What is the Employment Rights Act?

The Employment Rights Act is a cornerstone of the government’s commitment to ‘Make Work Pay’, as set out in its document of the same name, as well as the 2024 Labour Manifesto.

The government has been clear that tackling unscrupulous employment practices is a priority for this parliament. Through its Keep Britain Working review, the government has also set out its objectives to tackle economic inactivity and ensure that more people can get into, and stay in, work.

Retailers are responsible employers who are already actively addressing much of the Act. There are, however, significant concerns that some provisions could have unintended consequences and, in particular, limit the industry’s ability to offer flexible/part-time work.

The Act received Royal Assent in December 2025. As a framework piece of legislation, an almost unprecedented amount of detailed work will be required in the consultation and implementation of the Act. This will include issues of the highest importance to retailers, including the approach to guaranteed hours and shift changes, treatment of seasonal work, and new trade union requirements.

The main policy areas, their potential impact, BRC positioning, and recent activity (including engagement with government) is outlined below. This page, alongside the HR community hub, will host all content related to the Employment Rights Act, so everything you need to keep up to date is in one place.

Key Links & Recent Activity

Employment Rights Bill - Campaign Playbook

Government publishes Employment Rights Bill Implementation Roadmap

Policy areas of the Employment Rights Act

Explore the key proposals in the Employment Rights Act and what they mean for retailers, employees, and the wider industry.

Status: Awaiting Consultation

1. Guaranteed Hours

What are the proposals for guaranteed hours in the Employment Rights Act?

As part of the Government’s plan to ban what it calls ‘exploitative’ zero-hours’ contracts, the Act introduces a requirement for employers to offer their employees on low or zero hours a permanent contract, with a guaranteed number of hours. The number of hours offered would be based on the amount an employee worked over a reference period.

What will be the impact for employers and employees?

There are a number of elements of these provisions which are yet to be decided, with specifics expected to be confirmed in secondary legislation, including:
- The length of the reference period - there are concerns that a short reference period (government had previously indicated 12 weeks as an initial period) would not adequately consider seasonal peaks – having a negative impact on flexible working – and cause a significant administrative burden.
- The definition of low hours – which will determine how many employees are brought into scope and have a significant impact on cost and administrative burden.
- The definition of ‘regularly worked’ – which will determine how a permanent offer of guaranteed hours will be calculated.

How these areas are defined will be crucial in establishing the impact on employers and employees.

What is the BRC’s position?

There are serious concerns that the guaranteed hours proposals in their current form will have significant unintended consequences. Retailers support the idea of cracking down on unscrupulous employers, but making continuous offers of guaranteed hours (even if an employee has made clear they do not want them) will only add to the significant cost burden the industry is under, and ultimately reduce the number of flexible job opportunities available.

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Status: Awaiting Consultation

2. Compensation for ‘short notice’ cancelled/curtailed shifts

What are the proposals for short notice compensation in the Employment Rights Act?

The Act introduces a requirement for employers to provide compensation for shift changes, cancellations, or curtailments at ‘short notice’ – a term expected to be defined in secondary legislation.

What will be the impact for employers and employees?

Most retailers publish rotas several weeks in advance and rarely make short-term cancellations to shifts. However, the extent of the impact on employers and employees will be determined by how ‘short notice’ is defined.

What is the BRC’s positioning?

Whilst the intentions behind the provisions are understood and broadly supported, the main point of concern lies with how a shift is confirmed to a worker. Clarity on how ‘reasonable notice’ will be defined would be welcomed, and the finalised arrangements should be practical for both employers and employees.

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Status: Implementation on January 1st, 2027

3. Day One Rights

What are the proposals for day one rights in the Employment Rights Act?

Unfair dismissal: Intention to change the point a worker qualifies for unfair dismissal from two years to six months.
Original proposals would have turned unfair dismissal into a day one right, but following discussions with employer groups and trade unions, government changed track, opting instead for a six-month qualifying period.

What will be the impact for employers and employees?

