Employment Rights Act 2025
The much-discussed Employment Rights Act received Royal Assent on 18th December, although the contents of the Act will be subject to staged implementation.
This is a far-reaching piece of legislation and represents a landmark moment in employment law.
Unfair Dismissal
One of the key components, that was subject to some debate from interested parties and the House of Lords, is the section on unfair dismissal.
Currently someone needs to have worked for an employer for two years before they can claim unfair dismissal. Initially the intention was to remove any qualifying period however, the amended period of service required has finally been agreed as being 6 months.
The current cap on compensatory awards for unfair dismissal claims will also be removed.
This change will not come into play immediately but will be put in place as of January 2027.
Paternity & Parental Leave
A raft of changes will come into force in April 2026. Amongst these are a right to claim paternity leave from day one of joining an employer, previously this was after 26 weeks.
Ordinary parental leave becomes a right from day one as opposed to a year’s qualifying service.
Sick Pay Changes
Also coming into force in April will be changes relating to statutory sick pay. Payment will be an entitlement from the first day of illness, not the fourth, which is currently the case.
Fire and Rehire
October 2026 will see new protection from ‘fire and rehire’ practices. This is where an employee is dismissed but then rehired on worse terms. This will then be seen as being ‘unfair dismissal.’
Employment Tribunals
October will also see changes to the deadlines for making a claim to an employment tribunal. This will increase from the current three months to six months.
Industrial Action
There are some changes taking place in February 2026 in particular relating to the notice period before a union can take industrial action down to 10 days from 14. A simple majority vote is all that will be required in order to take industrial action.
Opposition parties and employer groups have been critical of the new Act, even though the final form is somewhat watered down from the original draft.
As reported by the BBC the original draft was argued to cost employers around £5 billion but this has now been rounded down to about £1billion. Even this figure is disputed though.
The British Chambers of Commerce said the £1bn figure “is likely to be a massive underestimate”.
Policy director Kate Shoesmith said: “The impact figure doesn’t adequately account for the harder to quantify costs. Those include staff time for understanding and implementing new processes or explaining these to colleagues. Concessions such as introducing the six-month qualifying period will reduce costs – but not on the scale this latest assessment suggests.”
There is no doubt that this is a significant change in the direction of flow in employment law. There are many more changes to come beyond what is mentioned above.
We anticipate that employers of all sizes will now need to reconsider their employment practices, procedures and processes.
Anyone requiring help in responding to the changes should contact one of our employment law specialists.