase legal exposure.

2027: Unfair Dismissal Protection Reduced to Six Months

The most significant shift in dismissal risk for small businesses arrives in 2027, when the qualifying period for unfair dismissal protection is reduced to six months’ service.

This change dramatically shortens the timeframe in which employees gain the right to challenge dismissals as unfair. For SMEs, it means that the window for relatively low-risk termination of employment becomes much narrower.

From 2027, most employees will acquire unfair dismissal rights before the end of their probation period, unless probation is tightly managed and decisions are taken promptly. Employers will need to show that dismissals are based on fair reasons and that a reasonable process was followed, even where service is relatively short.

This reform has a direct impact on recruitment strategy, probation design, and performance management. Vague concerns about “fit” or capability will no longer be sufficient unless they are supported by clear expectations, feedback, and evidence.

2027: Flexible Working and Harassment Liability Expansion

Also in 2027, further reforms affecting workplace culture and engagement will take effect.

Employers will only be able to refuse flexible working requests where the refusal is reasonable and properly explained. Generic business reasons will be harder to rely on, and requests must be considered on an individual basis.

In addition, employers will face expanded liability for third-party harassment, including harassment by customers or clients. Liability will arise where reasonable preventative steps have not been taken.

For small, customer-facing businesses, this reinforces the need for basic policies, clear reporting routes, and a willingness to act when issues arise.

Key milestones to plan around are:

• April 2026: Increased cost and protection through SSP and day-one paternity leave

• Mid-to-late 2026: Greater scrutiny of dismissal and limits on contractual change

• Late 2026: Reduced flexibility in long-term zero-hours arrangements

• 2027: Unfair dismissal rights after six months, plus stronger flexible working and harassment obligation.

The Employment Rights Act 2025 reshapes employment risk gradually, but decisively. However, the changes are significant and can impact small business if they are not planned for. Now is the time to review your employment handbook and employment policies, and if these are lacking then now is the time to find yourself some good HR support.

Full details of the Employment Rights Act 2025 and training on this can be found as ACAS: https://www.acas.org.uk/employment-rights-bill