This is a significant change for employers, giving employees substantial new powers to bring forward claims of unfair dismissal after six months of employment.
There are likely to be increases in tribunal cases at a potentially significant cost to both parties.
Although the risk is reduced now the right is introduced after six months, rather than six months, there still may be an impact on hiring behaviour – if there is an increased risk of employees taking an employer to a tribunal, employers are likely to be more risk-averse in their hiring, which could have a detrimental impact on helping the economically inactive back into work, for example.

What is the BRC’s positioning?

The BRC welcomes the government’s move away from unfair dismissal as a day one right – a six-month qualifying period balances improving rights for workers whilst also mitigating unintended consequences for employers.
There are concerns about increases in tribunal claims for unfair dismissal, and that businesses might become more risk-averse in their hiring as a result.

6-Month Qualifying Periods

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Status: Some measures come into force 18th February 2026

4. Trade Union Measures

What are the proposals for trade union measures in the Employment Rights Act?

There are a large number of measures related to trade unions within the Employment Rights Act, including:
- Reforms making it easier for trade unions to access employees in the workplace.
- The introduction of electronic balloting
- Simplification of trade union recognition
- A new duty to inform workers of their right to join a trade union
- A repeal of the Strikes (Minimum Service Levels) Act 2023, and of the Trade Union Act 2016 – allowing government to change the thresholds for strike action, and extend its mandate.

What will be the impact for employers and employees?

Many retailers have developed strong and positive working relationships with trade unions, but there is concern that the proposals in their current form may impact these relationships.
There will likely be a significant increase in administrative burden, with retailers potentially having to work with multiple trade unions, which may not have any expertise in the industry.
It will become easier for unions to access employees in the workplace, for instance through the introduction of digital access, but continued contact from multiple unions may not bring any tangible benefit to workers.

What is BRC’s positioning?

Thresholds for union recognition should remain in place and should ensure that there is a meaningful democratic mandate in place for any decision.
Similarly, a meaningful threshold should be retained for strike action to avoid the potential for strikes without a clear mandate.

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Status: Implementation on April 6th

5. Statutory Sick Pay

What are the proposals for statutory sick pay in the Employment Rights Act?

Statutory sick pay, currently available to workers on the 4th day of sickness absence, will be available as a ‘day one’ right under provisions in the Employment Rights Act.
The existing lower earnings limit is also set to be removed, with those earning under this receiving 80% of their weekly earnings under the current provisions.

What will be the impact for employers and employees?

While there is a clear benefit for employees, Statutory sick pay from day one is likely to be the single most expensive measure within the Act.
This will be another significant cost for retailers at a time where the cost burden is particularly heavy.
It is possible that employers will also have to deal with increased absence rates as a result of statutory sick pay being available from the first day of sickness absence.

What is BRC’s positioning?

Whilst retailers are supportive, the cost must be acknowledged in the context of all the other increased costs the industry is currently facing.

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Status: Implementation expected October 2026

6. Sexual Harassment

What are the proposals for sexual harassment in the Employment Rights Act?

Recently strengthened requirements introduced a duty for employers to take ‘reasonable steps’ to prevent sexual harassment of their employees (and other workers) in their workplaces.
This will be further strengthened under provisions in the Act, requiring employers to take ‘all reasonable steps’ to prevent sexual harassment of employees and workers, including from third parties.

What will be the impact for employers and employees?

Employees will have greater protections, and employers will be more liable to claims that they could have done more to prevent an instance of harassment.

What is BRC’s positioning?

Retailers want to do all they can to prevent sexual harassment. Guidance on what steps need to be taken to ensure compliance and adequate protection of their workforce needs to be as clear as possible as to the practical steps employers need to take to be compliant.
Clarity is needed on what constitutes “all reasonable steps".

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Status: Introduced voluntarily April 2026, into force in 2027

7. Equality Action Plans – Gender Pay Gap and Menopause

What are the proposals for equality action plans in the Employment Rights Act?

