Seizing the initiative: Navigating the Employment Rights Act 2025 and the rise of collective voice

This article is provided by BRC Associate Member, Marsh.

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Variously described as ‘truly transformative’ and ‘the most significant piece of employment legislation in decades,’ with the ability to ‘strengthen the voices of people in the workplace,’ the Employment Rights Act (ERA) 2025 represents not just legal change, but a wider significant shift in the employer-employee relationship.

Some of the more eye-catching headlines around the ERA have focused on the introduction of guaranteed hours and the removal of zero hours contracts, increased leave provisions, and day one sickness rights. However, one of the potential game changers is modernisation of trade union legislation which will give trade unions greater freedom to organise, represent and negotiate on behalf of workers. The legislative changes are designed to establish clearer and more enforceable frameworks for collective bargaining, empowering trade unions and shifting expectations around consultation, representation and pay negotiations.

The new legislation comes at a time when employees are demanding more from their employers – fair pay, inclusion, and greater transparency – some of which is being driven by high profile equal pay cases in the UK, notably in the retail and public sectors. This pressure is acute in retail: according to research conducted by Marsh into the retail sector, 26% of retailers expect to decrease their workforce this year, and 59% say they are overinvesting in managing retail-wide labour shortages. Organisations are also facing higher costs – resulting from increases to the National Minimum Wage and National Living Wage – and greater administrative obligations via the Fair Work Agency, a new single centralised enforcement body for UK employment rights which came into force on 7th April 2026.

Add to these some wider geopolitical concerns among UK businesses – including rising energy prices, supply chain resilience and AI adoption (Office for National Statistics, April 2026) – and it is not surprising that organisations are feeling under pressure. And while the fall-back option might be to do the minimum and prioritise being legally compliant with the new legislation, this approach could look reactive and potentially leave organisations appearing more vulnerable.

This raises the question: What should employers do now, to navigate their way through the ERA and get on the front foot?

Recent research undertaken by Mercer highlights record levels of low morale and disengagement among employees. Mercer’s 2026 Global Talent Trends analysis reports that only 44% of employees are thriving in the workplace, down from 66% in 2024. The picture is even more stark among employees from lower socio-economic groups, with only 9% found to be thriving in the workplace. These statistics should not be treated lightly! Our research also tells us that fairness, stability, and trust are at the core of employees’ decisions to stay or leave their organisations. Mercer’s latest Inside Employees’ Minds 2025-2026 report states that ‘perceived pay unfairness is increasing becoming a “push” factor, driving employees to leave’.

Alongside this, recent research from Acas (November 2025) highlights increased conflict in the workplace, with the greatest prevalence in wholesale and retail trade and accommodation and food service activities.

Hence, against a backdrop of low employee morale, rising workplace conflict, increased demand for ‘fair’ over ‘competitive’ pay and geopolitical uncertainty, we have a perfect storm that leaves organisations increasingly open to approaches from trade unions.

A recent pulse survey conducted by Mercer in March 2026 found that most organisations are aware of the new legislation but not prepared for it. A Mercer Employment Rights Bill pulse survey two years earlier found that employers were unfamiliar with, and unprepared for, the practicalities of having collective voice in their workplaces.

That little appears to have changed in the past two years is concerning, to say the least. Research from the CIPD also suggests there may be an unwillingness among employers to change the status quo. In a report published in October 2025, the CIPD reported that employers in non-unionised workplaces were less likely to welcome trade union representation, compared with employers in unionised workplaces who recognised the benefits of collective representation.

In short, organisations need to be proactive and make strategic choices in light of the ERA. The preferred approach may be to build a strong individual voice, to reduce the perceived need for unionisation, or at the other end of the spectrum to partner with unions to co-create transformation. There is also a middle option – organisations can create clear boundaries and constructive frameworks for engagement, where trade unions are present or anticipated. Whatever the strategic choice, it needs to reflect the organisation culture, risk appetite, and goals.

Organisations need to seize the initiative now. Inaction is not an option.