Employment Law: Looking back at 2025 and what to expect in 2026

Key employment law changes in 2025

2025 has certainly been an interesting year for employment law. The Employment Rights Bill has pulled much of the focus since it was introduced in October 2024, but other important developments this year include:

• Significant increases to National Minimum Wage, National Living Wage and Employer NICs, which saw a significant impact for businesses.
• The Neonatal Care (Leave and Pay) Act 2023 came into effect from 6 April 2025, introducing the right for eligible parents to receive up to 12 weeks paid leave for newborns requiring neonatal care.
• Practical changes to the collective redundancy consultation process involving a move to digital HR1 forms.
• An increase to the length of the ACAS early conciliation period from 6 weeks to 12 for new claims to allow parties more time to explore settlement before being able to submit a claim to the employment tribunal.
• Restrictions on non-disclosure agreements so that victims of crime are not prevented from making permitted disclosures relating to criminal conduct, including disclosures to police, legal professionals, victim support services, regulators and the victim’s close family, for the purposes of obtaining support.

However, there has been no escaping the significant changes being proposed by the Employment Rights Bill, which has now passed! Royal assent is expected imminently.

All attention has been on the changes and the Bill’s passage through Parliament, which has seen significant amendments being made to the government’s original proposals.  This has included a major U-turn by the government on its manifesto pledge to make unfair dismissal protection a day-one right, in favour of a 6-month qualification period, and, very recently, the removal of the compensation cap for unfair dismissal claims, which came out of nowhere.

The government has committed to launching consultations connected with the changes under the Employment Rights Bill and 2025 has seen the first batch of these being commenced with consultations on matters including bereavement leave, enhanced dismissal protections for pregnant women and new mothers, the duty to inform workers of their right to join a trade union and trade union access (with the latter two consultations closing on 18 December 2025).

What to expect in 2026

2026 is unsurprisingly going to be all about the (soon to be) Employment Rights Act 2025! The level of change is unprecedented, and organisations will be dealing with implementing changes coming into effect in 2026 and preparing for changes coming in 2027.

The government published a roadmap of when changes are likely to occur earlier in the year. We have set out some of the key ones affecting businesses below.

Changes expected to take effect on Royal Assent (or closely afterwards)

• The repeal of the Strikes (Minimum Service Levels) Act 2023 and the great majority of the Trade Union Act 2016 (some provisions will be repealed at a later date). This will remove many restrictions placed on industrial action and picketing, including minimum service levels in particular sectors such as health, transport and education.
• Simplifying industrial action notices and industrial action ballot notices, including reducing the notice of industrial action required to 10 days (from 14), removing the requirement to disclose the number of employees in each category that are expected to take part in industrial action and extending the industrial action mandate to 12 months (from 6).
• Widening of protections for employees taking part in industrial action to include protection against detrimental treatment, not just dismissal.

Changes expected to take effect from April 2026

• An increase to the collective redundancy protective award, doubling this from 90 days to 180 days.
• Removing service requirements to provide a ‘day 1’ entitlement to paternity leave and unpaid parental leave. Employees will also no longer forfeit paternity leave if they take a period of shared parental leave first.
• Enhancing whistleblowing protections, making disclosures about sexual harassment a protected disclosure for whistleblowing purposes.
• Changes to statutory sick pay to remove the lower earnings limit and waiting period so that statutory sick pay will be payable from day 1 of sickness.
• Simplifying the trade union recognition process and introducing the option of electronic balloting. The 10% threshold for the CAC to accept a recognition application will be reduced to somewhere between 2-10% (to be confirmed), a trade union will no longer have to demonstrate that it has the support of the majority of the bargaining unit to succeed in an application and the 40% threshold for support currently required in the recognition ballot will be removed. The government is currently consulting on electronic balloting (the consultation closes on 28 January 2026).
• The establishment of the Fair Work Agency to help regulate employment law, including areas such as breaches of national minimum wage, statutory sick pay and holiday pay requirements. Whilst it is expected to be established in April, it is not known when its enforcement powers will come into force.

