After months of parliamentary debate and revision, the Employment Rights Act 2025 received Royal Assent on 18 December 2025.
It represents the most significant reform of UK employment law in a generation, affecting dismissal rights, working arrangements, trade union engagement, family leave, harassment prevention and enforcement mechanisms. While implementation will be phased through 2026 and 2027, the direction of travel is clear: employment-related claims are likely to increase, costs will rise, and businesses that fail to prepare face heightened financial and reputational risk.
Eight critical changes every broker needs to understand
1. Tribunal time limits are expected to extend for some claims
The Act introduces powers to extend time limits for certain employment tribunal claims, subject to further regulations. While not all claims will be affected, longer limitation periods will increase uncertainty for employers and may contribute to higher claim volumes and legal costs.
Brokers should expect increased exposure where employers fail to manage risk proactively.
2. Unfair dismissal protection will apply much earlier
The qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months once the relevant provisions come into force (currently expected from January 2027). Day-one unfair dismissal rights were proposed earlier in the Bill’s passage but were not included in the final Act.
This change significantly shortens the window in which employers can dismiss without unfair dismissal exposure, increasing the importance of robust processes from early in employment.
3. Collective consultation failures carry higher financial risk
The Act strengthens collective consultation obligations and increases the maximum protective award for failure to consult, potentially up to 180 days’ pay per affected employee, subject to final regulations.
This materially increases the potential value of claims arising from redundancy exercises that do not comply with statutory requirements.
4. Fire and rehire practices face tighter restrictions
The Act places significant limits on the use of dismissal and re-engagement to impose contractual changes. Where statutory conditions are not met, dismissals may be treated as automatically unfair. Even where justified, employers must follow enhanced consultation requirements.
Claims arising from fire and rehire scenarios are therefore likely to carry higher liability and complexity.
5. Insecure working arrangements will require closer scrutiny
New protections are introduced for zero-hours and low-hours workers, including rights to request guaranteed hours and compensation for cancelled or changed shifts, subject to reference periods and regulations.
While flexible workforce models will not be prohibited, reliance on them is likely to increase claims exposure if not carefully managed.
6. Harassment prevention duties are strengthened
Employers will be under a statutory duty to take all reasonable steps to prevent sexual harassment, including harassment by third parties such as customers or clients. Employment tribunals may uplift compensation by up to 25% where employers fail to meet this duty.
These obligations require proactive policies, training, and monitoring, and are expected to drive an increase in both the number and value of harassment claims.
7. Family leave protections expand from day one
The Act introduces enhanced protections for parents and those affected by pregnancy loss, including day-one rights to paternity leave and unpaid parental leave, extended protection following maternity return, and new bereavement leave entitlements, subject to commencement regulations.
Claims connected to family leave and discrimination are therefore likely to become more frequent.
8. Flexible working and trade union engagement increase
Employees will be able to request flexible working from day one, with employers required to give evidence-based reasons for refusal. Trade unions will find it easier to gain recognition and access workplaces under updated statutory frameworks.
These changes increase the likelihood of indirect discrimination claims and collective disputes.
Act Now
Brokers and their clients who prepare early will be better positioned to manage the increased claims environment created by the Act. Proactive engagement also presents an opportunity for brokers to reinforce their role as trusted advisers during a period of significant legal change.
For further insight, watch our joint webinar with Shoosmiths or speak to us our Team about our Commercial Legal Protection products.