The Employment Rights Bill – Where Are We Now?

The Employment Rights Bill, which is set to bring sweeping changes to almost all aspects of employment law as part of the Government’s agenda to “Make Work Pay”, is now in its final stages.

When it was published on 10 October 2024, many expected the Bill to become law by the end of 2025, but it has proven to be a marathon effort rather than a sprint and the passage of the Bill through Parliament has stalled due to key areas of disagreement between the House of Lords and the House of Commons, most significantly in relation to the Government’s pledge to make protection from unfair dismissal a “day-one” right for all employees. After the Lords twice insisted on an amendment introducing a qualifying period of six months, to avoid a complex two-tier system which would have seen a “light-touch” dismissal procedure applying to some dismissals in the initial statutory probationary period of employment, the Government have now conceded this change. We may therefore see the Bill become law before Christmas, but it’s unlikely to be welcomed as a Christmas present by all.

In tandem to the Parliamentary ping-pong process, the Government has released consultations on some key provisions of the Bill.

This update also covers the extension of the ACAS early conciliation period from 6 to 12 weeks on 1 December 2025 and the recently launched consultation on reforming non-compete clauses in employment contracts which was initially proposed by the previous Government.

Unfair dismissal – 6 month qualifying period

On 27 November 2025, after a deal struck between ministers, some unions, and industry groups, the Government announced that it would accept the Lord’s amendment to the Bill which introduced a qualifying period of six months before an employee can bring a claim of unfair dismissal, in a break with their manifesto promise to make protection from unfair dismissal a “day-one” right. This is still however a significant decrease to the current two-year qualifying period for unfair dismissal.

The Government had been under increasing pressure not just from the Lords but also business leaders that allowing employees to claim unfair dismissal from day one of employment could hinder mobility in the labour market (as employers would hesitate before hiring) and stifle economic growth. The “light-touch” dismissal procedure which would have applied to only some dismissals (such as for capability or conduct) during an “initial period of employment” (a so called statutory probationary period) also faced criticism for being too complex. The qualifying period of 6 months will be enshrined in primary legislation and therefore future governments will not be able to amend the qualifying period by regulations (which is possible currently). The 6-month qualifying period for unfair dismissal will mean that employers will need to manage probationary periods much more carefully and pro-actively and there will be less appetite to extend an initial probationary period to ensure that employees do not inadvertently pass the 6-month qualifying period for unfair dismissal protection, if the employer has concerns about their performance.

The Bill will return to the House of Commons on 8 December 2025 after which final amendments will need to go back to the House of Lords before the Bill can pass.

The Government has also announced that it will remove the statutory compensation cap for unfair dismissal. It is expected that this will apply to the cap which prevents compensation exceeding one year’s pay, however, we understand that the overall cap on the maximum award, currently £118,223, will remain. The shorter qualifying period for unfair dismissal claims will undoubtedly increase the number of cases coming before an Employment Tribunal, but they pass through the Employment Tribunal system more quickly than discrimination or whistleblowing claims, as they are far less complex. However, the combination of the reduced qualifying period and the partial lifting of the compensation cap may mean that we see fewer claims of discrimination and whistleblowing (which can be brought from day-one of employment and are not subject to a cap on compensation) from junior to mid-level employees who earn less than the unfair dismissal compensatory award statutory cap as those employees will no longer have to assert that their dismissal was discriminatory or retaliation for blowing the whistle to bring a claim provided that they have at least 6 months of employment, or to access higher compensation.

Sticking points

The Lords also had other key aspects of the Employment Rights Bill in their sights, and twice returned to the House of Commons other amendments in relation to the following:

• Right to guaranteed hours: The Lords insisted on amendments to allow workers to opt out of the right to guaranteed hours to enable them to stay in existing zero/low hours contracts if they wish to do so.
• Seasonal work: The Lords attempted to add an obligation for the Government to take seasonal work into account when designing its guaranteed hours scheme for zero/low hours workers.
• Statutory union recognition: The Lords wished to keep the current turnout requirement of 50% for industrial action ballots, which is set to be repealed by the Bill. They also rejected the move to automatically sign-up new trade union members to pay a fee towards each union’s political fund and preferred the current opt-in model.

The House of Commons has not accepted these additional amendments suggested by the House of Lords. It is not yet clear whether the concession made by the Government on unfair dismissal will be enough to secure the Bill’s passage, but this was the major point of difference. Ministers will be anxious for the Bill to pass so that the timetable for changes to take effect can begin, including a right to statutory sick pay from day-one of sickness absence (instead of the current 3-day waiting period), and a right to paternity leave from day-one of employment (instead of after 26 weeks) from April 2026.

Consultations

In tandem to the passage of the Bill through Parliament, on 23 October 2025 the Government issued consultation papers on some of the other measures in the Bill.

Enhanced dismissal protection for pregnant women and new mothers 

The Bill proposes to make it unlawful to dismiss pregnant women, those on maternity leave, and those who return to work after maternity leave for at least a six-month period, aside from in “specific circumstances”. These measures are not expected to be implemented before 2027.

