Employment Rights Act 2025 Archives

The Employment Rights Bill has finally passed. On 16 December 2025, over a year after being announced, the House of Lords has backed down on the remaining area of contention.

There were several rounds of ‘ping-pong’ between the House of Lords and the House of Commons. Despite the delays, we are likely to have the Employment Rights Bill 2025 when Royal Assent is given.

For background on the ERB, see our blogs here and here) and previous updates on amendments here

The remaining issues which were in dispute but which has now been agreed:

Removal of compensatory cap: The main outstanding disagreement was over the removal of the compensatory cap for unfair dismissal claims. The cap is currently the lower of £118,223 or one year’s salary. The Commons wanted to remove the cap entirely, but the Lords was pushing for a review of the current cap within three months of ERB becoming law. The Government has now committed instead to publishing an impact assessment on the impact of removing the cap before implementing the dismissal sections of the new Act. The absence of a cap is unlikely to cause problems in our opinion.

All issues have now been agreed:

Unfair dismissal protection: The major headline news (which I expect you’re well aware of by now) is that employees will qualify for protection after six months’ service. The good news is that this is more employer-friendly than the Government’s initial plan for protection to be a day one right.

However, employers will still need to adjust from the current qualifying protection of two years down to just six months by the time the change comes into effect – this is expected to be from 1 January 2027 (for dismissals on or after that date).

Guaranteed hours: The Lords wanted an amendment to give employees a right to request minimum hours, rather than employers being required proactively to do so. However, this has not been agreed by the Commons and the Lords have dropped their objections – so this remains as set out in our previous updates.

Trade union reform: Industrial action will require a simple majority of those voting – the existing threshold of at least 50% will be removed (the Lords have dropped their objections to this). Trade unions will be able to automatically opt members into contributing to political funds

Tag: Employment Rights Act 2025

Employment Rights Act 2025

The Employment Rights Bill has finally passed. On 16 December 2025, over a year after being announced, the House of Lords has backed down on the remaining area of contention.

There were several rounds of ‘ping-pong’ between the House of Lords and the House of Commons. Despite the delays, we are likely to have the Employment Rights Bill 2025 when Royal Assent is given.

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