UK Employment Rights Act 2025: The Fair Work Agency and What Changes in April 2026

The Employment Rights Act 2025 represents the most significant overhaul of employment law since the Employment Rights Act 1996. With implementation now well underway, employers face a series of substantive changes coming into force between now and April 2026. This briefing sets out what is changing and what your business should do to prepare.

Overview of the Employment Rights Act 2025

The Employment Rights Act 2025 was passed to strengthen workers' rights and provide better enforcement of employment law standards. The Act sets out a comprehensive programme of reform touching nearly every area of employment law: statutory sick pay, leave entitlements, unfair dismissal, collective redundancy, trade union rights, and whistleblower protection. The reforms are being implemented in stages, with the final wave arriving in April 2026.

The Act should not be viewed as a single point in time. Some provisions took effect immediately upon Royal Assent, others have already come into force, and several key changes are scheduled for April 2026. Employers who have not yet reviewed their policies and procedures against the Act's requirements will find themselves non-compliant in a matter of weeks.

The Government has been clear that enforcement will be strengthened. The creation of the Fair Work Agency, discussed below, is the cornerstone of this policy. Alongside that, the Acas Code of Practice on Disciplinary and Grievance Procedures has been substantially revised. Workers have new rights to be accompanied by a trade union representative in investigatory meetings, even where the worker is not a union member. These are not peripheral changes.

The Fair Work Agency: 7 April 2026

On 7 April 2026, the Fair Work Agency comes into operation. This new body brings together employment law enforcement functions that were previously scattered across multiple agencies. The Agency will combine the functions of the Employment Agency Standards Inspectorate, the Gangmasters and Labour Abuse Authority, and HMRC's National Minimum Wage enforcement team.

The Fair Work Agency will have a broad enforcement remit. It will investigate breaches of the National Minimum Wage, holiday pay, rest periods, Working Time Regulations, and employment agency standards. Importantly, it will also investigate alleged breaches of any worker protection under Part 2 of the Employment Rights Act 1996, which includes protection against unauthorised deductions from wages, unlawful suspension, and health and safety dismissals.

The Agency will have significant investigative powers. It can require employers to produce records, attend interviews, and provide information about workers' pay and conditions. In cases of non-compliance with notices issued by the Agency, the matter may be referred to the enforcement authorities, including local authorities, HMRC, and the Health and Safety Executive. Failure to comply with a notice from the Fair Work Agency can result in a fine of up to £20,000 for an individual and up to £100,000 for a body corporate.

For many employers, the creation of the Fair Work Agency means that employment law compliance is now a live issue. Previously, many breaches of employment law went undetected because enforcement was fragmented and under-resourced. The new Agency is expressly designed to be more visible and proactive. Every employer should expect contact from the Agency at some point. The question is whether that contact will reveal compliance or breaches.

Statutory Sick Pay from 6 April 2026

The rules on Statutory Sick Pay (SSP) are changing fundamentally. From 6 April 2026, SSP will be payable from the first day of absence, not the fourth. This means the three waiting days that currently apply will be removed.

The rate of SSP remains £116.00 per week (the rate in force at the time of writing, though this will be reviewed in advance of April 2026). However, the cost to employers will increase because SSP will now be payable from day one. An employee absent for three days will receive SSP for all three days, not just days four onwards.

Equally significant is the removal of the Lower Earnings Limit. Currently, SSP is only payable to workers earning at least £123 per week (as at April 2025). This threshold will be removed. This means workers earning below this level will now be entitled to SSP. This change brings the lowest-paid workers into the statutory sick pay scheme.

Employers should review their occupational sick pay policies immediately. Many employers offer enhanced sick pay arrangements to protect their business interests (for example, by requiring medical evidence after two absences in a period, or by operating a return-to-work interview process). These provisions must remain compliant with the new statutory minimum. If your occupational scheme is less generous than the statutory scheme, workers will be entitled to claim the statutory amount.

From a practical perspective, employers should ensure their payroll systems are updated to calculate SSP from day one and to include all workers regardless of earnings level. Your occupational sick pay policy should be revised to make clear how it interacts with the statutory entitlement.

Day-One Rights: Paternity Leave and Unpaid Parental Leave

Currently, an employee must have two years' service with their employer to claim most statutory protections, including the right to parental leave. This is changing. From 6 April 2026, paternity leave and unpaid parental leave will be available from day one of employment.

This means that an employee can take statutory paternity leave (which is currently two weeks, though this is under separate review) from their first day at work. Similarly, an employee will be entitled to up to 18 weeks of unpaid parental leave without having to meet the two-year qualifying period.

The significance of this change lies in administrative burden. An employee absent on paternity leave from their first week of employment requires the same return-to-work processing as any other employee, but the usual qualifying period will not apply. Employers should ensure that their payroll and HR systems are configured to recognise day-one rights and that managers understand that these rights apply regardless of length of service.

There is also a wider message. The shift towards day-one rights reflects a view that workers should not have to work for a qualifying period before basic protections apply. This applies to maternity and paternity leave. The Government has indicated that further day-one rights may be introduced in future legislative periods. Employers should anticipate this trend.

Collective Redundancy Protections: Doubling of Protective Awards

When an employer fails to consult with workers' representatives in advance of collective redundancies, the Employment Tribunal can make a protective award. This award compensates workers for loss of earnings during the period when consultation should have taken place.

From 6 April 2026, the maximum protective award will be doubled. Currently, the cap is 90 days' pay. This will increase to 180 days' pay. For a worker on an average UK salary, this represents a liability of approximately £14,000 per worker, multiplied by the number of workers affected.

