Is your business ready for new rights? – Daily Business Magazine

The Employment Rights Act represents a major shift in the law, writes EUAN SMITH

It’s no exaggeration to say that the pace of change in UK employment law looks set to be the fastest in a generation, principally because of the Employment Rights Act 2025 which has now received Royal Assent and is to be implemented in stages, over the next year or two.

Foremost amongst the changes is the reduction of the qualifying period for unfair dismissal claims from 2 years to 6 months.  Initially intended to be a “day 1” right for employees (with some form of protection for employers around probationary periods) it was, after much debate between the Government, Trade Unions and business representatives, removed from becoming a day one right.

Nonetheless, the reduction in the qualifying period for claims of unfair dismissal still represents a significant change to the employment law landscape, and one that will impact employers earlier than the scheduled 1 January 2027 implementation date.  This is due to the likelihood that anyone hired from 1 July 2026 will be regarded as having qualifying service, on the basis they will have attained 6 months’ service by the start of 2027.

Employers therefore need to be aware that some prospective employees currently in the recruitment “pipeline” may benefit from this change, given (for example), notice periods and any relevant pre-employment checks.

So, it will be important for businesses to ensure that any probationary periods are appropriately adjusted to take account of the change.  This may mean dispensing with any “normal” 6-month probation period and implementing a shorter period, of around 4.5 months, to ensure they both work within the new 6-month period and take account of any potentially complicating factors, such as employee sickness absence.

To date, the current 2-year qualifying service period required, has allowed businesses to be relatively relaxed, with respect to practices around probationary periods.  However, the Employment Rights Act looks set to change that in a stroke.

Another significant change will be to the time limit for raising many Employment Tribunal claims, which will increase from three months to six months (likely effective from 1 October 2026). In addition, the statutory (compensatory award) cap for unfair dismissal claims looks likely to be removed. 

Currently, a compensatory award can only attract a maximum of the lower of the current cap (£118,223) and a year’s pay.  Any removal of this statutory cap (likely effective from 1 January 2027) will have repercussions, particularly for businesses with higher earners, meaning it will no longer be as straightforward to settle unfair dismissal claims by simply offering them a sum at/toward the compensatory award cap.             

Some other changes to come include:     

From 6 April 2026:

• Statutory Sick Pay (SSP) entitlements, from the 1^st   day of absence and the removal of the lower earnings limits.
• Paternity leave and Parental leave to become day one rights.
• The maximum collective redundancy protective award to rise, from 90 days to 180 days.
• Sexual harassment to become a qualifying disclosure, under “whistleblowing” legislation.

From 1 October 2026:

• A Fair Work Agency to consolidate and enforce employment rights, to be established.
• “Fire and re-hire” legislation to be introduced, making it harder to dismiss through changes to terms and conditions exercises.
• Union involvement/activity – various Union related protections and changes across multiple dates.

These examples of changes coming within this Act are by no means exhaustive.  Suffice to say, the Employment Rights Act 2025 represents a major landscape shift in employment law, with numerous changes that businesses will need to plan and prepare for.

To stay on top of those changes and avoid any costly repercussions, businesses should undertake checks of all relevant changes and their implementation dates, before performing full audits/risk assessments and consulting with relevant advisers, as necessary.  And now would seem the best time to do that.

Euan Smith is a legal manager at Navigator, part of Vialex group

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