Employment Rights Act 2025: the changes to employment law for higher education institutions

The Employment Rights Act 2025 is the most significant overhaul of UK employment law in decades. For higher education, where employment models are complex and heavily reliant on casual and flexible contracts, several provisions of the act may create major compliance, financial, and operational challenges.

Given universities and other higher education institutions (HEIs) have a number of different, and sometimes complex, employment contracts and models, including permanent academics protected by academic staff statutes, fixed-term researchers, zero hours lecturers and casual workers (some of whom may also be students), now, with consultations in progress, is the time to audit contracts and other governance documents.

What key changes should HEIs be considering and actioning?

Unfair dismissal

From 1 January 2027, staff will need only six months’ service (rather than two years) to claim unfair dismissal. Furthermore, the maximum cap on compensation is being removed. This means that staff who start work this summer and whose effective date of termination is on or after 1 January will be covered by the new regime, and HEIs will face much larger claims if things go wrong. It will also be harder to settle claims brought by higher paid members of staff where the potential compensation may be significant (perhaps where years of loss are foreseeable).

Many institutions say that six months is not long enough to assess the performance of staff, notwithstanding when they might gain the right to claim unfair dismissal; so HEIs should review probation and dismissal policies now, and ensure manager understanding and compliance, as the shorter qualifying period will inevitably increase claims.

Some HEIs are already considering whether this will fundamentally change the risk with employing academic staff, many of whom could have very expensive claims should they be dismissed.

Casual contracts

Recently the sector has increasingly relied on casual contracts, including student employees, visiting lecturers, researchers performing a few hours’ work teaching or tutoring, exam invigilators, or catering, cleaning, and other student-facing roles – and the act will change the employment risk for all of these work types. It introduces rights to request guaranteed hours, as well as notice requirements for shifts, and compensation for cancellations. Now is the time to audit these contractual arrangements too, and where necessary make changes.

Sexual harassment

From April this year, disclosures of sexual harassment will be explicitly protected under whistleblowing law. This may be a change of form more than substance, but also note that from October 2026, the act will require universities to take ‘all’ reasonable steps (not just ‘reasonable steps’) to prevent sexual harassment of staff.

At the moment, there has not been a significant increase in claims of this sort, but this may change as employers will also become liable for harassment of staff by third parties (which will include students, visitors, contractors and others who come into contact with the institution) across all protected characteristics, unless they can show they took all reasonable steps to prevent it.

Finally, most confidentiality clauses (NDAs) that seek to prevent staff from either raising or disclosing allegations of discrimination or harassment will be void, from a date to be determined in 2027. The Higher Education (Freedom of Speech) Act 2023 already proscribes NDAs where there are allegations of bullying, harassment, or sexual misconduct, but publicity around the changes in the act will no doubt increase the likelihood of complaints.

Trade unions

Changes have already been made which lower the threshold for industrial action ballots, shorten the notice unions must give before taking industrial action (from 14 to 10 days), and extend the mandate for action from 6 to 12 months. Unions across various sectors will look to use these powers as it will be both quicker and easier for them to threaten and ultimately strike or engage in other industrial action.

These risks increase disruption and it will be prudent to review trade union recognition arrangements to consider dispute resolution procedures. Engagement with unions often helps manage expectations and, given the scale of the changes, working with unions will make compliance much easier.

Fire and rehire

Given the financial pressures across the UK, and education in particular, now is also the time to consider if any restructuring might be needed.

‘Fire and rehire’ refers to the practice where an employer dismisses staff and immediately reemploys the same staff on new, usually less favourable, terms when agreement on variations to the contract cannot be reached through consultation.

In universities, this practice has historically surfaced during periods of financial pressure or structural change, and can affect academic departments undergoing restructuring, professional services roles, and all types of employment where institutions are facing deficits or declining student numbers.

However, under the act dismissing an employee for refusing to agree to a change in their core contractual terms will be automatically unfair, unless the employer is in severe financial difficulties and has no genuine alternative. This exception is likely to be very narrowly construed and in order to rely on it, institutions would need to show not just that there is a serious, verifiable financial difficulty, but also that all other options were explored and a fair process was followed.

Because dismissals for refusing contractual changes are now more likely to be automatically unfair, any missteps here may lead to costly claims. The impact of changes to student numbers, the international student picture, and changes to immigration control will not be sufficient reasons in themselves to justify a fire and rehire process, nor will increased pension or other staff costs, nor any other changes in funding. Furthermore, as the act strengthens union rights, it will also be easier for unions to threaten or engage in  industrial action.

Conclusion

Overall, the act represents a cultural shift. It aims to create greater job security and improve workers’ rights. For HEIs, the challenge will be how to implement the changes fairly and ensure legal compliance, with the flexibility to meet the evolving and complex needs of an institution in a sector in flux.