Employment Rights Bill – December 2025 Update

The Employment Rights Bill has finally managed to get over the final parliamentary hurdle in the House of Lords and is likely to receive Royal Assent today, 18 December 2025. It will then become known as the Employment Rights Act 2025.

This has been a somewhat tortuous journey with many twists and turns, but the changes will finally come into force in stages in 2026 and 2027.

This Employment Rights Act will bring into force significant changes to employment rights, which will change the landscape for both employers and employees. Clarity is still needed as to how these will work in practice, and we will have to wait to see what the accompanying regulations set out.

Some Key changes

• Unfair dismissal: originally, the government had wanted to bring in protection from unfair dismissal from day one. From the government’s perspective this has been watered down as the protection will now come into force from six months of employment.
  
  The current qualifying period is two years, so this change will nevertheless mean a huge change and employers will have to be far more proactive in managing probationary periods.
  
  This is likely to come into effect at the start of 2027.
• Compensation cap: the existing limit on unfair dismissal compensation is currently £118,223.
  The plan however is that this will be completely removed, but this is still under review and will be assessed before implementation.
  
  
• Time limit for submission of tribunal claims, this will be extended from three months to six months. This will mean that employers risk receiving claims many months after the issue initially arose.
  
  

  This is likely to come into effect October 2026.
  
  

• Earlier leave and benefits: SSP entitlement, paternity leave and ordinary parental leave will become day one rights.
  
  

  This is likely to come into force April 2026.
  
  

• Zero-hours contracts and guaranteed hours: employers will have to offer contracts that reflect regular hours worked over a set reference period, which is likely to be 12 weeks.
  
  

Employers will also have to give reasonable notice of shift changes and potentially compensation for shifts that are moved, shortened or cancelled.