What is the employment rights act in the UK?

From 6 April 2026, the Employment Rights Act 2025 triggered the biggest expansion of UK workplace rights since the original Employment Rights Act 1996 — making paternity and unpaid parental leave day-one rights, and adding a new Bereaved Partner's Paternity Leave.

The 1996 Act still defines the legal framework between employers and employees in the UK, setting minimum standards for contracts, pay, dismissal, redundancy and wider HR and payroll responsibilities. The 2025 reforms now overlay several day-one entitlements on top of that backbone, changing how contracts, leave and payroll must be administered in 2026/27.

What is the purpose of the Employment Rights Act?

The Employment Rights Act 1996 sets minimum workplace rights, covering contracts, pay, dismissal, and redundancy across all sectors. For the 2026/27 tax year, employers must follow these rules to remain compliant with UK employment law and avoid disputes or penalties. 

What is the role of the Employment Rights Act in UK labour law?

Understanding the role of the Employment Rights Act is crucial to ensure compliance with UK employment law. This legislation sets the legal framework for the relationship between employers and employees, defining minimum rights, obligations, and workplace standards. The Act consolidates key employment rules covering areas such as contracts, pay protection, dismissal, and redundancy. It ensures consistency across sectors and provides a reference point for resolving workplace disputes.

💡 Good to know: Some rights apply immediately, while others require a minimum length of service.

Who is protected under the Act?

Find out who is covered by the Employment Rights Act, as the level of protection depends on employment status and the nature of the working relationship.

• Employees benefit from the full range of rights under the Act, including protection against unfair dismissal, statutory redundancy pay, and minimum notice periods. They typically work under a contract of employment with a higher level of control from the employer.

• Workers have more limited rights, such as protection against unlawful wage deductions, entitlement to the National Minimum Wage, and paid holiday. However, they do not usually qualify for rights like unfair dismissal or redundancy pay.

• Self-employed individuals are generally not covered by the Act, as they operate their own business and are responsible for managing their own tax and working arrangements.

⚠️Warning: Misclassifying workers carries significant legal and financial risks. The most common error is treating employees as self-employed, depriving them of rights they are legally entitled to, such as statutory maternity pay. HMRC penalties can include backdated taxes, National Insurance contributions, and fines of up to 100% of the unpaid tax.

What are the key employee rights under the employment rights act?

The Employment Rights Act establishes fundamental principles that have been integrated into UK employment law rights and that employers must ensure are fully upheld. These rules apply throughout the entire employment lifecycle, from hiring and onboarding to termination and redundancy. They cover key areas such as written employment terms, protection of wages, notice periods, and safeguards against unfair dismissal. Employers must understand and apply these rights correctly in their day-to-day HR and payroll processes.

What is a written statement of employment and what must it include?

The Employment Rights Act requires employers to provide a written statement of employment particulars from day one, making it a fundamental obligation. This document sets out the essential terms of the working relationship, including pay, working hours, job role, place of work, and notice periods. Its purpose is to ensure transparency from the outset and to create a clear mutual understanding between employer and employee. By formally outlining these key conditions, the written statement helps reduce misunderstandings and provides a reliable reference point in case of disagreements or disputes.

📌 Example: A compliant written statement should clearly specify the employee’s salary, expected working hours, job responsibilities, and applicable notice period.

What is unfair dismissal and how are employees protected?

Employee dismissal rights ensure that individuals are treated fairly when their employment is terminated. Employers must follow a lawful procedure and provide a valid reason, such as conduct, capability, redundancy, or a legal restriction. 

They must also act reasonably throughout the process by carrying out appropriate investigations, allowing the employee to respond, and following internal procedures. Employees are only eligible to claim unfair dismissal after completing the required qualifying period of employment, unless the dismissal is considered automatically unfair.

However, certain dismissals are considered automatically unfair under the Employment Rights Act 1996 regardless of service length, including those related to discrimination, whistleblowing, or the exercise of statutory rights.

