The Employment Rights Act 2025 brings some important changes to employment rights and unfair dismissal law that employers need to be aware of. While these changes don’t come into force straight away, they will affect how you manage probation periods, performance issues and dismissals in the future.
Below, we explain what’s changing, when it’s happening, and what it means for you as an employer. In particular, understanding the new landscape of employment rights is crucial.
At the moment, employees need two years’ service before they can bring an ordinary unfair dismissal claim. Under the new Act, this will reduce to six months. This means employees will gain protection much earlier, and employers will need to ensure dismissals within the first year are handled fairly and consistently under the updated rights for employment.
Currently, employees can usually only request written reasons for dismissal after two years’ service. This will also change to six months, meaning employers will need to clearly explain and document dismissal decisions much earlier in the employment relationship, with attention to statutory employment rights.
The Act removes the qualifying period entirely where a dismissal relates to a spent conviction. In these cases, employees will be protected from unfair dismissal from day one, ensuring their employment rights are upheld.
At present, compensation for unfair dismissal is capped at the lower of:
Under the new Act, this cap will be removed completely. Tribunals will be able to award compensation based on the employee’s actual financial loss. While most awards are currently well below the cap, this change increases potential risk for employers where dismissals are not handled properly. Furthermore, robust rights in employment are now essential to reduce exposure to claims.
Some key protections already apply from day one, and this remains the case. These include:
The Act does not change these existing rights, so fundamental employment rights stay protected.
In simple terms, the new Act makes significant adjustments to employment rights and protections compared to current law:
The Government plans to bring these changes into force on 1 January 2027, altering requirements for employment rights.
From that date:
You may be wondering why the Government hasn’t introduced unfair dismissal protection from day one when revising employment rights.
The reasoning is:
This approach puts the UK among countries with some of the strongest unfair dismissal protections, while keeping probation periods meaningful and balancing employment rights for all parties.
The Government believes:
In practice, most unfair dismissal awards are modest, regardless of the strengthened employment rights.
Although these changes won’t apply until 2027, they will require a shift in approach, particularly around employment rights.
Employers should start thinking about:
Good HR practice will be more important than ever, ensuring compliance with all new requirements related to employment rights.
Article
With time to prepare, employers can get ahead of these changes rather than reacting later.
Now is a good opportunity to:
If you’d like support reviewing your processes or preparing for these changes, Limelite would be happy to help.
Let’s talk about how we can support you. Submit your enquiry using the form below.
We would love to hear from you. Simply complete the form below with your enquiry.
Let’s talk about how we can help your people and business thrive — book your 30-minute discovery call today.