In addition to the publication of a company’s gender pay gap, large employers (with over 250 employees) will also be required to publish an action plan outlining the steps they will take to close that gap.
There are also provisions for the publication of Equality Action Plans, expected to require employers to outline actions they will take to support certain groups within their workforces, such as those experiencing menopause.

What will be the impact for employers and employees?

It is expected that the measures will be introduced on a voluntary basis for a year before they officially come into force.
Employers will consequently commit to taking certain steps, which will be published, meaning there will be greater accountability.

What is BRC’s positioning?

Retailers are supportive of the proposals, which introduce greater accountability across the board. Many already have in place much of what is being proposed and would welcome greater guidance on how the proposals will work in practice.

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Status: Awaiting Consultation

8. Fire and Rehire

What are the proposals for fire and rehire in the Employment Rights Act?

Following government amendments made during the parliamentary process, ‘restricted variations’ have been introduced where the use of dismissal and re-engagement will be banned (broadly across hours, pay, leave and specified shift patterns). The specific parameters of these broad areas will be decided upon following consultation.
There are, however, some smaller contractual amendments which will remain acceptable.

What will be the impact for employers and employees?

Employees will still have increased protection, but the impact on employers has been somewhat mitigated following the government amendments. The full impact for employers will be understood once the restricted variations have been properly defined.

What is BRC’s positioning?

Retailers welcome the government amendments in this area, which address retailers’ key concerns. They would now welcome greater clarity on the restricted variations, as well as on the proposed exception for businesses facing significant financial distress.

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Status: Awaiting Consultation

9. Collective Redundancy

What are the proposals for collective redundancy in the Employment Rights Act?

Initially, proposals for collective redundancy would have removed the requirement for redundancies to have happened in a single establishment for collective consultation to be triggered.
Government amendments reintroduced the single establishment requirement, but also introduced a second trigger, where collective consultation will be triggered for redundancies across multiple establishments if a certain threshold is met.

What will be the impact for employers and employees?

The impact will largely be determined by the definition of the second trigger, something which will be defined in secondary legislation.

What is BRC’s positioning?

Government amendments in this area were very welcome, following significant concern that the initial provisions would have left larger retailers in a state of constant collective consultation.
It now should be ensured that the second trigger is high enough to ensure the burden of continuous collective consultation is avoided.

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Status: Awaiting Consultation

10. Flexible Working

What are the proposals for flexible working in the Employment Rights Act?

Currently, an employee can make a flexible working request, and there is an obligation for employers to take a ‘reasonable’ approach to the processing of that request.
The Act changes the emphasis, mandating ‘reasonableness’ in relation to a refusal, as in an employer has to have reasonable grounds upon which to reject a flexible working request.

What will be the impact for employers and employees?

The impact of the proposals is likely to be limited, as the process, the reasons for refusal, and the penalty for a breach are all remaining the same.
How ‘reasonable’ is defined in relation to the refusal of a request will determine how substantial the impact will be for employers and employees.

What is BRC’s positioning?

Retail is known for the flexible work that it provides for people of all ages and backgrounds. However, other provisions in the Act (such as guaranteed hours) are likely to have a negative impact on the availability of this flexible work. Amendments are needed in these areas to avoid unintended consequences.

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Status: Partly Implemented in April 2026

11. Family-Friendly Policies

What are the proposals for family-friendly policies in the Employment Rights Act?

There are a range of provisions within the Act aimed at further supporting parents and families. These include the introduction of statutory bereavement leave, including for pregnancy loss at less than 24 weeks; changing paternity leave and unpaid parental leave to become a ‘day one’ right; and increased protection for people returning from maternity leave.

What will be the impact for employers and employees?

These strengthened family-friendly policies will provide more employees with increased support, particularly new parents.
The impact for employers and employees will also be impacted by a broader review of the parental leave and pay system, with conclusions expected in 2027.

What is BRC’s positioning?

Retailers welcome these family friendly policies and the increased government support for leave for new parents. Many retailers already have strong policies in place in this area which go beyond legislative requirements.

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