The Employment Rights Bill has now been passed

The Employment Rights Bill was passed on Tuesday 16 December 2025, following an extended period of parliamentary 'ping-pong'. Subject to receiving Royal Assent, the Bill will be enacted as the Employment Rights Act. While some provisions will require consultation and secondary legislation, a number of measures will take effect on, or shortly after, Royal Assent. Commencement dates for individual provisions will be confirmed in due course.

What changes will the Employment Rights Act introduce?

Provisions expected to commence on or soon after Royal Assent include changes relating to Statutory Sick Pay, trade unions and industrial action, and day-one paternity leave and unpaid parental leave.

Changes to unfair dismissal rights and compensation

The Government has confirmed that the qualifying period for bringing an ordinary unfair dismissal claim will be reduced from two years to six months. In return, the current cap on the compensatory award for unfair dismissal (currently the lower of one year’s gross pay or £118,223) will be removed. As this change does not require consultation and has already been confirmed, it is expected to be implemented shortly after Royal Assent. The Government has also committed to publishing an impact assessment on the consequences of removing the cap, as this proposal was not included in its manifesto.

What will the Employment Rights Act mean for employers?

Once enacted, the Employment Rights Act will represent the most significant piece of employment legislation in the past decade. Its impact will be wide-ranging, and employers who are not adequately prepared may face increased legal and operational risk. It is therefore essential to begin planning now by reviewing policies, contracts, training programmes and HR processes.

How should employers prepare for the Employment Rights Act?

• Audit your policies and contracts;
• Plan for transition;
• Monitor the commencement dates;
• Assess potential financial exposure arising from the removal of the compensatory cap; and
• Provide training for HR and line managers on the new legislation (particularly in relation to probation management, early performance management, and union-related developments).

If you have any questions about the Act and how to prepare for its implementation, please call us on 0113 207 0000.