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As you will be aware, the Employment Rights Act 2025 is bringing significant changes to the employment world with its implementation staged between 2026 and 2027. The below is a short recap of the main changes due to take effect from 6 April 2026:
Protective award for collective consultation
When employers plan to make 20 or more redundancies within a 90‑day period, they are required to carry out collective consultation. If they fail to meet these obligations, affected employees have in the past been able to bring claims in the employment tribunal for a protective award of up to 90 days’ actual gross pay per employee.
However, the already expensive protective award for failing to collectively consult will double from 90 to 180 days per affected employee, raising the stakes for non-compliance significantly.
Whistleblowing protections for sexual harassment
Sexual harassment is being added to the list of qualifying disclosures within the relevant whistleblowing legislation. Any qualifying disclosure will be a protected disclosure if it has been made to the employer (or other specified person) subject to certain conditions (such as reasonable belief and public interest).
Protected qualifying disclosures are afford employees protections against dismissal and both employees and workers are protected against suffering a detriment on grounds of having made a protected qualifying disclosure. It is therefore ever more important that employees and workers are not treated less favourably for whistleblowing in relation to allegations of sexual harassment.
Statutory Sick Pay (SSP)
SSP will be payable from the first day of illness, instead of having three waiting days and SSP becoming payable on the fourth day. The lower earnings limit is also going to be removed so that SSP, which essentially means that all workers will be eligible for SSP.
However, this will not mean that lower earners can bring home a higher income on SSP than their actual earnings. Whilst there will be no lower earnings limit, the weekly rate of SSP will be the lower of either the prescribed weekly rate and 80% of the employee’s normal weekly earnings.
Records of holiday entitlement and pay
There is a new requirement for employers to maintain records demonstrating their compliance with holiday entitlement, including details of leave taken and pay. Whilst there is no prescribed format yet, the Act suggests employers may have records “created, maintained and kept in such a manner and format as the employer reasonably thinks fit”, but it is likely that further guidance will later be published on this point.
Importantly these records must be retained for six years going forwards. Failure to do so will constitute a criminal offence and may result in potentially unlimited fines. Further, the Fair Work Agency (detailed below) will have the power to investigate, enforce and impose penalties against non-compliance and will be able to look back retrospectively at annual leave records from December 2025, so it is important to retain appropriate records from that point onwards, if not already doing so. Employers should also ensure any relevant Data Protection or retention policies allow for the records to be kept for this period of time.
Fair Work Agency (FWA)
From 7th April 2026, a new body will be established to oversee compliance with certain employment rights, operating within the Department for Business and Trade (it will not have a separate legal identity). The FWA will act as a central point of support for both employers and employees, helping business comply with the law while also enforcing it where necessary.
Its powers will include investigating breaches, inspecting workplaces, requiring the production of relevant documents, issuing notices to recover underpaid wages, and imposing civil penalties on employers who fail to meet obligations such as paying national minimum wage.
This may shape how certain employment disputes are dealt with in the future, particularly those related to holiday pay and national minimum wage as the FWA will also have powers to bring claims in the Employment Tribunals and recover its own costs.
Employers should already by complying with their obligations to pay correctly, but now may be a good time to carry out compliance audits to be sure.
Parental & Paternity Leave
Eligible employees will have the right to take parental and or paternity leave from day one of their employment as the requirement for qualifying service is to be removed. The service requirement for parental and paternity leave was previously one year and 26 weeks respectively, and whilst not a new requirement – a subtle reminder that those using their statutory leave entitlements should not be put to any detriment as a result, regardless of their length of service.
Simplifying TU recognition
Simplification is to be implemented by the following changes:
- Acceptance of TU recognition applications currently have a 10% threshold, which is being replaced with a test of anywhere between 2% and 10%;
- Removing the obligation for a trade union to demonstrate that there is likely to be majority support for trade union recognition; and
- Removing the 40% support threshold from recognition ballots. Instead, only a simple majority of those voting will be needed.
Other changes effective from April: Vento Bands
Whilst not part of the ERA 2025 updates, it should also be noted that in relation to Employment Tribunal claims submitted on or after 6 April 2026, the Vento Guidelines have been updated. The Vento guidelines are essentially different bands based on severity used to assess the compensation for injury to feelings or non-financial harm in cases such as discrimination and whistleblowing.
The updated bands are as follows:
- Lower band £1,300 to £12,600 (for less serious cases);
- Middle band £12,600 to £37,000 (for more serious cases that do not merit an award in the upper band);
- Higher band £37,700 to £62,900 (for most serious cases and in exceptional circumstances, there is possibility to exceed the upper limit).
If you have any concerns in relation to the above changes and how they affect you, please contact our employment team.