Employment Rights Act: Changes from 6 April SMEs should know about

April is finally here, and for small businesses across the country, it means a lot of new changes are landing at once. 

While it may start with April Fool’s Day, this month is no joke for SMEs. Among the enforcement of Making Tax Digital (MTD) for sole traders and landlords, the rise in the National Minimum Wage and the reevaluation of business rates, small businesses are already facing significant operational pressures.

And on top of all this, the new reforms for the Employment Rights Act 2025 will officially come into force from 6th April. With aims to protect employees from unfair treatment and improve workplace transparency, the changes represent some of the most significant updates to UK employment law in years.

Here are the most important changes that will be enforced from this date.

Statutory Sick Pay (SSP) reforms

Statutory sick pay (SSP) will be payable from the first day of an employee’s absence, eliminating the previous three-day waiting period. 

Additionally, the requirement to earn above the Lower Earnings Limit (LEL) will also be removed, meaning all workers will be eligible for SSP, regardless of earnings. For those earning below the standard SSP rate, payment will either be a flat weekly rate or 80% of their normal weekly earnings (whichever is lower).

For businesses, this comes with a significant risk to budgets, particularly with SMEs losing £29bn annually due to sickness-related productivity losses. 42% of firms also reported that SSP reforms will have a negative impact on their business.

“Day One” family leave rights

The 26-week qualifying period for paternity leave will be scrapped, and employees will have the right to take it from their first day of employment.

The new paternity leave system will also be more flexible, including a shorter notice period from 15 weeks to 28 days and allowing fathers or partners to take paternity leave even if they have already used shared parental leave.

Moreover, the Act is implementing the bereaved partner’s paternity leave, giving employees up to 52 weeks of unpaid leave if the mother or primary adopter dies within the child’s first year.

Collective redundancy

The Employment Rights Act is strengthening its rules around workplace layoffs, including stricter consultation requirements and higher penalties for employers who fail to follow the law.

The maximum “protective award” for failing to consult during collective redundancies will double from 90 days to 180 days of uncapped pay per employee. 

The threshold for triggering collective consultation is also expected to change in 2027. Currently, employers must consult if they propose 20 or more redundancies at a single establishment within 90 days. 

However, under the new rules, collective consultation will be required if both the current threshold and a new organisation-wide trigger (a total number of redundancies across the entire company, regardless of how many occur at each site) are met.

Whistleblowing protections for sexual harassment

Disclosures around sexual harassment will explicitly be categorised as “protected disclosures” under whistleblowing law, formalising legal protections for those who report it.

Put simply, if an employee reports sexual harassment in the workplace, this is now more clearly treated as whistleblowing, meaning they are legally protected from retaliation. This includes protection from being dismissed, demoted, or treated unfairly because they spoke up.

The aim is to encourage employees to report misconduct without fear, particularly as research from whistleblowing charity Protect reveals that Gen Z workers (aged 18-24) were the least likely to blow the whistle compared to older colleagues. It also found that 67% would report sexual harassment, the lowest rate of all age groups.

However, the UK’s whistleblowing training gap means that businesses will need to improve staff training, update policies, and create clear reporting channels to remain compliant and ensure that employees understand their rights.

Other important changes

Here are three other significant changes coming that small businesses need to be aware of to avoid costly mistakes.

Annual leave record-keeping

Employers now have clearer duties to keep accurate records of workers’ annual leave for six years. Businesses must keep a record of any ordinary and additional annual leave, leave carried forward from previous years, details of holiday pay (including pay elements that have been included or excluded) and any payments in lieu of annual leave (including for carried-over leave). Failure to do so can result in criminal fines.

Trade union recognition reforms

Unions no longer have to prove they are likely to win a recognition ballot when applying to the Central Arbitration Committee (CAC). Instead, they just need to show that at least 10% of the proposed bargaining unit are union members. 

Once a ballot takes place, the old requirement that at least 40% of workers must vote in favour will be removed. For employers, it means even a small group of employees can now successfully bring a Union into a workplace, even if the rest of the staff is indifferent or simply forgets to vote.

Fair Work Agency (FWA)

This new enforcement body will be introduced on 7th April to oversee how employment rights are upheld. The Fair Work Agency (FWA) will also have the power to inspect workplaces, investigate possible breaches, issue penalties or underpayment notices, and support compliance.

Over time, its remit will extend to include the enforcement of holiday pay, SSP, and other employment rights. It’s also intended to act as a “single point of contact” for employees to report issues and get assistance, including potentially helping them bring claims to employment tribunals on behalf of workers.

What else is coming this year?

Further expansions of the Employment Rights Act 2025 are expected to be enforced in October 2026. This includes the following:

Tribunal time limits doubled

The standard time limit for employees to bring most claims to an employment tribunal — including unfair dismissal, discrimination, and harassment — will increase from three months to six months.

New trade union rights

When providing a “Section 1” statement (the written statement of particulars) to new hires, employers must now include a standard written notice advising them of their right to join a trade union. 

Protection from detriment means employees cannot be treated unfairly, penalised, or disadvantaged because they exercise a legal right at work (such as whistleblowing, annual leave, flexible working requests, etc.)

Additionally, unions will gain a new statutory right to request physical or digital access to workplaces to meet, recruit, or represent workers. If an agreement cannot be reached, CAC can order access and fine non-compliant employers up to £75,000.

“All reasonable steps” for harassment

Employers must actively prevent harassment, not just respond after it happens. This can include clear anti-harassment policies and training, effective reporting and grievance procedures, and prompt investigation and corrective actions when harassment occurs.

Employers will become legally liable if they fail to take all reasonable steps to prevent their staff from being harassed by third parties, such as customers, clients, or contractors.

Fire and rehire restrictions

Dismissing an employee to force through a change in contract terms (such lower pay or fewer holidays) will be deemed automatically unfair. However, this will only be allowed if the employer can prove that the change was “unavoidable” to prevent the business from collapsing.