Commentary | 18 Dec 2025 |

Employment Rights Act

What does it mean for employers?

The Employment Rights Bill has received Royal Assent, becoming the Employment Rights Act 2025. The Act paves the way for significant reforms to UK employment law, with the key changes to be phased in starting from April 2026. The much-publicised reduction of the service requirement for unfair dismissal claims and the removal of the compensation cap are expected to take effect in January 2027 (see below).

The Government has also pledged to introduce other employment law reforms separately, including:

Ethnicity and disability pay gap reporting requirements for employers with at least 250 employees (the Government ran a consultation on the proposed detail of the reporting requirements which ended on 10 June 2025).
Introducing a "single worker status" under which all workers would have full employment rights.
Reviewing the current parental leave system (commenced July 2025 and expected to continue until early 2027).
Examining carers' leave and considering whether it should be paid.