After months of parliamentary debate, the Employment Rights Bill has finally cleared the House of Lords and gained Royal Assent on 18th December 2025. It has now become the Employment Rights Act 2025 (ERA 2025) – a landmark reform that will reshape UK employment law over the coming years.
While many of the changes will not take effect immediately, employers should now be clear on the direction of travel. The focus should shift from what might happen to how and when to prepare.
The two changes employers are watching closely
Two late amendments made during the Bill’s final passage are particularly significant.
First, the qualifying period for ordinary unfair dismissal will reduce from two years to six months, rather than being removed entirely. This change is expected to take effect from January 2027.
Second, and potentially more impactful, the compensation cap for unfair dismissal — currently the lower of one year’s salary or £118,223 — is expected to be abolished, subject to the Government completing and publishing an Impact Assessment. If confirmed, this will substantially increase litigation risk and exposure for employers.
A phased introduction
ERA 2025 will be implemented gradually under a government roadmap.
The only immediate change following Royal Assent has been the repeal of the Strikes (Minimum Service Levels) Act 2023.
Further industrial relations reforms will follow two months later, including simplified industrial action ballots and notices, stronger protection against dismissal during strikes, and the repeal of much of the Trade Union Act 2016.
From April 2026, employers will start to see more practical, day-to-day changes, such as:
Day-one rights to paternity leave and unpaid parental leave
Reformed Statutory Sick Pay (no waiting days or lower earnings limit)
Expanded whistleblowing protection, including sexual harassment complaints
Higher penalties for collective redundancy failures
Additional reforms are planned for October 2026, including tighter controls on fire-and-rehire practices, stronger rules on tips, expanded trade union rights, and a new duty to take “all reasonable steps” to prevent sexual harassment.
Beyond that, 2027 is expected to bring the aforementioned unfair dismissal changes, reforms covering flexible working, bereavement leave, protections for pregnant workers, restrictions on zero-hours arrangements, and regulation of umbrella companies
What should employers be doing now?
For unionised employers, the priority is understanding the imminent changes to industrial action rules and reassessing risk and response planning.
For non-unionised workplaces, preparation should focus on:
Reviewing contracts, variation clauses and probationary provisions
Strengthening probationary processes ahead of the six-month unfair dismissal threshold
Training managers on upcoming rights and obligations
Planning policy updates for family leave, sickness absence and harassment
Auditing payroll and benefits systems in light of SSP reform
The takeaway
ERA 2025 is not a single moment of change but a rolling programme of reform. Employers that start planning early – rather than waiting for implementation dates – will be best placed to manage risk, cost and disruption as the new framework takes shape.
The UK’s employment landscape is undergoing a significant shift, with the proposed Employment Rights Bill introducing sweeping reforms that could redefine workplace rights and responsibilities. This article summarises 3 key updates every employer and employee should know.
Non-disclosure agreements (NDAs) are legal contracts or provisions of legal contracts that place confidentiality requirements on another in respect of certain information, usually for something of value or payment. They are sometimes referred to as ‘gagging clauses’. In an employment context, they are often used to maintain the confidentiality of settlement terms (or the events leading up to such terms being agreed). The use of NDAs has come under increasing scrutiny in recent years, with the #MeToo movement and high-profile examples (such as Mohamed Al Fayed and Harrods) of them being used to cover-up misconduct. With their use being restricted in new areas with effect from 1st October 2025, we summarise the current legal position regarding NDAs, and where it is headed.
Acts of harassment are generally committed by individuals, not corporate entities. How is it, then, that businesses can be liable for the harassing acts of their employees? The answer lies in the concept of ‘vicarious liability’. Through the concept of vicarious liability, businesses are held liable for any acts of harassment by employees committed ‘in the course of employment’.
In the recent employment tribunal case of Kalina v Digitas LBI Ltd, two applicants were interviewed for a role. Both were found, following a competency-based assessment, to be appointable. The successful candidate was chosen, in large part, because she was considered to be the ‘best fit’ for the team. The interviewer noted that she had ‘vibed’ with her at interview. The unsuccessful candidate alleged that this way of choosing which person to appoint was discriminatory on grounds of race and disability. Allegations included:
A probationary period is a trial phase at the start of a new employment relationship, during which both the employer and the employee assess the suitability of the role. They are usually three to six months in duration. They are a useful tool for employers if used effectively. Here are our top tips:
Redundancy is one of the five ‘potentially fair reasons’ for dismissal recognised in UK law. However, to convert a ‘potentially fair’ redundancy into a ‘fair’ one, employers must be able to show that the situation was a genuine redundancy and that a fair process of selection and consultation was followed. One of the key requirements for fairness is that the possibility of alternative employment has been considered. There are two different concepts which are relevant to redundancy, and both must be taken into account by employers:
It is important that employers have a clear understanding of their obligations towards whistleblowers in the workplace. It is equally important to understand that their status as whistleblowers does not make them untouchable. The law is clear: Employers will be liable for automatic unfair dismissal if they dismiss an employee because they have made protected disclosures. They could also face claims if they subject a whistleblower to a detriment on the ground that they have made a protected disclosure.
The rise of remote work post-COVID-19 is arguably the most radical shift in working patterns since the advent of email. Many employees now value flexibility as much as pay. But this flexibility comes with a trade-off – reduced visibility.
The words “redundancy” and “restructuring” carry very different connotations. Redundancy often implies cutbacks and job loss. Restructuring, on the other hand, sounds strategic and forward-looking.
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