To avoid having to pay compensation for unfair dismissal and becoming involved in legal proceedings, employers must pay close attention to both the reason for dismissal and the procedure followed, ensuring full compliance with employment law at every stage.

Currently, employees are only eligible to claim ordinary unfair dismissal after 2 years' continuous service. The Employment Rights Act 2025 removes this threshold in a future phase, making unfair dismissal a day-one right subject to a statutory "initial period of employment", implementation is expected in 2027 under secondary regulations.

What are redundancy rights and how is redundancy pay calculated?

Under the employment rights act, redundancy is defined as a fair reason for dismissal when a role is no longer required, for example due to business closure, workplace relocation, or a reduced need for employees to carry out certain work. Employees with at least 2 years of continuous service may qualify for statutory redundancy pay, calculated using a statutory formula based on:

• Age

• Length of service

• Weekly pay; from 6 April 2026, payments are capped at £751 per week, with a maximum total payment of £22,530 (Employment Rights (Increase of Limits) Order 2026, SI 2026/310).

This structured approach ensures consistency and fairness in redundancy payments across different sectors, while also providing employees with financial support during periods of transition.

📌 Example: A 45-year-old employee with 10 years' continuous service earning £800 per week receives statutory redundancy pay of £10,514: 4 years above age 41 at 1.5 weeks' pay (capped at £751) + 6 years between 22 and 40 at 1 week's pay (£751 × 6).

When can employees take time off for dependants?

Under s.57A of the Employment Rights Act 1996, employees have the right to take time off in emergency situations involving a dependant, such as illness, injury, or unexpected care disruptions.

This leave is generally unpaid and must be limited to the time reasonably necessary to deal with the situation. Within the broader framework of family-related protections, this also includes parental leave and employment rights for pregnant workers, which support work–life balance. Eligible employees can take up to 18 weeks of unpaid parental leave per child, up to the age of 18, usually limited to 4 weeks per year.

The Employment Rights Act framework also supports paternity leave rights. Eligible employees may be entitled to up to 2 weeks of statutory paternity leave following the birth or adoption of a child. According to UK government guidance, this leave can be taken in one-week blocks and must usually be taken within 52 weeks of the birth or adoption placement.

👉 To note: This right is intended for urgent and unforeseen circumstances only, not for arranging or providing long-term care.

What obligations must employers meet under the employment rights act?

The Employment Rights Act sets out employer obligations to comply with key legal requirements on pay, contracts, and termination of employment, within the broader framework. These obligations form the foundation of a lawful employment relationship and are essential for maintaining fair and transparent workplace practices.

Employers must:

• provide clear written terms of employment

• pay employees correctly and on time

• follow proper procedures when making contractual changes or ending employment

• apply lawful procedures when making contractual changesor ending employment

• protect employees from unauthorised wage deductions

They must also ensure:

• compliance with statutory notice periods

• protection against unlawful wage deductions

• fair and lawful dismissal procedures

These obligations apply from day one of employment and must be managed consistently across HR and payroll processes.

What must employers include in payslips and how should pay be managed?

The Employment Rights Act requires employers to provide accurate itemised payslips to employees on or before each payday . A payslip must clearly show key pay details, including gross pay, any deductions, and the final net pay received. Deductions from wages must always be lawful. This means they must either be required by law (such as Income Tax and National Insurance) or agreed in advance in writing between the employer and the employee. Unauthorised deductions can lead to legal disputes and claims. Payslips must also reflect how pay is calculated, especially in cases where working hours vary. For employees with variable hours or pay, the number of hours worked should be clearly stated to ensure full transparency.

⚠️ Warning: incorrect payslips or payroll errors may lead to employee claims and potential HMRC penalties, particularly where employers fail to meet statutory pay, reporting, or record-keeping obligations.

What are the legal notice periods and termination rules?

Under the Employment Rights Act 1996, statutory (legal) notice periods define the minimum amount of notice an employer must give when terminating an employee’s contract. These rules, set out in the Employment Rights Act, ensure a fair transition period and provide employees with time to prepare for the end of their employment.