If, for example, an employer makes 100 workers redundant without consultation, the total liability is potentially £1.4 million. This is a substantial commercial risk. Large-scale redundancy exercises must be planned with employment law compliance as a central consideration, not an afterthought.

The doubling of protective awards reflects a policy decision that the cost of failing to consult must be severe enough to deter non-compliance. In practice, this means employers must conduct proper consultation periods, document the consultation process, and engage with workers' representatives or elected representatives before announcing redundancies.

Industrial Action Protections: Automatically Unfair Dismissal from 18 February 2026

From 18 February 2026, a new ground of automatically unfair dismissal came into force. An employee cannot now be dismissed for taking part in official industrial action, even if the strike is unlawful. This applies for a period of 12 weeks from the start of the action, and thereafter if the employer has not taken reasonable steps to resolve the dispute.

This is a significant strengthening of protections for workers engaged in industrial action. Previously, an employer could dismiss strikers provided they dismissed all participants equally. Now, dismissal is unfair regardless of whether equal treatment is afforded.

For employers, this means that industrial action carries a higher cost. If workers take strike action, the employer cannot respond by dismissing the strikers. The only way to break an industrial action is to continue negotiating and reach a settlement. This fundamentally changes the power dynamic in industrial disputes.

Employers managing ongoing industrial disputes should be aware that dismissal is no longer an option to break the dispute, even if the action causes significant business disruption.

Trade Union Act 2016: Repealed Provisions

The Employment Rights Act 2025 repeals key provisions of the Trade Union Act 2016. Specifically, the requirements for strike ballots to meet a 50% turnout threshold and a 40% support threshold (in essential public services) have been removed. Strikes can now proceed on the basis of majority support in the ballot, without the additional thresholds.

This change makes it easier for workers to take industrial action. A simple majority in a properly conducted ballot now suffices. This is particularly significant in essential public services (health, education, transport, fire, water) where the additional thresholds previously applied.

For employers in these sectors, this means industrial action is now more likely. Contingency planning for strike action is sensible practice. This is not to suggest that strikes will automatically occur, but rather that the legal barriers to strikes have been lowered.

Whistleblower Protections and Sexual Harassment Reporting

From 6 April 2026, new whistleblower protections come into force. A worker who reports alleged sexual harassment will be protected against dismissal and detriment as if they were making a public interest disclosure under section 103A of the Employment Rights Act 1996.

Currently, a worker who reports sexual harassment internally is protected against dismissal only if the disclosure is made in the public interest. The new provision removes this requirement. A worker can report sexual harassment to their employer and claim protection against dismissal even if the disclosure is not made in the public interest.

This provision applies to reports made to the employer and also to reports made to the Equality and Human Rights Commission. The protection extends to workers reporting harassment by colleagues, managers, and third parties (such as clients or customers).

For employers, this means that internal harassment complaints must be taken seriously. An employee who makes a complaint and subsequently faces dismissal (or detriment such as reassignment, pay cuts, or exclusion from meetings) can claim protection. The dismissal will be automatically unfair and compensation will be awarded.

Best practice requires a clear anti-harassment policy, a transparent complaints procedure, proper training for managers, and thorough investigation of complaints when received.

What Employers Should Do Now

The changes introduced by the Employment Rights Act 2025 are not optional and they are not distant. Most take effect in April 2026, which means planning must begin immediately. The following steps should be taken:

Audit your policies: Review disciplinary, grievance, sick leave, leave of absence, and redundancy policies. Check that they comply with the new statutory minima. Ensure that provisions on day-one rights are included. Verify that your collective redundancy procedures contemplate the new protective award caps.

Update your systems: Ensure payroll and HR systems are configured to calculate SSP from day one and for all workers. Check that your records management systems are capable of handling Fair Work Agency inquiries. If you use a payroll provider, ask them about their implementation plans.

Train your managers: Line managers and HR staff must understand the new rights. If your managers do not understand their obligations, compliance will fail. This is particularly important in relation to day-one rights, SSP changes, and the protection against dismissal for industrial action.

Review grievance and disciplinary procedures: The Acas Code of Practice has been revised. Workers now have the right to be accompanied by a trade union representative in investigatory meetings. Ensure your procedures reflect this. If your business has union recognition agreements, review them in light of the new protections for industrial action.

Risk-assess redundancy plans: If you are contemplating redundancies, engage with employment law specialists now. The doubled protective award represents a significant financial risk. Consultation must be properly conducted and documented.

Anti-harassment measures: Review and strengthen your anti-harassment policies. Ensure complaints are logged, investigated, and documented properly. The new whistleblower protections for sexual harassment mean that complaints must be handled very carefully indeed.

How LexForm Can Help

Employment law compliance is now more complex than ever, and the stakes are higher. A breach of the statutory sick pay rules will result in arrears claims from workers and a potential Fair Work Agency investigation. A collective redundancy conducted without proper consultation could result in protective awards running to hundreds of thousands of pounds. An employee dismissed for reporting sexual harassment can claim automatically unfair dismissal with unlimited compensation.

LexForm's Employment and Labour Law team has deep experience in advising businesses of all sizes on employment law compliance. We advise on policy drafting, training, Fair Work Agency responses, redundancy planning, and tribunal representation. We work across multiple jurisdictions, including the United Kingdom, European Union jurisdictions, and other key employment law regimes, so we can provide advice that considers your global operations.

Whether you need a full employment law audit, advice on a specific procedure, or representation in a dispute, we are here to help. Our team includes solicitors and advocates with significant tribunal experience. We understand both the letter of the law and the practical realities of business.

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