As we enter April and finish our Easter weekend, a significant tranche of new employment law rights will take effect under the Employment Rights Act 2025, and is the first major implementation of this legislation. Changes include increased penalties for failure to conduct collective redundancy consultation, expanded whistleblowing protections to cover sexual harassment, simplified trade union recognition processes, and new requirements for employers to retain annual leave records for six years. Additionally, a new enforcement body will be established to oversee and enforce these regulations. These changes will affect employers who may be planning larger-scale redundancies from 6 April onwards, and the internal policies and procedures that Companies currently have.
The changes in this article detail the specific reforms made under the Employment Rights Act 2025, and is separate from the changes to statutory sick pay and national minimum wage rates which are also taking effect in April, as detailed in our previous updates:
- Waiting days are over – Statutory Sick Pay Reform from 6 April
- National Minimum Wage rises in 2026: Key implications for Employers
Increased Penalties for Collective redundancies
Effective from 6 April, there will be a significant increase in maximum protective awards for employers failing to comply with collective redundancy consultation obligations, which arise when an employer is proposing 20 or more redundancies at a single establishment within a period of 90 days;
- The maximum protective award for non-compliance with collective redundancy obligations will increase from 90 days’ pay to 180 days’ per affected employee. The rate of a day’s pay is uncapped.
- This change will apply to dismissals which happen on or after 6 April.
Expanded whistleblowing protections to cover sexual harassment
Also effective from 6 April, workers who report sexual harassment at work can benefit from protection under whistleblowing law, and are deemed to amount to “protected disclosures”. This change ensures that workers who report sexual harassment are protected under whistleblowing protections against detriment and unfair dismissal as retaliation for having raised such concerns.
Previously, a worker was required to demonstrate that a disclosure relating to sexual harassment fell within an existing category of wrongdoing, such as a risk to health and safety or criminality, and believe the disclosure was made in the public interest, in order to qualify for whistleblowing protection. Whilst a disclosure of sexual harassment must still be made in the public interest and to the correct entity in accordance with the legislation to amount to protected disclosure, this change is a clear shift toward explicitly recognising sexual harassment as a serious and distinct form of wrongdoing and expands the kind of information which is protected under whistleblowing rules.
A further implication of this is that by law, an individual cannot be prevented from making a protected disclosure, either to an employer, relevant regulator, law enforcement or other specific “prescribed body” set out in the legislation. Now that a report of sexual harassment is deemed to amount to a protected disclosure provided it is made in the public interest, such disclosures cannot legally be prevented under any confidentiality provisions, such as within a settlement agreement or other non-disclosure agreement and will change employers’ and claimant’s strategies in settlement of sexual harassment claims.
Simplified trade union recognition processes
From 6 April, the rules set out in the Trade Union and Labour Relations (Consolidation) Act 1992 will be amended by Schedule 6 of the Employment Rights Act 2025 to change how a union becomes recognised by an employer, for collective bargaining purposes.
Where the employer refuses to recognise a union voluntarily, the trade union can apply to the Central Arbitration Committee (CAC) for statutory recognition.
The current rules are as follows:
the union must show:
- that at least 10% of the workers in the proposed bargaining unit are members of that union; and
- They are likely to have majority support for trade union recognition.
The CAC can either automatically recognise the union or hold a ballot: the union must obtain a majority and at least 40% of the workforce in the proposed bargaining unit must support recognition.
From 6 April, the law changes to the following for recognition applications made on or after 6 April:
- The current 10% threshold for the CAC to accept a recognition application can be amended by Regulations to anything between 2% and 10%;
- removal of the requirement for the union to show there’s likely to be majority support for recognition; and
- the 40% support threshold is also abolished so the union will just need a simple majority to succeed.
If the above criteria is satisfied, it will then be recognised to carry out collective bargaining.
The law change is expected to increase the number of trade unions recognised, and in turn, the number of employees covered by collective bargaining.
Requirement for employers to keep records of annual leave for six years
Prior to this change, there has been no statutory obligation for employers to retain records of annual leave and holiday pay (albeit it has always been good practice). However, this change now provides a clear statutory timeframe and purpose: to ensure employees can enforce their holiday rights and employers can demonstrate compliance.
From 6 April businesses will be required to keep ‘adequate’ records of annual leave for six years. Records may be created and maintained in a manner determined by the employer. Although this is likely to increase the administrative burden on businesses, it will be important to comply with this requirement particularly with the establishment of the new enforcement body, the Fair Work Agency.