The consultation, which closes on 15 January 2026, asks for views on what these “specific circumstances” will be – whether the existing grounds for fair dismissal (conduct, capability, redundancy, statutory prohibition and “some other substantial reason”) should apply or whether these should be qualified or replaced with a new test. It also asks when the enhanced protections should start and end and whether they should apply more widely to people who have taken other types of extended family leave, such as adoption leave or shared parental leave.

Bereavement leave

The Bill will introduce a new day-one right to unpaid bereavement leave, which includes pregnancy loss before 24 weeks. These provisions have an expected implementation date of 2027.

The consultation, which also closes on 15 January 2026, asks for opinions on the potential scope, for example whether this should be wider than birth parents for pregnancy loss and the types of relationships that will qualify for bereavement leave, from immediate family members to grandparents, extended family and “chosen family” such as foster carers. It also covers practical details of the leave including evidence requirements and eligibility requirements. Many employers already provide for unpaid bereavement leave, but this consultation considers a wider scope than is covered by many existing policies.

Duty to inform workers of their right to join a trade union and workplace access for trade unions

From October 2026, employers will have a duty to give workers a written statement of their right to join a trade union. The consultation on this topic asks for views on the content, drafting and frequency of reissuance of this statement. The Bill also introduces a new right for trade unions to access workplaces, expected to take effect in October 2026. The consultation, closing on 18 December 2025, covers the operational detail of this access. The practical implications should become clearer once these details are finalised. These consultations have a short timeframe and close on 18 December 2025.

The Business Secretary Peter Kyle has also announced that once the Bill has passed, he will launch 26 consultations on other aspects of the Employment Rights Bill. We will continue to monitor developments to assist employers in preparing for new requirements.

Other Key Employment Law Developments

ACAS early conciliation period

The Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) (Amendment) Regulations 2025 came into force on 1 December 2025. These regulations extend the maximum period for ACAS early conciliation from 6 to 12 weeks, but the 12-week period cannot be extended. This applies to cases that ACAS are notified about from 1 December 2025 onwards. ACAS early conciliation is a compulsory pre-cursor to a Claimant instituting Employment Tribunal proceedings. However, a Claimant can notify ACAS that they do not want to engage in the conciliation process, in order to be issued with the ACAS early conciliation certificate number that they need to include on their Employment Tribunal claim form.

The Explanatory Memorandum to the new regulations sets out that the maximum early conciliation period has been increased to reduce the pressure on ACAS as a result of a rise in demand and an increase in the complexity of cases. It also states that the early conciliation period will be reviewed again in October 2026.

This longer early conciliation period will allow more time for settlements to be agreed between the parties and therefore avoid the need for Tribunal proceedings to be commenced. However, it will also have the effect of extending the time an employee has for bringing an Employment Tribunal claim, as the ACAS early conciliation period is added on to the ordinary limitation period (which is 3 months for most types of claims, although the Employment Rights Bill proposes to double this to 6 months), effectively extending the limitation period.

Consultation on non-compete clauses

On 26 November 2025, the Government launched a consultation on the reform of non-compete clauses in employment contracts, which prohibit former employees from joining a competitor for a period (usually 3 or 6 months, although they can be for up to 12 months for senior individuals) after their employment ends. The consultation is open until 18 February 2026. The consultation seeks opinions on a range of reforms including:

• a cap on the duration of non-compete clauses, with an option for time limits to differ according to company size;
• salary thresholds where non-compete clauses will only be permitted for workers who earn over a certain level of salary; and/or
• a complete ban of these clauses.

The Government has expressed its intention to limit the use of non-compete clauses in an employment context in order to increase job mobility and encourage productivity and economic growth. However, it will not apply to non-compete restrictions in shareholders agreements and other equity documents, which tend to affect more senior executives and are much longer in length, i.e. usually 24-36 months.

This is not the first time that non-compete clauses have been scrutinised. As we covered in a June 2023 briefing, the previous government proposed introducing a statutory time limit of three months to non-compete clauses in order to “grow the economy” after a consultation on the topic in 2020, but this was never implemented.

With the imminent passing of the Employment Rights Bill, and other changes on the horizon, UK employment law is in a state of flux and employers need to keep abreast of developments to ensure they are prepared for changes. Most importantly, once changes to unfair dismissal law come into effect (day-one unfair dismissal rights were originally scheduled to come into effect in 2027, but it is possible that a six-month qualifying period will come into effect in early 2026), employers will need to ensure that their dismissal procedures are updated and hiring processes reviewed and improved as employers will want to avoid poor hiring decisions and ineffective management of probationary periods leading to time consuming, costly and potentially reputationally damaging claims which could also have adverse effects on team morale and the retention prospects for key talent. 

Charlotte Soanes, Trainee Solicitor, assisted in the preparation of this briefing.