The Employment Rights Bill (ERB) will introduce the biggest changes to employment law in England, Scotland and Wales in a generation.
The legislation was one of the central pillars of the Labour government’s 2024 election manifesto and makes significant changes to laws governing pay; flexible working and employee rights, including rights to sick pay; and protection against unfair dismissal. Other reforms will impact how employers manage industrial relations; address the gender pay gap; support employees through the menopause; and protect against the risk of sexual harassment.
The changes, which will be implemented on a phased basis across 2026 and 2027, will require employers to update their employment contracts, policies and practices.
A separate package of employment law reforms is planned in Northern Ireland.
On 10 December 2025, the House of Lords agreed to a six-month unfair dismissal qualification period as a compromise position from the government’s preferred ‘day one’ right to unfair dismissal. The government confirmed that this will take effect on 1 January 2027.
The Lords also dropped objections around zero/low hours contracts, removal of industrial action ballot turnout thresholds and trade union political fund default ‘opt-in’ provisions.
However, the Lords did not agree to the government’s late removal of unfair dismissal compensation limits. The cap on the compensatory award for unfair dismissal is currently the lower of 118,223 or a year’s...
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