A few months ago, I wrote about the Employment Rights Bill, examining the changes it proposed and their potential to reshape businesses and organisations across the country. Since then, the legislation has received royal assent and graduated into the Employment Rights Act.

In this article, we'll revisit some of the main changes it proposed, cover last-minute amendments and examine the implications of the act's phased implementation.

A recap of the main changes

1. Improving the right to claim unfair dismissal

Previously, an employee was required to have worked at an organisation for at least two continuous years in order to bring a claim for unfair dismissal. This period of two years has now been reduced to six months, making the right to claim unfair dismissal accessible to employees at an earlier stage in their employment.

The act also includes a provision that this new qualifying period can only be varied by primary legislation (ie, another act of parliament) in future, making further changes unlikely without full parliamentary scrutiny.

2. Ending 'fire and rehire'

Dismissing an employee for refusing to agree to changes in core contractual terms is now automatically unfair, except where the employer faces severe financial difficulties and has no reasonable alternative.

3. Voiding certain provisions in non-disclosure agreements

Any provision in a non-disclosure agreement between a worker and employer which aims to prevent a worker from speaking out about harassment and discrimination that they've experienced is now automatically unenforceable.

4. Strengthening the right to request flexible working

The act strengthens the existing right to request flexible working. Employers may now only refuse such requests where it's reasonable and must provide reasons for doing so.

5. Improving parental rights

The act makes paternity leave and unpaid parental leave 'day one' rights, meaning employees are entitled to them from the start of their employment. It also introduces a new right to unpaid bereavement leave, including for pregnancy loss, allowing employees to take time away from work in order to grieve a lost loved one.

Additionally, the act strengthens protections against dismissal for pregnant women, mothers on maternity leave, and for a period of at least six months after returning to work, subject to a few exceptions.

6. Whistleblowers and equality

Under the act, workers who ‘blow the whistle’ on sexual harassment (ie, report or disclose it) are now protected against adverse treatment and unfair dismissal.

The act also introduces stricter duties on employers to prevent sexual harassment: whereas they were previously required to take 'reasonable steps', they must now take 'all reasonable steps'.

7. Enforcement of employment rights

The act establishes the Fair Work Agency, responsible for enforcing domestic agency rules, holiday pay, national minimum wage and tackling serious labour exploitation.

It also expands the scope for employment tribunal claims by increasing the time limit for making a claim from three months to six months.

Last-minute amendments

1. Reduction of qualifying period for unfair dismissal

In my previous article on the Employment Rights Bill, I noted that the right to make an unfair dismissal claim would become a 'day one' right. This has since been replaced by a requirement of six months' continuous service.

2. Removal of unfair dismissal compensatory awards cap

Currently, compensation for unfair dismissal is capped at the lower of 52 weeks' gross (total) pay or a statutory maximum (£118,223). The act removes this cap, allowing employment tribunals to make uncapped compensatory awards in unfair dismissal claims, subject to other existing limitations.

Next steps

The act will be implemented in phases across 2026 and 2027, giving employers and employees – as well as the law firms advising them – time to prepare and adapt. The most crucial reforms, including the launch of the Fair Work Agency and 'day one' rights to parental leave, are expected to come into force in April this year.

How will this impact…

Businesses?

• Potential reduction in hiring: the stricter requirements imposed on employers may dissuade some from hiring, especially given the already uncertain economic conditions.
• Greater protection of work/life balance: enhanced rights for working parents, including expanded parental leave and protections for pregnant employees and new mothers, strengthen employees' ability to balance work and family life.

The courts?

• Increased pressure on the system: while the increased protections afforded to employees are significant, the broader scope for bringing claims may lead to a rise in litigation, placing further pressure on an already backlogged court system.

Law firms?

• Increased disputes activity: expanded employee protections and a wider scope for claims are likely to drive demand for employment dispute work. In particular, employers face greater litigation risk, seeing as compensatory awards for unfair dismissal claims are no longer subject to a cap – meaning they will likely require more advice on negotiating employee exits and navigating disputes.
• Increased advisory and compliance work: as the reforms are being introduced in phases, employers will require advice on adapting to and preparing for the new regime, navigating the transitional period, and ensuring compliance with the stricter requirements and higher thresholds.

As the Department for Business and Trade notes, the Employment Rights Act “brings our employment rights legislation into the 21st century” – representing a significant shift in a sector that has seen little reform since the 1990s. Yet it's crucial to navigate these changes carefully as they begin to take effect, to ensure that nobody – employees, employers and those advising them – gets left behind.

For a deeper look at the Employment Rights Act and what these reforms could mean in practice, take a look at this LCN Says.