Leading employment lawyers at Thackray Williams warn that some workers could fall victim to the Employment Rights Act 2025, which is intended to strengthen employee protections.
The firm’s employment team is noticing a significant increase in employers reviewing their workforce and contemplating restructures in anticipation of the new rights that will come into effect.
These employers are preparing for the additional costs and risks introduced by the Employment Rights Act 2025.
“With the next wave of changes coming into force in April, we’re seeing businesses not only look at their recruitment practices and tightening these significantly, but also considering whether they should streamline their workforce now and/or change pay and benefits so they are in the strongest position in advance of the additional rights coming into effect,” cautions Employment Partner, Megan O’Hara.
“Enhanced employment rights are, in theory, good news for workers. However, the ability to be agile and to adapt is key for businesses to be successful, profitable and meet clients’ evolving needs,” she explains. “The enhanced rights for employees potentially impact this flexibility, so this transitional period as firms prepare for the implementation of the ERA is creating new vulnerabilities for some workers.
“As part of future-proofing their organisations, we’re seeing business leaders consider whether they should retain all the staff they currently have, and whether they can maintain current pay and benefits, given the potential costs that will come into effect as these rights come into force.
“Particularly at risk are workers in industries that rely on flexibility to scale up and down in response to fluctuating demand, such as hospitality, leisure and care,” she warns.
The ERA is introducing and extending several rights for workers. From 6 April 2026, paternity leave and unpaid parental leave (up to four weeks per year per child, up to a maximum of 18 weeks) become day-one rights. Statutory Sick Pay will also be payable from the first day of absence (currently staff need to wait three days before they can claim it).
Starting in January 2027, employees will only need six months of service to file a claim for unfair dismissal, reducing the current requirement of two years. Additionally, the cap on dismissal compensation will be removed, allowing for unlimited compensation.
‘Fire and rehire’ (which allows businesses to fire staff who refuse to accept revised terms and re-employ them on the new conditions) will be severely restricted. Changes to existing terms regarding pay, pensions, hours and time off will require employees’ consent. Dismissal will not be an option if those changes are not agreed, unless the business is facing such severe financial difficulties that it may mean it cannot carry on as a going concern without such changes.
‘Zero hours’ contracts will be severely curtailed; employers will need to offer guaranteed hours reflecting a regular work pattern, give reasonable notice of shifts and provide compensation if shifts are cancelled, moved or cut short at short notice.
“The combination of increased costs, liabilities, admin requirements and resourcing pressures alongside reduced flexibility means many businesses are rethinking their workforce needs, making some workers more vulnerable to dismissal than they might otherwise be,” concludes Megan. “Some organisations are also rethinking their terms and conditions before their ability to change them is restricted.
“We’re also seeing recruitment freezes and increased hesitancy in taking on new staff, and we anticipate that employers may be less tolerant with new recruits, allowing them less time to “bed down” and show their ability, given the new, reduced six-month service eligibility to claim unfair dismissal.
“Decisions regarding an employee’s continued employment may be made much sooner going forwards than in the current climate, where employers effectively have a longer period to assess the suitability of recruits before they might be liable to an unfair dismissal claim.”
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