Employment Rights Act 2025 Guide

Understanding the Changes

The Employment Rights Act 2025 represents a wholesale reform of employment protection in the UK. The Act does not come into force all at once; instead, different provisions will be commenced on different dates throughout 2026 and 2027. This guide explains what is changing and when.

The most significant changes for Employment Tribunal claimants are the extension of time limits from 3 months to 6 months, the reduction of the unfair dismissal qualifying period from 2 years to 6 months, and the complete removal of the statutory cap on compensatory awards for unfair dismissal.

Timeline of Changes

Impact on Employment Tribunal Claims

Extended Time Limits (October 2026)

From October 2026, the standard time limit for bringing an Employment Tribunal claim will extend from 3 months less 1 day to 6 months from the date of the act complained of. This applies to most claim types, including unfair dismissal, discrimination, and unlawful deduction from wages.

This means claimants will have twice as long to start ACAS early conciliation and submit their ET1 form. The current time limit of 3 months less 1 day (or 89 days) has been widely criticised as unreasonably short, particularly when employees need time to seek advice, grieve, and consider their options after dismissal.

Reduced Qualifying Period (January 2027)

From January 2027, the qualifying period for ordinary unfair dismissal claims will reduce from 2 years to 6 months of continuous employment. This will make unfair dismissal protection available to millions more employees who previously had no protection against arbitrary dismissal.

Under the current rules, employees dismissed before completing 2 years of service cannot claim ordinary unfair dismissal (though they can still claim automatically unfair dismissal, discrimination, and other rights that do not require a qualifying period). The new 6-month threshold brings the UK closer to European norms.

Compensation Cap Removed (January 2027)

From January 2027, the statutory cap on the compensatory award for unfair dismissal will be completely removed. Currently, the compensatory award is capped at the lower of 52 weeks' gross pay or £118,223 (from 6 April 2025). This cap will cease to apply to unfair dismissal claims arising on or after the commencement date.

This is a radical change. It means that high earners who are unfairly dismissed will be able to recover their full financial losses, potentially running into hundreds of thousands of pounds in cases involving long notice periods, substantial bonuses, and difficulty finding equivalent work.

Fire and Rehire (January 2027)

From January 2027, a new automatically unfair reason for dismissal will be inserted into the Employment Rights Act 1996 (s.104F). Dismissal will be automatically unfair if the reason (or principal reason) is that the employer dismissed the employee with the intention of re-engaging them on varied (and usually worse) terms.

This practice, known as "fire and rehire," has been controversial and widely used during the pandemic and cost-of-living crisis. The new law will make it automatically unfair, meaning employees do not need a qualifying period and the employer cannot argue the dismissal was fair or reasonable in the circumstances.

Other Significant Changes

Statutory Sick Pay (April 2026)

From April 2026, Statutory Sick Pay (SSP) will be reformed. The lower earnings limit (currently £123 per week) will be abolished, meaning all employees will qualify for SSP regardless of how much they earn. The 3 waiting days before SSP becomes payable will also be removed, so SSP will be payable from day 1 of sickness absence.

Collective Redundancy Protective Award (April 2026)

From April 2026, the maximum protective award for failure to consult on collective redundancies will double from 90 days' pay to 180 days' pay. This is the penalty awarded to employees when an employer fails to comply with collective consultation requirements before making 20 or more employees redundant.

Zero-Hours Contracts and Guaranteed Hours

The Act includes provisions giving workers on zero-hours contracts the right to request guaranteed hours based on their typical working pattern, and banning exploitative exclusivity clauses. These provisions will be commenced by secondary legislation (no date confirmed yet).

Trade Union Access Rights

New rights for trade unions to access workplaces and communicate with workers will be introduced. These provisions will also be commenced by secondary legislation at a later date.

What You Should Do Now

Transitional Provisions

When new legislation comes into force, there are often complex transitional provisions that determine which version of the law applies to a particular case. The general rule is that the law in force at the date of the act complained of (e.g., dismissal date) applies, not the law at the date the claim is brought.

This means:

• If you were dismissed in September 2026, the 3-month time limit applies (you must bring your claim by December 2026).
• If you were dismissed in November 2026, the 6-month time limit applies (you have until May 2027).
• If you were dismissed in December 2026 with 18 months' service, you need 2 years' service to claim ordinary unfair dismissal.
• If you were dismissed in February 2027 with 18 months' service, you only need 6 months, so you can claim.

The Government will publish detailed guidance on transitional provisions closer to each commencement date. You should check the position carefully before acting.

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