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Employment Rights Bill: Unfair Dismissal to Move to Six Months — and Early Reports of a Potential Uncapped Compensation Regime
5 December 2025
2025: A Year of Momentum, Growth, and Delivery
22 December 2025
Employment Rights Bill: Unfair Dismissal to Move to Six Months — and Early Reports of a Potential Uncapped Compensation Regime
5 December 2025
2025: A Year of Momentum, Growth, and Delivery
22 December 2025

Employment Rights Bill is now law: what employers need to know, what’s live now, and what’s coming next

The Employment Rights Bill has now received Royal Assent and is officially the Employment Rights Act 2025.

This follows the House of Lords backing down during the final round of parliamentary “ping-pong” earlier this week. While this is a significant milestone in UK employment law, it’s important for employers to understand what has actually changed today — and what has not.

What has changed today (and what hasn’t)

Despite the scale of the Act, only one substantive provision comes into force immediately.

In force now

  • The repeal of the Strikes (Minimum Service Levels) Act 2023 provisions
For most employers, this will not require immediate changes to day-to-day HR processes. However, it is symbolically important and signals the government’s broader direction of travel on employment and industrial relations.

What is NOT yet in force

All other changes contained within the Employment Rights Act 2025 are not yet live. These will be brought in gradually through commencement orders, supported by consultations, guidance and secondary legislation.
This means there is no immediate requirement to change contracts, policies or practices today — but it would be a mistake to ignore what is coming.

What happens next

The government has confirmed that implementation of the Employment Rights Act 2025 will be phased across 2026 and 2027.
Crucially, we are now awaiting:
  • Formal consultations on several key reforms
  • A government impact assessment on the proposed removal of the unfair dismissal compensation cap, before those provisions are brought into force
This staged approach gives employers time — but also places responsibility on employers to prepare rather than react.

Expected implementation timeline (subject to commencement orders)

While final dates will only be confirmed once commencement regulations are laid, current government guidance and legal commentary point to the following broad structure.

What employers should be doing now

 

Although most changes are not yet in force, doing nothing until 2026 is a risk. The employers who manage this best will prepare in stages.

Frequently Asked Questions

1Is the Employment Rights Act 2025 in force now?
Partially. The Act has received Royal Assent and is now law. However, most of its provisions are not yet in force. They will be implemented in stages across 2026 and 2027 via commencement orders. The only substantive change in force immediately is the repeal of the Strikes (Minimum Service Levels) Act 2023 provisions.
2Do employers need to change contracts or policies right now?
No immediate changes are legally required today (other than being aware of the strikes-related repeal). However, employers should be reviewing contracts and policies now so they are ready for phased implementation, particularly in relation to: hours of work sickness absence dismissal and performance management variable or zero-hours arrangements Leaving this until changes are live significantly increases risk.
3When do the main employment law changes take effect?
Based on current government guidance and legal commentary (subject to confirmation): April 2026 (expected): Sick pay reforms, day-one family leave rights, whistleblowing changes, Fair Work Agency October 2026 (expected): Fire and rehire restrictions, sexual harassment prevention duties, tribunal time limit changes 2027 (expected): Reduced unfair dismissal qualifying period, changes linked to unfair dismissal compensation, guaranteed/predictable hours reforms Exact dates will be confirmed through commencement regulations.
4What’s happening with unfair dismissal?
The government has indicated that: The unfair dismissal qualifying period is expected to reduce from two years to six months The unfair dismissal compensation cap may be removed However: These changes are not in force yet The government has committed to publishing an impact assessment before implementing the compensation cap removal Further consultation is expected These reforms are currently expected in 2027, not 2026.
5What do we know about guaranteed or predictable hours?
This is one of the most common questions — and one of the areas where detail is still emerging. What we do know: The Act introduces new rights aimed at tackling exploitative zero-hours and highly variable working arrangements Workers are expected to gain a right to request a guaranteed or more predictable working pattern Employers will need to consider and respond to such requests in a structured way There will be protections linked to short-notice cancellation of shifts, including potential compensation What we don’t yet know: Exactly who will qualify (e.g. length of service thresholds) How often requests can be made The precise grounds on which employers can refuse How compensation for cancelled shifts will be calculated What we can say confidently: This is not an outright ban on zero-hours contracts It will require employers to justify unpredictability, rather than rely on it by default Further detail will come through consultation and secondary legislation These changes are currently expected in 2027
6Does this mean zero-hours contracts are being banned?
No. Zero-hours contracts are not being banned outright. Instead, the focus is on: reducing one-sided flexibility increasing predictability where work patterns are regular in practice giving workers the right to challenge ongoing unpredictability Employers who can objectively justify variable hours (for genuine business reasons) are likely to retain flexibility — but informal or unmanaged arrangements will be riskier.

Need Support Navigating the change?

The Employment Rights Act 2025 represents a fundamental shift, but it does not need to be overwhelming. We help employers: understand what applies to their business plan changes in the right order implement compliant processes without unnecessary complexity If you’d like a clear, tailored action plan, get in touch.