Changes expected to take effect from October 2026

• Restrictions on fire and rehire practices making it more difficult for businesses to dismiss employees for failing to agree contract changes relating to certain restricted changes (such as pay, number of working hours, pension, shift times/length, rights to time off and other changes to be confirmed), save in some instances where the business is in significant financial difficulty.
• Increasing rights for trade unions in terms of access (including physical and digital access to workplaces) and the introduction of an obligation on employers to inform workers of their right to join a trade union.
• Requiring employers to take “all reasonable steps” to prevent sexual harassment of their employees and introducing an obligation on employers to prevent third-party harassment (again, by taking all reasonable steps). Unhelpfully, regulations to assist businesses on what this entails are not expected until 2027, despite this change coming into effect earlier.
• New rights and protections for trade union equality reps who will have a recognised right to time off and access to facilities.
• The extension of the time limit to bring most types of claims in Employment Tribunals from 3 months to 6 months (save for breach of contract claims which appear still to have a 3 month limit).
• Extending protections against detriments for taking part in industrial action by including protection against action short of dismissal.

We’ll also see continued consultations associated with the changes proposed by the Employment Rights Bill. Those already published on bereavement leave and enhanced protections for pregnant women are due to close on 15 January 2026, and the draft code of practice on electronic and workplace balloting on 28 January.

Looking onwards to 2027, further changes are proposed which businesses will be preparing for in 2026

• Changes to the qualifying service for unfair dismissal (reducing from 2 years to 6 months). The government has committed to this change coming into effect from 1 January 2027.
• Removal of the cap on compensation for unfair dismissal claims. This was a last minute change and sees the abolition of the statutory caps on compensation for unfair dismissal (currently the lower of either 52 weeks’ gross pay or the statutory cap (currently £118,223)). It’s expected that the change will come into force around the same time as the change to qualifying service (and following the government’s impact assessment on this, which it has committed to provide).
• A change to the threshold for collective redundancy consultation. Currently, the threshold is 20 or more employees at one establishment, but an additional threshold will be used, looking across workplaces, which is to be clarified.
• Rights relating to guaranteed hours contracts for low hours, zero hours and agency workers and rights relating to being given reasonable notice of shifts (including changes and cancellation of these) and compensation for changes and cancellations at short notice.
• Greater rights for pregnant women and new families by extending the existing protections relating to redundancy dismissals to all other types of dismissals and allowing regulations to be made relating to dismissals after a period of family leave (like maternity, adoption, shared parental leave), not just during the period of leave.
• Mandatory gender pay gap and menopause action plans (voluntary from April 2026) applying to employers with 250 + employees.
• A wider right to bereavement leave, which will be a day 1 right to at least one week of unpaid bereavement leave, with details to be specified in regulations.
• Tightening of flexible working requirements, introducing a reasonableness requirement, making it more difficult for employers to refuse.

What to watch out for in employment law in 2026

Aside from the changes brought about by the Employment Rights Bill, there will be further developments to watch out for in 2026, including:

• Consultation on employee status. The Government has committed to reviewing the current three-tier framework we have in the UK (employee, worker and self-employed) and there’s been suggestion of this moving towards a two-tier framework (effectively removing the distinction between employees and workers). A consultation was expected by the end of 2025 but early 2026 now seems more likely.
• The Equality (Race and Disability) Bill. It is anticipated that a draft Equality (Race and Disability) Bill will be introduced in 2026 covering matters such as reporting, equal pay and dual discrimination.
• Tighter restrictions on non-compete clauses in employment contracts. The government published a working paper on reform in this area in November 2025. There have been suggestions that such clauses could be subject to a maximum restrictive period of 3 months.
• Further government consultations are expected on areas such as AI in the workplace and TUPE reform. For AI, the government has said that it is seeking to put in place rights and protections which reflect technological change but also safeguard against discrimination. In respect of TUPE, whilst there are no firm details on what reform may look like, the government has suggested that existing rights should be strengthened for workers in TUPE situations.

The changes proposed across 2026 and 2027 will clearly significantly impact businesses, and our employment team is on hand to assist businesses in preparing for and implementing the changes. This can include working with you to develop tailored action plans for your business, providing training and assisting you with changes to your contracts, policies and procedures. If you require further advice on these topics, please do not hesitate to contact a member of our employment law team.