Employment Rights Act 2025 – incoming!

The Employment Rights Bill was passed on 16 December 2025 after an extended period of parliamentary "ping‑pong" and received Royal Assent on 18 December 2025. Early changes that are expected to take effect soon include reforms to Statutory Sick Pay, trade union and industrial action rules, and the introduction of day‑one rights to paternity leave and unpaid parental leave, whilst other provisions will require consultation or secondary legislation.  

Key Changes

The Government has also confirmed a major shift in unfair dismissal law:

• The qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months.
• The cap on the compensatory award (currently the lower of one year's gross pay or £118,223) will be removed entirely.

Click here to see our blog on the update regarding unfair dismissal rights. 

Next Steps For Employers 

The Employment Rights Act 2025 represents the most significant change to employment rights in a decade. The reforms will reshape dismissal risk, union relations, family leave, harassment prevention and tribunal litigation strategy.

Employers who prepare early will be best placed to manage the increased legal and operational risks and to navigate what promises to be a very busy period for HR and people management teams.

What employers should do to prepare:

• Review contracts and policies to identify gaps that require updates
• Plan for transition, particularly around dismissal processes and probation management
• Monitor commencement dates as they are announced