Employment Rights Act 2025: What UK Tech Scale-Ups Must Do Now

The Employment Rights Act 2025 received Royal Assent on 18 December 2025 — and with changes rolling out from April 2026 through to January 2027, fast-growing tech businesses cannot afford to treat this as background noise. This is the biggest overhaul of UK employment law in a generation, and for tech scale-ups in particular, the timing couldn't be more pressured. You're hiring fast, building culture at pace, and managing a team that's growing quicker than your HR infrastructure. The ERA raises the stakes considerably.

Here's what you need to know — and act on — right now.

Day-One Rights: April 2026

From 6 April 2026, a raft of entitlements that previously required qualifying service become day-one rights. Paternity leave, unpaid parental leave, and bereavement leave — including a new Bereaved Partner's Paternity Leave of up to 52 weeks — all apply from day one of employment.

Statutory Sick Pay also changes: the three-day waiting period is removed and the lower earnings limit is abolished. Employers should expect higher SSP costs with no rebate available.

For a tech scale-up hiring regularly and at pace, this has immediate practical implications. Founder-based and culture-aligned recruitment becomes ever more important - not just helping scale-ups to get the most engaged and performing talent, but also help ensure investments are wisely and safely spent. Your employment contracts, onboarding documentation and payroll systems all need updating before April. If you're using an HRIS, check with your provider that the system is ready to handle the new leave types and SSP calculations.

The Unfair Dismissal Time Bomb: January 2027

This is the change that should be keeping tech founders up at night. From January 2027, the qualifying period for unfair dismissal claims reduces from two years to six months — and critically, the cap on unfair dismissal compensation is being removed entirely.

This means any employee who joins your business from July 2026 onwards will have meaningful unfair dismissal protection within six months. If you hire someone in August 2026 and it isn't working out by December, you have a very narrow, very legally exposed window to act. The absence of a compensation cap means the financial risk of getting this wrong is no longer predictable.

---

The implication for fast-growing tech businesses is clear: your probation process needs to be structured, documented and actively managed — not a formality. Managers need to be trained to conduct proper mid-point and end-point probation reviews, and underperformance needs to be addressed early and on the record.

---

Third-Party Harassment: October 2026

From October 2026, employers will be under a legal duty to take all reasonable steps to prevent employees being harassed by third parties — including customers, clients and contractors. For tech businesses with client-facing teams or active customer communities, this requires a policy creation or review, if one already exists, and potentially, manager training on this topic before the deadline.

Fire and Rehire: January 2027

The ERA makes fire and rehire — dismissing employees and re-engaging them on inferior terms — automatically unfair dismissal from January 2027, except in very limited circumstances. If your business has any flexibility provisions in contracts around hours, duties or location, review them now with an employment lawyer or HR specialist before these restrictions take effect.

What Should Tech Scale-Ups Do Right Now?

ERA 2025 tech startups

• Audit all employment contracts against the new day-one rights requirements before April 2026

• Update your HRIS to handle new leave types and the revised SSP rules

• Build a structured, documented probation process before July 2026

• Train managers on the new legal landscape — particularly around probation, performance and dismissal

• Review anti-harassment policies to cover third-party obligations ahead of October 2026

• Take legal advice on any existing fire-and-rehire or contract flexibility provisions

• Carry out a professional HR or workforce management audit to identify and bridge relevant compliance gaps

The ERA 2025 isn't a future problem. Several changes are weeks away. For a tech scale-up with limited HR infrastructure and a fast-growing headcount, the risk of non-compliance is real — and the consequences are now significantly more expensive than they were a year ago.

Not sure where your HR gaps are?

Book a free 30-minute HR Audit Call with M923 Consulting.

No pitch. No obligation. Just clarity. → m923consulting.com/contact-us