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A practical review of Employment Law developments in 2025, including the Employment Rights Act, key consultations and reforms, with a forward look at the changes employers should prepare for in 2026.
Employment Law & HR|17 December 2025
Insight
As 2025 draws to an end, we reflect on what changes we have seen in employment law this year. The Employment Rights Bill has now become the Employment Rights Act having finally passed on 16th December. We therefore set out the key highlights from 2025 and look ahead to what to expect in 2026.
April saw the introduction of statutory neonatal care leave and pay. This is in addition to existing maternity, paternity, adoption and parental leave rights.
Eligible employees are entitled to one week of leave and statutory pay for each week that their baby requires neonatal care for up to a maximum of 12 weeks.
We produced new policies for this purpose that can be found on our HR Document bank, available to all retainer clients.
A number of consultations were launched, addressing the following measures under the Employment Rights Bill (ERB):
These consultations will run until 18th December (trade union measures) and 15th January (bereavement leave and pregnant workers).
November saw a consultation and draft code of practice issued on electronic balloting. This is open for consultation until 28th January.
The Government also published a Working Paper setting out options to reform non-compete clauses in employment contracts. These options include introducing statutory limits on the length of non-compete clauses; banning non-compete clauses altogether; banning non-compete clauses below a salary threshold; and combining a ban below a salary threshold with a statutory limit. Responses to the working paper are required by 18 February 2026.
This month has seen a new extension of the Acas early conciliation period. All new claims reported to the Advisory, Conciliation and Arbitration Service (“Acas”) for early conciliation on or after 01 December 2025 will be subject to a 12-week early conciliation period (rather than the previous six-week period). The effect of early conciliation is to pause the limitation period on Employment Tribunal claims (usually three months) and so this change will significantly increase the period of time in which individuals can bring a claim in the Employment Tribunal.
There was also the introduction of a new online version of HR1 form, the use of which is mandatory where an employer is proposing to make 20 or more redundancy dismissals within 90 days at a single establishment/site. The employer must submit form HR1 to the RPS before any individual employee is given notice of redundancy and at least:
The Employment Rights Act has now passed and will receive Royal Assent shortly. The government has agreed to undertake an impact assessment on the lifting of the statutory cap on compensation for unfair dismissal. This was something of a last minute surprise when “day one” rights were dropped and replaced instead with a six month qualifying period.
26 separate consultations are now awaited along with new draft codes of practice. Some of the changes will happen relatively quickly and we set out below the likely dates for implementation. (Please note that further change is anticipated for 2027 but those aspects of the Employment Rights Act do not feature in this article).
From 06 April 2026, paternity leave will become a day-one employment right, meaning eligible employees will no longer need 26 weeks’ continuous service before qualifying. There will also be a day one right to unpaid parental leave instead of the current one year qualifying period.
In October 2024, a new duty came into force which required employers to take reasonable steps to prevent sexual harassment of employees during the course of their employment. The Employment Rights Act will extend the scope of this duty to require employers to take “all reasonable steps.”
In addition, the Act will make employers liable if their employees are harassed by third parties in the course of their employment. This is a significant change with most employers already having updated their relevant policies as a result of the new duty, but they will need to be ready to make further updates as a result of these significant changes. Regulations that specify exactly what “reasonable steps” are will be published shortly.
The Employment Rights Act will also extend the time limit to bring claims in the Employment Tribunal from three months to six months. This change is anticipated to come into effect in October 2026. It seems likely that this will mean an increase in the number of claims brought in the Employment Tribunal and it remains to be seen how the Employment Tribunals will cope given the existing significant backlog of cases. No further funding appears to be available.
The Government had proposed to remove the qualifying period of two years currently required to bring an unfair dismissal claim, meaning that employees would have had the right not to be unfairly dismissed from day one of their employment. Following significant opposition to the proposal from the House of Lords, however, the Government has announced that this will not go ahead and instead, the qualifying period be reduced from two years to six months.
The Government has also stated that “the compensation cap will be lifted” meaning that, in the event of a successful claim, compensation for unfair dismissal will be unlimited. The government has promised to undertake an impact assessment before changing the law.
Whilst the Government’s timetable has slipped in places, we are still largely on course in respect of our roadmaps. Further changes are of course due in 2027. However, the timetable for implementation remains staggered and aims to give employers time to prepare and adapt. Our recommendation is to monitor developments and aim to move quickly as soon as sufficient details of the reforms are released.
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