The ERA 2025 - a planning and readiness guide for employers

Navigating the

Navigating the Employment Rights Act 2025 - A planning and readiness guide for employers Notes Burges Salmon 20

Navigating the Employment Rights Act 2025 - A planning and readiness guide for employers Changing terms and conditions of employment • Known as ‘restricted variations’, changes to certain terms and conditions of employment will only be possible if the employee agrees to the change (or if agreed though collective bargaining with a recognised trade union). • Dismissing an employee for refusing to agree to a restricted variation will be automatically unfair (save in very limited circumstances). • ‘Restricted variations’ include reductions in pay, changes to pensions, hours of work, and time off. Whether certain variations to shift patterns and to expenses and benefitsin-kind should also be ‘restricted variations’ are currently the subject of a government consultation. • Changes made through the lawful exercise of a variation clause are not affected by this new provision. However, introducing a variation clause to an existing employee’s contract to allow the employer to vary a restricted term will be a restricted variation once this provision comes into effect. • Whilst an employee may be dismissed for failing to agree to a non-restricted variation, the employer will need to follow a more stringent process for the dismissal to be fair. • Find out more about the reform Are you planning any changes to terms and conditions? If so, consider whether to bring forward the timing so that changes are in place (or decisions about continued employment are made) ahead of January 2027. Do you need to introduce or strengthen variation clauses/ flexibility provisions in existing contracts of employment and/ or your template contract ahead of January 2027? Consider your approach to changing terms and conditions on a longer-term basis: - How is your workforce likely to respond - not least as they become more familiar with the new legal protections? Could you improve employee engagement mechanisms so that employees understand and feel connected to business objectives and priorities? - Have you briefed your leadership team that changing core terms will be more difficult to effect? - Which contractual terms (if any) are governed by a collective agreement with any recognised trade union(s)? - Do you need to consider your strategy to trade union relations including trade union recognition moving forwards? Burges Salmon 21