For the 2026/27 tax year, employees are entitled to:

• at least 1 week’s notice after 1 month of continuous service

• 1 additional week of notice for each full year of service, up to a maximum of 12 weeks

Employers may offer longer notice periods through the employment contract, but they cannot provide less than the statutory minimum. In all cases, notice must be handled as part of a fair and lawful termination process, in line with proper procedures.

📌 Example: An employee with 5 years of continuous service must receive at least 5 weeks’ notice before their employment ends.

What payroll records must employers keep and why are they important?

Maintaining accurate payroll records is a key legal requirement under the Employment Rights Act for all employers. These records must document employee pay, working hours, and any deductions made, ensuring transparency and compliance with UK employment and tax regulations. Accurate record-keeping supports correct wage calculations, helps demonstrate compliance during audits, and provides essential evidence in case of disputes or employee claims. Employers must ensure that records are complete, up to date, and easily accessible when needed. Payroll records should be retained for at least 3 years and must accurately reflect all payments and deductions processed through payroll systems, including those reported under PAYE.

👉 To note: Well-maintained payroll records not only support compliance but also help resolve disputes quickly and ensure accurate tax reporting.

What changed under the Employment Rights Act 2025?

The Employment Rights Act 2025 introduces significant reforms to UK employment law, with the first wave in force from 6 April 2026:

• Day-one rights: paternity leave and unpaid parental leave are now day-one rights (GOV.UK) — previously requiring 26 weeks and 1 year of service respectively.

• Bereaved Partner's Paternity Leave: new statutory day-one right to up to 52 weeks of unpaid leave for a partner who loses the child's primary carer (SI 2026/237).

• Collective redundancy protective award: maximum liability doubled from 90 to 180 days' pay.

• SSP reform: lower earnings threshold removed; SSP payable from day one of sickness.

• Zero-hours contracts: right to a guaranteed-hours contract after a 12-week reference period.

Further reforms (day-one unfair dismissal protection, fire-and-rehire restrictions) are expected to follow in 2027 under secondary regulations.

Why does the employment rights act matter for businesses?

The Employment Rights Act 1996 plays a central role in defining how UK businesses manage employment relationships in 2026/27, forming a key part of the broader laws for employee rights. It establishes clear legal standards on key areas such as pay, contracts, and dismissal, providing a structured framework that employers must follow to remain compliant.

By setting minimum rights and obligations, the Act helps businesses operate consistently across HR and payroll processes, reducing uncertainty and supporting fair treatment of employees. It also serves as a reference point in case of disputes, guiding both employers and employees on what is legally expected. 

Following these rules is essential to minimise legal risks, avoid employment tribunal claims, and prevent financial penalties or operational disruptions.

How does the Employment Rights Act impact HR and payroll processes?

The Employment Rights Act directly influences how HR and payroll functions are structured and managed within UK businesses in 2026/27. It requires employers to align key processes, such as employment contracts, payslip issuance, and dismissal procedures, with clear legal standards.

 From an HR perspective:

• ensure employee documentation is accurate and up to date from day one

• maintain compliance with legal requirements

• manage disciplinary actions, grievances, and terminations fairly

From a payroll perspective:

• calculate wages accurately

• apply lawful deductions such as Income Tax and National Insurance

• ensure accurate and timely reporting through PAYE

Strong coordination between HR and payroll is essential to avoid errors and compliance risks.

💡 Good to know: Using automated payroll software can significantly reduce manual errors, streamline processes, and help ensure ongoing compliance with employment law requirements.

How does the Employment Rights Act help build trust with employees?

Consistent application of the Employment Rights Act plays a key role in building employee trust and creating a stable, transparent workplace. When employers apply clear rules around contracts, pay, and dismissal procedures, employees have a better understanding of their rights and what to expect throughout their employment. Fair and consistent practices help reduce uncertainty, prevent misunderstandings, and foster a positive working environment. 

Consistent application of the Employment Rights Act 1996, combined with the new 2025 Act day-one rights, gives employers a defensible audit trail in the event of an HMRC compliance check, an Acas conciliation, or an employment tribunal claim.