The final hurdle - the Employment Rights Bill to pass into law

After several rounds of back and forth within Parliament on several outstanding issues, yesterday the Employment Rights Bill (ERB) received the approval of the House of Lords, and will now pass into law. 

As we discussed in our recent article, debate has been ongoing on several key issues at the heart of the ERB. These were most notably in relation to the Government’s proposal to make protection from unfair dismissal a day-one right for employees.

In the wake of continued opposition from within Parliament and beyond, and in the hope of getting the Bill “over the line”, the Government backtracked on this proposal and instead replaced it with a 6-month qualifying period.

As a last minute surprise to many, however, they also proposed to remove the compensation cap for unfair dismissal claims, in a move that caused further unease. 

However, yesterday (16 December), the House of Lords backed-down on insisting that this new proposal be reconsidered – clearing the way for the Bill to move forward and receive Royal Assent before Christmas.

What next?

It is expected that the ERB will now quickly progress (possibly within a matter of days) to receive Royal Assent and so pass into law as the Employment Rights Act 2025.

It is not yet clear if there will be any further consultation on the unfair dismissal protections. However, the Government has committed to publishing an impact assessment on the anticipated impact of removing the compensation cap on unfair dismissal claims.

The 6-month unfair dismissal qualifying period will come into effect from 1 January 2027 and it is presumed that the lifting of the compensation cap would also take effect from this date. 

Employers should therefore keep in mind that any employee who will have been employed for 6-months or more by this date will immediately become eligible for these enhanced protections.

If you have any questions about the Employment Rights Bill, or for more information on how we can support you to support your employees, please contact the Employment Team.