Employment
Owner Managed Businesses

Robert Turner
June 2026

The Employment Rights Act 2025 received Royal Assent in December 2025 and introduces wide-ranging changes to employment law, with many measures being phased in over the next two years. Founders and leadership teams will need to navigate an evolving landscape to stay compliant while continuing to scale. You can view the full timeline of changes here. Below, we’ve set out the key takeaways founders should be considering at each stage.

December 2025

Don’t react yet, get ready.
The law is in place, but most changes haven’t landed. Use this window to audit contracts, policies and HR processes so you are not caught on the back foot.

January 2026

Move from awareness to planning.
Consultations are underway and direction of travel is clear. Start mapping what will need to change across hiring, policies and people management.

February 2026

Expect a more union‑friendly environment.

  • Key industrial action and trade union reforms begin to take effect, with stronger protections for workers taking protected industrial action.

April 2026

Operational shift.
This is where employer obligations begin to increase:

  • Day-one rights widen for paternity leave and unpaid parental leave, with SSP payable from day one
  • Protective awards for failure to collectively consult during a redundancy are doubled
  • Increased record-keeping compliance – maintain auditable records proving compliance with statutory holiday and pay entitlements for six years
  • Harassment and whistleblowing protections expand

Founder takeaway: your processes need to be tighter from day one of employment. There is less room for informality. 

July 2026

Your new hires now carry future risk.

  • Anyone hired from this point may be among the first cohort to gain ordinary unfair dismissal protection after six months’ service from January 2027.

Founder takeaway: hiring decisions matter more than ever. There’s less margin for error.

August 2026

Workforce organisation gets easier (for employees).

  • Further trade union reforms are expected to make organising and balloting more accessible, with some existing thresholds remaining in place until at least August 2026.

Founder takeaway: employee voice and organisation will be more visible and faster-moving.

October 2026

Employer obligations step up significantly.

  • Employment tribunal limitation periods to increase from three months to six months
  • Employers must take “all reasonable steps” to prevent sexual harassment, including third-party harassment by clients or customers
  • New compliance requirements around unions, tips and workforce structures

Founder takeaway: risk exposure increases as does the need to take proactive steps, particularly if you rely on lean HR processes or client-facing teams.

January 2027

The big one, risk arrives earlier and costs more.

  • Ordinary unfair dismissal protection after six months’ service, rather than two years
  • The statutory cap on the compensatory award for unfair dismissal is removed, although awards will still be based on actual and projected loss
  • New restrictions on “fire and rehire” and “fire and replace” practices are expected

Founder takeaway:
You now have a very short window to assess and manage underperformance, and mistakes are significantly more expensive.

During 2027

Ongoing shift towards worker protection and predictability.

  • More rights for atypical workers (hours, shifts)
  • Stronger family and pregnancy protections
  • Further flexibility reforms
  • Continued strengthening of union rights

Founder takeaway: employment models that rely on flexibility, informality or ambiguity will be under pressure.

TBC

Further restrictions on confidentiality clauses expected.
Timing is unclear, but the direction of travel is towards tighter restrictions on provisions that prevent disclosures relating to harassment or discrimination.

Founder takeaway: assume less ability to rely on confidentiality provisions in sensitive employment situations going forward, particularly where harassment or discrimination issues arise.

Bottom line for founders:
This is not one change, but a steady tightening of employee protections. The biggest shift is timing: risk now arises much earlier in the employment lifecycle, so getting hiring, onboarding and early performance management right is critical. View our checklist on hiring employees here and the full timeline of what to expect from the ERA here.