The Employment Rights Act (2025) is the biggest shakeup of Employment Law since the Equality Act (2010) and is a ‘key pillar of the government’s Plan to Make Work Pay’.

The changes included in the Act consolidate and strengthen workers rights with a sweep of changes including ending zero hour contracts, curbing use of Fire and Rehire practices and enhancing Statutory Sick Pay (SSP) and Parental Leave entitlements.

The enhanced rights for staff, coupled with the minimum wage increasing to £12.71 (for those aged 21 and over) in April 2026 will add the cost burden to employers. A recent CIPD study reveal the potential impact of these changes in their strategic workforce plan.

How will the Employment Rights Act impact on recruitment?

Permanent recruitment

Of those to respond, 20% indicate that they ‘anticipate recruiting fewer workers as a result’ (CIPD) of the changes being implemented, with the two most significant amendments in their consideration being those earlier Right to Unfair Dismissal and SSP entitlements.

Unsettlingly, the changes may have ‘the unintended consequence of disincentivising employers from hiring candidates that are perceived to be more likely to need more training or support in other ways, such as young workers and those with health conditions or caring responsibilities’ (CIPD).

Temporary recruitment

To mitigate against this new suite of rights for permanent members of staff, employers indicate they increase hiring of temporary workers which ‘would seem to undermine one of the central objectives of the…measures to increase employment security’ (CIPD).

However, as part of the Act, there will also be more protection for temporary workers.

Enforcement

To ensure compliance with the legislation, a new government department has been established. The Fair Work Agency will be part of the Department for Business and Trade and will have powers to inspect workplace and penalise non-compliance as well as giving a single place where workers and employers can turn for help.

Overall

The employment market is already performing poorly with unemployment rising and wage growth slowing. The added pressures incoming from the Employment Rights Act will further add to the burden for employers which may lead to a period of ‘wait and see’ to assess the impact of the changes in the real world.