Preparing for the Employment Rights Act 2025 in the charity sector

The Employment Rights Act 2025 is making wide ranging reforms to workers’ rights and employers’ duties. We highlight the principal changes impacting the charity sector, together with some suggested preparatory steps.

Unfair dismissal rights and probationary periods

Currently employees generally require two years’ service to bring a claim for ordinary unfair dismissal, and the unfair dismissal compensatory award is limited to the lower of the statutory cap (£123,543) or 52 weeks’ gross pay. From 1 January 2027 the qualifying period will reduce to six months and the statutory cap on compensatory awards will be removed.

Any employee who has at least six months' service by 1 January 2027 will have unfair dismissal protection from that date. This represents a fundamental shift in the balance of employment rights. Employees will gain access to unfair dismissal protection much earlier and the potential financial exposure for employers will increase significantly. Charities should review probationary periods (contract terms and how they work in practice), recruitment and performance management practices and dismissal processes for short-serving employees.

Zero-hours and low-hours contracts

From January 2027 for zero-hours and 'low-hours' workers employers will need to:

• inform them of their guaranteed hours' rights during an initial 2-week period;
• after each reference period (expected to be 12 weeks), offer them guaranteed hours reflecting actual hours worked (although they can opt to remain on their existing contract);
• offer guaranteed hours as a permanent contract, unless a fixed term is reasonable;
• give 'reasonable' notice of shifts, shift changes and cancellations;
• give compensation for shifts cancelled, moved or curtailed at short notice.

Similar obligations will apply in relation to agency workers. In general hirers, rather than agencies, will be responsible for offering guaranteed hours contracts to eligible agency workers; responsibility for providing agency workers with reasonable notice of shifts will be shared by agencies and hirers; and agencies will be responsible for paying compensation (but will be able to recoup costs in some circumstances).

These new obligations may present challenges for some charities, particularly if funding dictates workforce requirements. A consultation on the detail of the reforms is currently open (e.g. on who will be a low-hours worker, what form the offer will need to be in, what is meant by short notice etc). In the meantime, it would be advisable to conduct an initial audit of zero-hours, low-hours and agency workers to identify their prevalence and working patterns and how shifts operate in practice e.g. how much advance notice is given and what happens if a shift is cancelled, changed or curtailed?

Harassment

Since October 2024 employers have been under a duty to ‘take reasonable steps’ to prevent sexual harassment of employees in the course of their employment. Failure to comply risks enforcement action by the Equality and Human Rights Commission and/or a compensation uplift of up to 25% in the event of a successful sexual harassment claim. From 30 October 2026 this will be extended to a duty to ‘take all reasonable steps' to prevent sexual harassment. The UK government will be able to set out in regulations what will be regarded as reasonable steps. This may include, amongst other things, carrying out risk assessments, publishing action plans and policies, and steps relating to reporting mechanisms and managing complaints.

Employer liability for third-party harassment (which was repealed in 2013) will be re-introduced from 30 October 2026. Employers will become liable for third-party harassment of employees in the course of employment if they fail to take all reasonable steps to prevent it. This will apply to harassment related to age, disability, gender reassignment, race, religion or belief, sex or sexual orientation and to sexual harassment.

Preparatory steps include reviewing existing risk assessments and action plans on preventing harassment (in light of EHRC guidance which is currently being updated) and, if not already done, carrying out a risk assessment specifically in relation to third-party harassment. This might involve reviewing public facing roles and ensuring third parties are aware of your zero-tolerance approach e.g. via signs/online messages for customers, visitors and contractors.

The whistleblowing rules were amended in April 2026 to explicitly provide that qualifying sexual harassment disclosures are protected disclosures (provided the worker reasonably believes that the disclosure is made in the public interest). A whistleblower can report concerns to, amongst others, the employer or to a ‘prescribed person’ including the Office of the Scottish Charity Regulator and the Charity Commission for England and Wales.

Fire and rehire

If an employer is unable to get employees’ consent to changes to terms and conditions of employment, one option is to terminate existing contracts on notice and offer immediate re-engagement on new terms. However, from January 2027, there will be a prohibition on ‘fire and rehire’ and ‘fire and replace’ other than in limited circumstances. It will be an automatically unfair dismissal to use the practices to change certain core employment terms (including pay, shift patterns and working hours) unless a narrow exemption for financial difficulties is met.

Employers should seek advice on implementing any contractual changes ahead of the reforms and audit their use of general and/or specific variation clauses.

Those charities in Scotland which receive government funding, either directly or indirectly, should note that the Scottish Government's position is that fire and rehire does not align with the Fair Work principles and expected practice.

Other changes

A number of other important reforms are being introduced via the Employment Rights Act 2025 including the following:

• Trade unions and industrial action: reforms coming into force on 30 October 2026 include a new right of access to the workplace for trade unions for specific purposes (not organising industrial action); a requirement to provide workers with a statement of their trade union rights at the start of employment and other prescribed times; and a right for workers not to be subjected to a detriment intended to prevent or deter them from taking protected industrial action or penalise them for doing so. Other changes are aimed at simplifying both the statutory union recognition process and industrial action notices and ballots. Electronic and workplace balloting is also being introduced.
• Statutory sick pay: Employees no longer have to earn the lower earnings limit to be eligible for statutory sick pay. All employees are entitled to 80% of their average weekly earnings or the current rate of statutory sick pay (whichever is lower). The three-day waiting period for statutory sick pay was also removed in April 2026, meaning employees are entitled to statutory sick pay from the first day of sickness absence.
• Flexible working: from 2027 it will need to be 'reasonable' to refuse a flexible working request for one of the eight business reasons, and the employer will need to explain to the employee why they consider it to be reasonable. There may also be additional rules regarding consultation with employees.
• Fair Work Agency: a Fair Work Agency has been established, bringing together existing enforcement bodies to enforce rules relating to minimum wage, statutory sick pay, statutory holiday entitlement and pay, employment tribunal penalties, employment agencies and modern slavery. The FWA will have powers, amongst other things, to bring tribunal claims on behalf of workers, enter premises to inspect evidence and issue notices of underpayment going back up to six years.
• Tribunal time limits: employment tribunal time limits will be extended from three to six months from 1 October 2026.

This blog is a very high-level summary of some of the employment law changes impacting the charity sector. For more information contact one of Brodies Employment and Immigration lawyers or go to our Employment Rights Act 2025 hub which has a timeline and links to ERA blogs and webinars.