Employment Rights Bill: Key Updates

10 Dec 2025

The UK Employment Rights Bill has undergone significant changes in recent months, shaping the future of workplace protections and employer obligations. If you’re a business owner, here’s what you need to know.

1. Unfair Dismissal – Qualifying Period Reduced

One of the most notable amendments is the reduction of the qualifying period for ordinary unfair dismissal claims from 24 months to 6 months. This is a change to the original proposal, where the qualifying period was removed altogether, allowing employees to claim unfair dismissal from Day 1 of employment. I think all HR Consultants and Employment Lawyers breathed a little sigh of relief at that one…

2. Removal of Compensation Cap

The statutory cap on compensation for unfair dismissal will be removed entirely, meaning tribunal awards could be significantly higher. At the moment, the amount that can be awarded for unfair dismissal is capped at either £118,223 or one year’s gross pay – whichever is lower. Although this may initially sound a little concerning, in reality very very few claims are ever awarded the maximum, so it is highly unlikely to make a significant difference to most businesses.

3. Day-One Rights for Sick Pay and Paternity Leave

Statutory sick pay and paternity leave will become day-one entitlements. These provisions are expected to roll out from April 2026, so contact us if you need any help amending your policies.

4. Guaranteed Hours & Zero-Hours Contracts

The Bill introduces measures requiring employers to consult before implementing guaranteed-hours regulations, addressing concerns around zero-hours contracts. Seasonal workers may have opt-out provisions, but further guidance is expected.

5. Trade Union & Industrial Action Reforms

Key reforms include:

  • Shorter notice periods for strikes (10 days),
  • Extended mandates for industrial action (12 months),
  • Simplified ballot rules.

These changes aim to modernise union engagement while maintaining workplace stability.

The Bill is currently in the final stages of parliamentary approval and is expected to receive Royal Assent before the end of 2025. Most changes will be phased in during 2026–2027.

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