In brief
Yesterday (16 December 2025), the House of Lords backed down and accepted the last remaining issue in dispute in the Employment Rights Bill between the two Houses of Parliament: whether the cap on unfair dismissal should be removed. For more information, see our previous update.
This means that the Bill will shortly receive Royal Assent and is expected to become law as the Employment Rights Act 2025.
Key takeaways
- In July 2024, the then new government promised an Employment Rights Bill within its first 100 days, and it delivered on that promise in October 2024. The Bill provided for sweeping employment law changes, although much of the detail is still to be finalised.
- After a long and sometimes controversial passage through Parliament, including a period of “ping pong” between the Houses, the Bill has now been passed. Royal Assent is expected before Christmas.
- Certain provisions relating to strikes and trade unions will come into force two months after Royal Assent, so anticipated to be February 2026. Others, including the doubling of the current protective award for failure to inform and consult on collective redundancies, are expected in April 2026.
- The remainder, including limits on the use of fire and rehire (termination and re-engagement) processes, is due to come into force later in 2026 and into 2027. It has been reported that the reduction of the qualifying period of service for unfair dismissal claims, down to six months, will take effect in January 2027. It is presently unclear whether the removal of the compensation cap will take effect at the set time. More detail on the Implementation Roadmap published in July 2025 is here.
- The government has previously promised 26 consultations on the detail of the new rights in the Bill, which will be implemented through secondary legislation, once Royal Assent is granted. This number may have changed slightly since the announcement, but is still likely to be over 20. These consultation papers are expected in the early part of 2026.
