The first phase of reforms stemming from the recently passed Employment Rights Act took effect on Wednesday, bolstering protections for employees and granting new powers to trade unions. As of Wednesday, key measures included the repeal of most of the Trade Union Act 2016 and new protections against dismissal for participating in industrial action.
New Employee Rights
Alongside strengthened union rights, employees are now eligible for ‘day one’ paternity leave and unpaid parental leave can be requested with notice. While union leaders have welcomed the changes, they have been criticised by business leaders.
Mayer Brown partner Miriam Bruce explained that the removal of the 12-week qualifying period for dismissal related to industrial action is a significant change. It is now automatically unfair to dismiss an employee for participating in protected industrial action, regardless of how long they have been employed.
“This puts even greater onus on employers to have clear evidence that the dismissal of a striking employee is entirely unconnected to industrial action. Resolving disputes through dialogue rather than confrontation has never been more important,” Bruce added.
Future Changes and Potential Job Losses
Further measures from the Employment Rights Act are scheduled to come into effect on April 6th, including enhanced whistleblowing protections and the removal of limits on statutory sick pay.
Lawyers recently indicated to City AM that businesses are planning redundancies before January 2027, in anticipation of the changes to unfair dismissal rules.
In January 2027, the qualifying period for unfair dismissal will be reduced to six months, the cap on compensatory awards will be removed, and protections against fire-and-rehire tactics will be implemented. Currently, unfair dismissal compensation is capped at £118,223 or one year’s salary.
Hogan Lovells partner Stefan Martin explained that removing the compensation cap “could turn into quite a significant issue,” particularly for high earners.
These changes come as the labour market showed signs of loosening at the complete of last year, with unemployment climbing to 5.2 per cent between October and December – the highest level since early 2021, according to Office for National Statistics (ONS) data released on Tuesday.
Frequently Asked Questions
What changes came into effect on Wednesday?
The repeal of most of the Trade Union Act 2016 and the introduction of protections against dismissal for taking industrial action came into effect on Wednesday.
What further changes are planned?
Whistleblowing protections and the removal of limits on statutory sick pay are set to come into effect on April 6th. In January 2027, the unfair dismissal qualifying period will be reduced, the compensation cap removed, and fire-and-rehire protections implemented.
What is the current cap on unfair dismissal compensation?
Currently, compensation for unfair dismissal is capped at £118,223 or one year’s salary.
How might these changes impact the relationship between employers and employees in the coming months?
