Can I protect my limited company during a divorce?
The Employment Rights Act has officially received Royal Assent and will bring some of the biggest changes to UK employment law in recent years.
The Act became law in December 2025, but most of the changes will be introduced in stages from April 2026 through to 2027.
While some of the original proposals caused concerns for employers, the Government has now confirmed that it will not be introducing day-one unfair dismissal rights.
This change will come as a relief to many businesses, but employers should not underestimate the impact of the reforms that are still going ahead.
Now is the time to review your employment contracts and dismissal processes so that you are ready for when the first changes come into effect.
What was originally proposed in the Act?
When the Employment Rights Act was first introduced, the Government proposed removing the two-year qualifying period for unfair dismissal entirely.
Instead, it planned to introduce a statutory probationary period, which would have limited an employer’s ability to dismiss employees in the early months of employment.
However, these proposals were met with resistance. Employers and the House of Lords warned that the proposal could deter recruitment and place a burden on small businesses.
In response, the Government confirmed a new approach aimed at limiting litigation risks and continuing to protect employees.
What has changed in the Act?
Under the revised Act, two-year qualifying period for unfair dismissal has been reduced to six months instead of being removed altogether.
The main changes that take effect in 2026 and will affect employers include:
- A new six-month qualifying period for unfair dismissal
- No statutory probationary period being introduced
- Day-one rights to Statutory Sick Pay (SSP)
- Day-one rights for paternity leave and unpaid parental leave
- Sexual harassment will become a qualifying disclosure under whistleblowing law
- Simplified processes for trade union recognition
- The launch of the Fair Work Agency to enforce holiday pay, SSP and minimum wage compliance
- Changes to collective redundancy, including doubling the maximum protective award to 180 days’ pay
- The removal of the current cap on unfair dismissal compensation
What does the Act mean for employers?
Although the removal of day-one unfair dismissal rights offers some reassurance, the new six-month qualifying period still presents challenges.
Employers will now have a much shorter window to assess whether a new hire is the right fit before full unfair dismissal protections apply.
This means recruitment decisions will matter more than ever and employers must have robust hiring procedures in place, including thorough interview processes.
Any performance or conduct concerns should be raised as early as possible and supported by documentation and evidence.
Probation management must remain compliant as informal conversations may not be enough if a decision to dismiss is later challenged.
Many employers will also benefit from introducing a structured probation review process.
A formal review at around three months, followed by a final assessment closer to the five-month point can help ensure there is enough time to make an informed decision before the six-month threshold is reached.
What should employers be doing to prepare?
With these reforms soon coming into effect, employers should start reviewing and updating their employment contracts and dismissal procedures.
Managers should be trained on how to handle probation periods properly, including assessing performance objectively and keeping accurate records.
HR and payroll processes may also need updating, particularly when changes affect leave entitlements or sick pay.
Early preparation will help reduce the risk of unfair dismissal claims and give businesses confidence in their recruitment and management decisions.
How can we help employers prepare for the Act?
The Employment Rights Act reforms can feel overwhelming, especially when small changes can have greater implications than expected.
Employers should seek legal advice to understand how the new rules apply to them and avoid any costly mistakes or disputes.
Businesses must update their contracts and policies so that they are prepared for when the reforms come into effect and can hire with confidence.
For further advice and guidance, please get in touch today.
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