What are the leadership and people management implications of the Employment Rights Act?
I hadn't planned on writing about the Employment Rights Act, but I was asked one of those questions that just noodles round in your brain until you have answered it!
For many leaders and people managers, employment law has always felt like something that happens around them — handled by HR, escalated when things go wrong, and largely invisible when things are going right. Maybe that is how it has been for you - but that changes now.
The Employment Rights Act 2025 doesn't just alter what employers must do. It fundamentally reshapes what it means to manage people well and challenges us all to think about a number of things.
Now that there are some much firmer rules about how people are managed, things that we may have considered guardrails are now legal obligations.
I should warn you that you may leave this article with more questions than answers, but those questions will help you shape your future leadership and provide great points for reflection, so I make no apology for them!
So what are the key shifts you need to know and think about?
- Performance management is now both a leadership responsibility and a legal necessity. The qualifying period for unfair dismissal has reduced from two years to six months, which means decisions about a new employee's suitability need to be made and evidenced far earlier than before. And the obligation does not stop there; there need to be regular check-ins, clear documentation, and addressing underperformance early rather than hoping things improve.
- The days of handling difficult decisions informally are over. Weak processes will be exposed, and reliance on individual judgment, without documentation or consistency, will no longer be sufficient
- Hiring decisions carry greater weight. Senior appointments in particular require much more careful thought, given the removal of the compensation cap and the shorter qualifying period.
- Workforce planning is becoming strategic rather than administrative.
- Harassment prevention is now firmly a management responsibility requiring proactive leadership, not just a reactive response when something goes wrong.
This change is also going to increase the need for training for those managing people, from earlier in their career than is typical in many organisations.
So what was the question that got me thinking about all this?
Will the Employment Rights Act 2025 Act like a mirror or lever for Company Culture?
What a great question, and one that I think every manager would benefit from spending time considering.
My answer? Both. But not in equal measure.
The intent behind the Act is genuinely good. How people are treated, how concerns are raised and managed, and equity in the workplace have become matters of law, not just aspirations. In that sense, the Act holds a mirror up to every organisation and asks: are you actually living your values, or just displaying them on a wall?
But here's the conundrum it surfaces. The Act is process-driven by design. And processes treat people the same, which isn't the same as treating people equally. We all have subtly different needs and preferences. Legislation can't hold that nuance. So whilst the framework is there to protect people, there's a real tension between putting the person first and putting the process designed to support the person first.
And that tension has consequences.
Less flexibility and less agility. For larger organisations, that's uncomfortable. For smaller businesses, whose greatest strength is their ability to adapt quickly and personally, it's a more significant shift. The impact will be felt more acutely where agility has always been the competitive edge.
There's also nowhere to hide. Weak processes will be exposed. If your documentation is patchy, your consistency non-existent, or your managers winging difficult conversations, the Act will surface these issues, and they become organisational risks with legal consequences.
For those smaller organisations, they are also likely to have the biggest lift to get their processes and practices to a point of compliance, and they may well need to do so without the help of the support functions that larger organisations have, putting further burden on the leadership team or the business owner
Depending on your start point, that could feel like a threat. Or, and this is the reframe I'd invite you to consider, it could be an opportunity.
The Impact on Leaders and People Managers
It is on people managers and leaders where the day-to-day impact of the tension between strict adherence to policy and unlocking the individual strengths of team members is going to be most sharply felt.
Great leaders and people managers understand the need to adapt and adjust their approach with each team member to keep them motivated and to get the best work from them. The key here is going to be to have flexibility within processes to do this.
Another interesting area for both policy makers and individual leaders to consider is going to be the intersection of the Employment Rights Act and the 2010 Equality Act, which gives employees the right to request reasonable adjustments to their work
Plenty for leaders and people managers to reflect on as they look at their existing policies and practices and consider how best to evolve them to where they need to be, both from a legal perspective and from a company culture perspective.Early warning signs that the Act is exposing cultural or management problems?
The early warning signs may be subtle, but when considering how well your implementation of the new Act is going, here are some things you are going to want to consider
Watch what managers stop doing.
Recruitment shyness is one of the first indicators worth paying attention to. If managers are quietly hesitant to bring new people in, ask why. It may reflect anxiety or a lack of understanding about reduced flexibility or the earlier unfair dismissal threshold, but it may also signal something deeper: a lack of confidence in their own ability to manage performance fairly and consistently.
And speaking of performance, are difficult conversations still being avoided? Poor performance that goes unaddressed isn't a new problem. But if it's getting worse since the Act came into force, that's worth noticing. Reluctance to use processes, new or existing, because of fear of the consequences is a management culture issue, not just a legal one.Watch what starts to increase.
A rise in grievances. More requests for support in managing people. These aren't inherently bad signs. In fact, people asking for help is a healthy response. But the question to hold alongside it is: why now, and what does that tell us about what was missing before? Manager training is suddenly becoming a priority — particularly for first-time managers.
Compliance costs are another signal — and here's the one that often gets overlooked. If you're not seeing an increase, at least in the short term, it's worth asking whether you're actually doing the work required by the Act.
Statutory Sick Pay from day one will naturally bring some increase in cost. That's expected. But frequent, short-term absences, a pattern that SSP data will now make harder to ignore, can be one of the clearest indicators of a culture that isn't working. People don't repeatedly take a day here and a day there because they're unwell. Often, they do it because they're not okay.
Watch what your documentation is actually telling you.
Is the increase in documented decisions reflecting better management practice — or just more paperwork? There's an important difference. Documentation that captures decisions and then does nothing with them isn't governance. It's performance. The real question isn't whether things are being written down. It's what is being done about what's being uncovered.
The Signs are an invitation to get Curious
None of these signals alone is a reason to panic. Every single one of them is an invitation — to get curious, to look honestly at where you are, and to ask what kind of workplace you're actually building. The organisations that will navigate this period best won't be the ones with the tidiest handbooks. They'll be the ones willing to look in the mirror and take action on what they see.
The questions I would like to leave you with
The question I would like to leave you with is this:
How are you going to respond to the leadership conundrums that the Employment Rights Act has thrown up?
What changes do you need to make now?
What do you need to keep an eye on?
What are the implications for me as a manager of people, and for my organisation?
If all this feels too much, reach out, book a call and let’s get this handled for you and your organisation.