After months of parliamentary debate, the Employment Rights Bill has finally cleared the House of Lords and gained Royal Assent on 18th December 2025. It has now become the Employment Rights Act 2025 (ERA 2025) - a landmark reform that will reshape UK employment law over the coming years.
While many of the changes will not take effect immediately, employers should now be clear on the direction of travel. The focus should shift from what might happen to how and when to prepare.
The two changes employers are watching closely
Two late amendments made during the Bill’s final passage are particularly significant.
First, the qualifying period for ordinary unfair dismissal will reduce from two years to six months, rather than being removed entirely. This change is expected to take effect from January 2027.
Second, and potentially more impactful, the compensation cap for unfair dismissal — currently the lower of one year’s salary or £118,223 — is expected to be abolished, subject to the Government completing and publishing an Impact Assessment. If confirmed, this will substantially increase litigation risk and exposure for employers.
A phased introduction
ERA 2025 will be implemented gradually under a government roadmap. The only immediate change following Royal Assent has been the repeal of the Strikes (Minimum Service Levels) Act 2023.
Further industrial relations reforms will follow two months later, including simplified industrial action ballots and notices, stronger protection against dismissal during strikes, and the repeal of much of the Trade Union Act 2016.
From April 2026, employers will start to see more practical, day-to-day changes, such as:
- Day-one rights to paternity leave and unpaid parental leave
- Reformed Statutory Sick Pay (no waiting days or lower earnings limit)
- Expanded whistleblowing protection, including sexual harassment complaints
- Higher penalties for collective redundancy failures
Additional reforms are planned for October 2026, including tighter controls on fire-and-rehire practices, stronger rules on tips, expanded trade union rights, and a new duty to take “all reasonable steps” to prevent sexual harassment.
Beyond that, 2027 is expected to bring the aforementioned unfair dismissal changes, reforms covering flexible working, bereavement leave, protections for pregnant workers, restrictions on zero-hours arrangements, and regulation of umbrella companies.
What should employers be doing now?
For unionised employers, the priority is understanding the imminent changes to industrial action rules and reassessing risk and response planning. For non-unionised workplaces, preparation should focus on:
- Reviewing contracts, variation clauses and probationary provisions
- Strengthening probationary processes ahead of the six-month unfair dismissal threshold
- Training managers on upcoming rights and obligations
- Planning policy updates for family leave, sickness absence and harassment
- Auditing payroll and benefits systems in light of SSP reform
The takeaway
ERA 2025 is not a single moment of change but a rolling programme of reform. Employers that start planning early - rather than waiting for implementation dates - will be best placed to manage risk, cost and disruption as the new framework takes shape.
New rates for sick pay, family leave and national minimum wage from April 2026
The Government has set out its proposed new statutory rates for statutory sick pay and family leave pay to apply from 6th April 2026.
| Old Rate | New Rate |
Statutory maternity pay | £187.18 per week | £194.32 per week |
Statutory paternity pay | £187.18 per week | £194.32 per week |
Statutory shared parental pay | £187.18 per week | £194.32 per week |
Statutory adoption pay | £187.18 per week | £194.32 per week |
Statutory parental bereavement pay | £187.18 per week | £194.32 per week |
Statutory neonatal care leave pay | £187.18 per week | £194.32 per week |
Statutory sick pay | £118.75 per week | £123.25 per week |
The average gross weekly earnings required to qualify for the various forms of family leave pay is proposed to increase from £125.00 or more per week, to £129.00 or more per week from 6th April 2026.
These changes sit alongside the proposed changes to national minimum wage which, if approved, will take effect from 1st April 2026:
Category | Rate |
Aged 21 and above | £12.71 per hour |
Aged 18-20 | £10.85 per hour |
Aged under 18 (but above compulsory school leaving age) | £8.00 per hour |
Apprentices aged under 19 | £8.00 per hour |
Apprentices aged 19 or over but in the first year of their apprenticeship | £8.00 per hour |
Accommodation offset | £11.10 per day |
The Court of Appeal holds that Stonewall did not instruct, cause, or induce Garden Court Chambers to discriminate against a barrister because of her gender critical beliefs
Section 111 Equality Act 2010 makes it unlawful for a person to instruct, cause or induce someone to discriminate against, harass or victimise another person, or to attempt to do so.
In Bailey v Stonewall, the Claimant was a tenant of Garden Court Chambers (GCC). GCC signed up to the Diversity Partners programme run by Stonewall. The Claimant held gender critical views. She made tweets about her objection to what she saw as Stonewall’s ‘trans-extremism’ and supporting the LGB Alliance, which promoted gender crucial principles. GCC received a number of complaints as a result, specifically about a viewed incompatibility of her views with trans rights. Stonewall also made a complaint. GCC made a public statement that it would investigate. As a result of the investigation, GCC held that two of the tweets should be deleted.
The tribunal found that the announcement of the investigation and its outcome were both detriments suffered by the Claimant because of her protected gender critical beliefs. The point at issue was whether Stonewall was liable for inducing the discrimination. The Court of Appeal held it was not. For ‘causing or inducing’ claims under s111 EqA:
- a claimant must show that, but for the intervention of person A (here, Stonewall), the act of discrimination by B (GCC) would not have occurred; and
having regard to all the facts, making person A (Stonewall) liable for that discrimination would be ‘fair or reasonable or just’, those adjectives being interchangeable. The EAT held that responsibility for determining the complaint in a discriminatory way lay only with GCC. For that reason, although Stonewall’s complaint was the ‘occasion’ for it happening (and so could be regarded as causing it in a ‘but for’ sense), it would not be reasonable to hold Stonewall liable for that discriminatory outcome. Protest or complaint alone is insufficient to establish liability without a fair and reasonable basis to attribute responsibility.
How we can help
Please contact Sally Morris, Head of Employment, at sally.morris@mfgsolicitors.com or call on 01905 610410.
To read part 2, please click here.