The Employment Rights Act 2025

Royal Assent passes the Employment Rights Bill into law

After months of debate between the two chambers, the Bill passed into law, just as the Houses rose for the Christmas recess. Though there remains a period of consultation and secondary legislation, it is expected that most of the Act’s provisions will be phased in during 2026 and 2027.

Reaction from employees and Trade Unions has generally been positive, with workers acknowledging that the Act allows more job security, more robust rights relating to family and sick pay, and better protections against unfair dismissal. Trade Unions are understandably supportive of new thresholds for redundancy rights, simplification of ballots, and a reduction in the notice period needed for strike action.

However, responses from business and industry leaders have been more mixed. While there is strong support for fair and equitable treatment in the workplace, many businesses are concerned about increased costs, reduced flexibility and greater exposure to legal risk. Smaller businesses without specialist HR teams may find difficulty adjusting to new rules and the changes that need to be made to contracts, shifts and union engagement. The CIPD’s response was to advise businesses to move from speculation to preparation, but with many details yet to be finalised, concerns remain around transparency, complexity and the point at which firms can confidently move from preparation to implementation.

After a year of rising unemployment, particularly in the fourth quarter, believed to be driven by tax rises, high energy costs and unprecedented global uncertainty, there is understandable nervousness about the Act’s potential impact on job mobility. To protect themselves from the cost, complexity and compliance risks the Act portents, 2026 may see many more employers turning to AI solutions to reduce headcount still further. Time will tell, but at the beginning of a new year, let’s be hopeful instead that the Act’s underlying principles of protection and fairness guide the way, giving rise to a newly engaged, fulfilled workforce with lower turnover and increased productivity.