The House of Lords, on 16 December 2025, finally approved and decided on the definitive version of the Employment Rights Bill. This will now become the Employment Rights Act and receive Royal Assent, which is expected to take place before Christmas 2025.
Following the House of Lords’ approval, the government has specified that it intends to produce regulations in 2026 to bring the changes to the qualifying period into effect from 1 January 2027.
Employers and HR practitioners should therefore note that the change to the law will come into force on or after this date. This means that any employee with six months’ continuous service at the date of their dismissal will be entitled to bring a claim for unfair dismissal.
It is recommended that employers and HR practitioners review their recruitment processes, employment contracts and handbooks. It is now important to hire the right people for the job, with the proper skills and qualifications for the role. This will no doubt affect the way employees are interviewed and assessed. It will also be essential to review probation periods for new joiners to ensure that their length is suitable, given the new six-month qualifying period for unfair dismissal.
It is expected that the government will pursue the removal of the cap on the compensatory award for unfair dismissal. This is likely to come into effect at the same time as the change to the qualifying period. The current maximum compensation for ordinary unfair dismissal is £118,223.
With the removal of the cap on unfair dismissal awards, employers will face the risk of higher-value claims. Employers and HR practitioners should therefore ensure that managers receive robust training to manage disciplinary and grievance matters. This is likely to result in fewer employers being willing to take the risk of dismissing a protected employee. High earners are also more likely to pursue claims in the Employment Tribunal, as the previous cap often meant compensation was insufficient. Employers may therefore seek to settle claims to avoid the risk of uncapped compensation awards.
The government is also likely to apply the following changes from April 2026:
• Day one rights for statutory paternity leave and unpaid parental leave
• Statutory Sick Pay to be payable from the employee’s first day of sickness absence, with the lower earnings limit for SSP entitlement removed
• In collective redundancy situations, the maximum protective award for failure to follow consultation requirements to be doubled from 90 to 180 days’ pay per affected employee
• A complaint of sexual harassment to amount to a protected disclosure for the purposes of whistleblowing protection
It is therefore vital that employers and HR practitioners review and update all relevant policies and deliver appropriate training for managers and staff.
The government has also indicated that changes to trade union recognition and workplace balloting will take effect from April 2026. Consultation on electronic and workplace balloting, as well as changes to union recognition, will continue until the necessary regulations are agreed.
If you need any further help, please do not hesitate to contact our HR/Legal advice line team on 01455 852 028. Quest can assist with updating contracts and handbooks and provide training for staff on HR matters.