Information that will require to be recorded includes:
- Ordinary and Annual leave
- Annual leave carried forward from previous years
- Details of holiday pay, including which pay elements have been included or excluded
- Any payments in lieu of annual leave, including for carried over leave.
Changes to Family Leave
From 6 April, parental leave, which is a statutory right to take up to 18 weeks unpaid leave in respect of a child they have parental responsibility up to their 18th birthday to care for that child (up to a maximum of 4 weeks each year) will become a day-one right for employees. Currently, it is available only for employees with one years’ continuous service.
Statutory paternity leave, which is a statutory right for spouses and partners of the mother giving birth (or child’s adopter) to take paid leave of up to 2 weeks at any time from birth (or adoption placement) and 52 weeks after that date, will also become a day one right for employees. Currently, an employee must have 26-weeks continuous service at birth or adoption placement, but it will become a day-one right for births on or after 6 April 2026, or births which occur before this date but had an expected week of childbirth occurring on or after 5 April 2026. It will also apply to adoption placements taking place on or after 6 April 2026. It will also become a day one right if the child’s primary carer dies on or after 6 April, even though the date of birth or placement was before 6 April. From 6 April eligible persons will also be able to take paternity leave after a period of shared parental leave.
The Fair Work Agency (FWA)
The Fair Work Agency (FWA) will be introduced as a new public body from 7 April. The FWA is a statutory advisory board with business, trade union and independent representation will guide the agency. It will consolidate enforcement of employment rights, including the National Minimum Wage, agency worker protections, and gangmaster licensing.
The FWA will have powers to investigate breaches, issue civil penalties, and act against non-compliant employers. It will also be able to issue underpayment notices in respect of certain statutory payments, including statutory sick pay and holiday pay. These notices may require payment within 28 days, can cover underpayments going back up to six years, and may include financial penalties. Penalties in such cases may be up to 200% of the sum in the notice, subject to a maximum of £20,000 for each individual.
A new power will permit the Secretary of State, presumably through the FWA, to bring tribunal proceedings in place of a worker, where it appears that they are not making a claim, but not if an underpayment notice has been given. If a claim is upheld, a tribunal may still make a financial award in the worker’s favour.
The FWA will adopt the Labour Marketing Enforcement system that currently exists. This system provides for voluntary agreements with non-compliant employers setting out improvement measures. Voluntary agreements and improvement measures may be ordered by a court where the employer resists or imposed upon conviction of a labour market offence. The employer risks fines if they fail to comply with an order or obstructs enforcement.
Next Steps for Employers
Employers must be proactive and prepared for the significant shake-up of the law and the current procedures, and the Employment Rights Act 2025 is now making a real world impact in worker’s rights. Employers will require an inward lens to their own policies and procedures to ensure they comply with these significant changes.
Policies and Procedures
Employers should review and update all relevant policies to reflect the new legal framework, in particular, whistleblowing, sexual harassment and redundancy policies. Leave policies, including annual leave accrual, carry-over leave, and holiday pay, should be updated to comply with the new six-year record keeping requirement. All company policies should also be reviewed to ensure fairness, transparency, and consistency, helping to prevent disputes and the need for union involvement.
HR and Management Training
HR teams and managers should be briefed and receive training on the updated law. Managers need to understand collective redundancy and compliance penalties, updated whistleblowing protections for sexual harassment, and union recognition rules. Payroll and HR staff should be trained to accurately maintain leave and pay records, in preparedness for potential inspections or enforcement by the Fair Work Agency is also recommended.
Employee Engagement and Risk Management
Employers should be proactive in maintaining clear communication with employees. Engaging with employees regularly will help identify and address any concerns early, including dissatisfaction or potential interest in union representation. Employees should be informed about changes to whistleblowing policies, leave entitlements, and other procedures. Employers should also have a constructive plan for engaging with unions if recognition is sought.
Record-Keeping and Compliance
Accurate records of annual leave, carried over leave, holiday pay, and payments in lieu must now be maintained for six years. Records should be adequate and accessible, whether digital, paper, or hybrid. Reviewing current practices will help identify issues and ensure compliance with the updated legal framework.
Legal and Regulatory Preparedness
Employers should consider seeking professional advice on redundancies, union recognition, or potential disputes. Employers should also prioritise preparation of enforcement by the Fair Work Agency and review their current compliance to maintain good employment practice. This will aid and facilitate the preparedness to respond to inspections or enforcement.
How can we help?
For further information about issues raised in this article, please contact a member of our Employment team.
David is a Partner in our Employment and Immigration team. He advises employers and employees on all aspects of employment law.... Read More
