Employment Rights Bill Gains Royal Assent! - What You Need to Know

We are pleased to announce that on Tuesday 16th December 2025, the Employment Rights Bill was finally passed in Parliament and today, it has received Royal Assent. It is now the Employment Rights Act 2025.

The only substantive provision that comes into force immediately is the repeal of the provisions introduced by the Strikes (Minimum Service Levels) Act 2023, which allowed the government to prescribe minimum service levels during strikes in key sectors - including Education (although no minimum levels were ever in force in the education sector).

The Act was subject to significant debate and amendments in its Bill form, particularly regarding provisions related to unfair dismissal and compensation limits and this area is covered in more detail below.

What are the Recent Updates? 

Right not to be unfairly dismissed: qualifying period

In our previous article we explained that the government has decided to step back from “day one” unfair dismissal protection and will instead set a six‑month qualifying period.  The unfair dismissal qualifying period will be reduced from two years’ continuous service to six months in accordance with the House of Lords proposal. This will apply from 1 January 2027. 

However, this compromise over day one rights will come with a major change to the compensation framework seeing employees potentially being entitled to unlimited compensation for their financial loss, bringing unfair dismissal awards more in line with whistleblowing and discrimination claims, where compensation for financial loss is also uncapped. 

Right not to be unfairly dismissed: compensatory award

Where an employee succeeds with an unfair dismissal award, they may receive a ‘basic award’ and a ‘compensatory award’.

The basic award will remain unchanged (and capped) and is a set formula based on age, number of years’ complete service and a week’s pay (capped). A multiplier is used based on the employee’s age.

The ’compensatory award’ for unfair dismissal is currently limited to the lower of £118,223 or 52 weeks’ pay.  The government has agreed to remove both limits. However, the amount of compensation that should be awarded will still be determined in the same way, looking at what is just and equitable in all the circumstances, covering immediate and future losses.

The government has promised to publish an impact assessment, but it’s not clear that there will be any further consultation on this measure before its introduction. The timing of this change is also slightly unclear, although it seems likely that the government plans for it to take effect for dismissals from 1 January 2027, at the same time as the change in the qualifying period.

Why it Matters for Schools and Trusts

These changes mean that new employees can no longer expect automatic protection against unfair dismissal from their first day (as was previously the intention).  During the first six months, schools / trusts will have time to take dismissal decisions without the risk of an ordinary unfair dismissal claim.  After six months’ employment, the right to claim unfair dismissal will apply.

Given that this change is due to take place from 1 January 2027, this means anyone you recruit from 1 July 2026 will have sufficient service when the new rule comes into effect. You may therefore want to start thinking about your recruitment processes and length of any probationary period you currently operate. It is quite common to have a 6 month probationary period, but this should be shortened to enable you to take action if things aren’t working out.

Schools / trusts will need to be very diligent in following fair processes, such as probation reviews, capability/performance improvement plans and disciplinary procedures, and ensure managers are adequately trained to deal with matters fairly and reasonably, and maintain accurate records. If unfair dismissal compensation is not limited, conducting dismissals fairly will become key to mitigate the risk and financial impact.

Schools should note that employees will still be able to bring discrimination, whistleblowing and automatic unfair dismissal claims with no qualifying period. However, given that employees will achieve the qualifying service to bring an unfair dismissal claim much earlier (6 months instead of the current 2 years), we may see a reduction in those pursuing discrimination and/or whistleblowing claims and instead focusing on the unfair dismissal claims.

Next Steps

Now that we have the Employment Rights Act 2025, several trade union changes will take effect two months from today. However, some of the changes require commencement regulations before they come into force. Many also require substantive regulations setting out further details of the new practices, as well as consultation.

The government’s roadmap indicates that most changes are scheduled to take effect in 2026 or 2027.

How Judicium can help... 

The Employment Rights Act represents a major shift in employment law. Most changes are not immediate, but schools / trusts that prepare now will be better placed to manage risk, control costs, and maintain positive staff relations.

We will continue to send out regular updates on the different aspects of the Act to keep you informed of the changes. Watch out for more updates in the new year, which will focus on forthcoming changes and how you can prepare.

Subscribe here to keep informed of the proposed changes and how best to prepare for them. Our team are also here to help our clients review policies, train managers, and prepare for the new landscape.

As always, we're here to support you with any questions you may have in relation to the Employment Rights Bill. Please don’t hesitate to get in touch via the usual channels if you need advice or assistance.

You can find information regarding our Employment Law and HR service here.

If you require any support in any of these steps or would like to talk to someone surrounding some support for your school, please do not hesitate to call us on 0345 548 7000 or email enquiries@judicium.com. 

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