Why Early Resolution Matters More Than Ever: Preparing Workplaces for the New Employment Rights Landscape
Why Early Resolution Matters More Than Ever: Preparing Workplaces for the New Employment Rights Landscape
As the Employment Rights Bill reaches its final stage in Parliament, the landscape of workplace rights in the UK is set for one of its most significant shifts in years. In this update, Dionne Dury unpacks what is changing, why it matters, and what employers and workers should be preparing for next.
WRITTEN BY DIONNE DURY
The long-awaited outcome of proposed changes to worker rights under the Employment Rights Bill is reaching fruition, as the Bill returns to the Commons today.
Following strong opposition in the House of Lords to labour’s manifesto commitment to provide workers day one rights against unfair dismissal a deal was brokered by businesses and unions last week to replace it with a qualifying period of six months from the current two years, amidst fears that day one rights would prevent businesses from hiring new staff.
Ministers are proposing the changes will take effect from 1 January 2027. This will mean that anyone employed from July 2026 will benefit from the decision as the protections will immediately apply to workers who already have six months service or more.
The government, perhaps as a trade-off for having to make a U-turn on its promise for day one unfair dismissal rights, is also proposing to abolish compensation limits for ‘ordinary’ unfair dismissal. Currently, awards to former employees who successfully bring a claim are limited to either their annual salary or £118,223, whichever is lower.
This would bring the process more in line with “automatic” unfair dismissal cases where workers have been dismissed for reasons such as discrimination and whistleblowing, where financial loss awards are uncapped. The change is likely to benefit higher paid workers and could result in complex evidence on valuing loss for senior roles, potentially worsening Tribunal delays and backlogs.
Plans to bring in new day-one rights to sick pay and paternity leave from April 2026 remain unchanged along with fire and rehire protections from October 2026.
This is an exciting time for employment law and workplace rights. With increased rights and compensation, it’s more important than ever for UK businesses to nip conflict in the bud early and utilise other options for resolving workplace disputes. The CMC’s Workplace & Employment group is continuing to work and consult with key stakeholders on these changes and what this means for UK businesses, with another roundtable planned for early 2026.
