UK Overhauls Employment Law With Phased 2025 Rights Act
A sweeping new UK law will significantly expand employee protections by reducing the qualifying period for unfair dismissal claims, removing the cap on awards, and imposing new duties on employers to prevent harassment.
The UK's Employment Rights Act 2025 is introducing one of the most significant reforms to national employment law in decades, with changes taking effect in phases through 2026 and 2027. Counsel for employers should note several key developments. From October 2026, the time limit for most tribunal claims will double to six months, and employers will face a stricter duty to take "all reasonable steps" to prevent sexual harassment, including by third parties like clients. In a major shift from January 2027, the qualifying service period for unfair dismissal protection will be cut from two years to just six months. The statutory cap on compensatory awards for unfair dismissal will also be eliminated entirely, increasing potential liability, especially in cases involving high earners. The law also strengthens trade union access rights and restricts "fire and rehire" tactics. Employers must review and update their contracts, handbooks, and management training to mitigate increased litigation risk and ensure compliance with the new regime.