Ignition Law Hosts Webinar on the Employment Rights Act 2025: What SMEs Need to Know
On 24 February 2026, Ignition Law hosted a webinar led by Nicky Cranfield, Head of Employment, examining the far-reaching changes introduced by the Employment Rights Act 2025 (ERA 2025) and what they mean for SMEs .
The session walked attendees through the implementation timeline and highlighted the key reforms taking effect from April 2026 through to 2027 and beyond .
April 2026: Immediate Workplace Impact
The first wave of reforms, coming into force in April 2026, will bring several significant operational and cost implications for SMEs.
Day One Rights for Paternity and Parental Leave
Paternity leave and parental leave will become Day One rights, removing existing qualifying service requirements (although pay eligibility rules will still apply) . Employers will need to update policies and ensure managers are trained on the new rules.
Statutory Sick Pay (SSP) Reform
SSP will become payable from the first day of sickness, removing the current three “waiting days”. The lower earnings threshold will also be removed, and SSP will be payable at 80% of weekly earnings . SMEs should prepare for potential cost increases and review contracts and policies accordingly.
Whistleblowing Changes
Sexual harassment will be explicitly added as a “relevant failure” for the purposes of protected disclosures . While the practical impact may be limited, businesses should review whistleblowing policies to ensure alignment.
Creation of the Fair Work Agency
From 7 April 2026, a new Fair Work Agency will begin consolidating enforcement powers currently held by bodies such as HMRC and the DWP . It will oversee compliance with SSP, national minimum wage, holiday pay, agency worker rights and more, signalling a more coordinated and potentially robust enforcement landscape.
Autumn 2026: Expanded Employer Liability
Third-Party Harassment
Employers will become liable for harassment of their staff by third parties (such as customers or contractors) where they have failed to take all reasonable steps to prevent it . The duty shifts from taking “reasonable steps” to “all reasonable steps”, raising the bar for compliance. Risk assessments, training, monitoring, and clear reporting mechanisms will be essential.
Extended Limitation Periods
The time limit for bringing Employment Tribunal claims will increase from three to six months , extending employers’ period of risk exposure.
Right to Join a Trade Union
Employment contracts will need to include an explicit statement confirming workers’ right to join a trade union, with further detail to be set out in regulations .
January 2027: Unfair Dismissal and Fire & Rehire
Unfair Dismissal Reform
The qualifying period for unfair dismissal will reduce from two years to six months, and the statutory compensation cap will be removed . This is likely to increase claims and risk, particularly in relation to probationary processes and senior executive exits.
Ending “Fire and Re-Hire” Practices
Dismissals for refusing certain contractual changes (such as reductions in pay or hours) will become automatically unfair, except in cases of serious financial difficulty affecting business viability . This reform places greater emphasis on consultation, transparency and careful change management.
2027 and Beyond: Broader Workplace Reform
The webinar also addressed anticipated future changes, including:
- Potential bans on dismissals during pregnancy, maternity leave, and other family leave (subject to further regulations) .
- A requirement that refusals of flexible working requests must themselves be “reasonable”, increasing scrutiny on decision-making .
- Extension of bereavement leave to all bereaved individuals .
- A ban on zero-hours contracts, including guaranteed hours obligations, reasonable notice of shifts and compensation for short-notice cancellations .
- Restrictions on NDAs in harassment and discrimination cases .
Key Takeaways for SMEs
ERA 2025 represents one of the most substantial overhauls of employment law in recent years. For SMEs, the recurring themes are clear:
- Increased compliance obligations
- Greater financial exposure
- Higher tribunal risk
- The need for proactive policy updates and manager training
Early preparation will be critical. Reviewing probationary processes, updating contracts, strengthening harassment prevention measures, and auditing shift allocation practices are all practical steps SMEs should now consider.
If you would like advice on how the Employment Rights Act 2025 affects your business, please contact Nicky Cranfield, Head of Employment at Ignition Law .
If you missed the webinar, watch it here:
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