The UK’s inflation rate in December 2025, as measured by the Consumer Price Index (CPI), was...
HR Hub
Bill becomes the Employment Rights Act 2025
The Employment Rights Bill received Royal Assent, on 18th December, to become the Employment Rights Act 2025 (ERA25).
The Bill cleared its final Parliamentary hurdle on 16th December when the House of Lords dropped its opposition to the government’s plans to remove the cap on compensation awards for unfair dismissal. This change had been inserted very much at the last minute as part of the government’s concession on Day 1 unfair dismissal rights.
The Lords eventually agreed to a change which requires the government to conduct a review (in consultation with trade unions, employer organisations and legal professionals), on the amount of compensation to be awarded to a dismissed employee before implementing the unfair dismissal sections of the new Act.
Although the government originally promised Day 1 unfair dismissal rights, during Parliamentary ping-pong, it accepted a House of Lords amendment substituting a qualifying period of 6 months before an employee can claim unfair dismissal.
The only measure in the ERA25 which comes into force at Royal Assent is the repeal of the Strikes (Minimum Service Levels) Act 2023 (which in fact was never used). The rest of the Act’s provisions will be brought into force in stages and after various consultations.