The Employment Rights Bill becomes the Employment Rights Act 2025

The Employment Rights Bill has now formally completed its journey through Parliament and yesterday received Royal Assent, bringing it into force as the Employment Rights Act 2025. 

As discussed in our recent article, this follows the House of Lords’ agreement to proceed despite concerns regarding the Government’s late-stage proposal to remove the compensation cap for unfair dismissal claims late last week.

For the time being, the immediate effect of the Act is limited, with the only provision to take effect on Royal Assent (18 December 2025) being the repeal of the measures introduced by the Strikes (Minimum Service Levels) Act 2023. The remainder of the reforms, as discussed in our previous update, will be phased in through 2026 and 2027, following conclusion of the relevant consultations and introduction of secondary legislation. 

1 January 2027 is the date that the qualifying period for unfair dismissal protection decreases to six months (including for existing employees). It is likely (but not confirmed) that this will also be the date on which the compensation cap applicable to unfair dismissal claims will be lifted. 

If you have any questions about the Employment Rights Bill and what steps your organisation should be taking in light of the reforms, please contact the Employment Team.