If your employment contracts have not been updated since 2024, there is a strong chance they no longer reflect the law you are operating under. The Employment Rights Act 2025 has changed the employment landscape significantly, and outdated contracts are creating real legal exposure for employers across the UK.
Employment Contracts Are Risk Documents
Many business owners view employment contracts as an administrative task. They are issued on day one, signed, filed away, and rarely reviewed again.
That approach is becoming increasingly risky.
Employment contracts are legal documents that define the relationship between employer and employee. They set out rights, responsibilities, expectations, and procedures. When legislation changes, contracts must evolve with it.
If your contracts no longer align with current law — or worse, contain clauses that contradict statutory rights — you face two major risks:
- Legal non-compliance
- Reduced protection in the event of a dispute, grievance, or tribunal claim
Key Employment Rights Act 2025 Changes Affecting Contracts
1. Statutory Sick Pay (SSP)
From 6 April 2026, Statutory Sick Pay becomes payable from Day One of sickness absence.
Many employment contracts and sickness policies still reference the previous three-day waiting period. These provisions must be updated. Any contractual wording that seeks to delay SSP entitlement beyond the legal requirement will be unlawful.
2. Probation and Dismissal
From January 2027, unfair dismissal protection will apply after six months’ service.
This places greater importance on well-structured probation periods. Employers should ensure contracts contain:
- Clear probation clauses
- Defined review periods
- Performance expectations
- Extension provisions where appropriate
Vague or outdated probation wording may leave employers exposed when managing underperformance.
3. Trade Union Rights
From October 2026, employers will be required to provide a written statement of trade union rights as part of the Section 1 employment particulars provided to employees.
This is a mandatory requirement. Employers issuing contracts without this information could be in breach of statutory obligations.
4. Guaranteed Hours and Flexible Working
The Employment Rights Act 2025 introduces new protections for workers with variable hours arrangements.
Businesses that engage:
- Zero-hours workers
- Casual workers
- Seasonal staff
- Variable-hours employees
may need substantial updates to contractual terms covering guaranteed hours offers, shift scheduling, and notice requirements.
The Hidden Risk: What Your Contract Doesn’t Say
Some of the greatest employment risks are not caused by incorrect clauses.
They are caused by missing clauses.
Contracts that fail to address probation, performance management, disciplinary procedures, grievance processes, or workplace expectations leave employers with limited documentary evidence when disputes arise.
In an employment tribunal, silence is rarely neutral.
Where contractual expectations are unclear, the benefit of doubt often favours the employee.
A Practical Approach to Contract Review
Most organisations do not need a complete contract rewrite.
A sensible approach includes:
Conduct a Gap Analysis
Review existing contracts against the key requirements introduced by the Employment Rights Act 2025.
Audit Existing Templates
Identify clauses that are outdated, inconsistent, or missing entirely.
Prioritise High-Risk Areas
Focus first on:
- Statutory Sick Pay
- Probation periods
- Dismissal procedures
- Worker status provisions
- Flexible working arrangements
Update New Starter Documentation
Ensure all new employees receive compliant contracts immediately rather than waiting for a wider review project.
Manage Existing Employees Carefully
Changes to contractual terms cannot simply be imposed. Attempting to make unilateral amendments may create additional legal risk. Employers should seek advice before introducing revised terms for existing staff.
Don’t Wait for a Problem to Trigger Action
Most contract reviews happen after a tribunal claim, compliance audit, or costly dispute.
The Employment Rights Act 2025 gives employers the opportunity to act proactively rather than reactively.
The cost of reviewing and updating your contract templates today is significantly lower than the cost of defending an employment tribunal claim tomorrow.
Stay Ahead of Employment Law Changes
Insightful Hub provides fully updated employment contract templates, supporting HR policies, and practical ERA 2025 compliance guidance designed specifically for UK employers.
Everything is written in plain English, ready to use, and updated as legislation evolves.
Start preparing for 2026 today at insightfulhub.co.uk.
Ready to Transform Your HR Strategy?
Get expert guidance from our Fractional HR Directors to solve your people challenges and drive business growth.