The Employment Rights Act 2025 makes changes to the qualifying period before an employee can claim unfair dismissal, and the cap on the compensatory award is abolished.
The Employment Rights Act 2025 is a significant piece of employment legislation which gives new rights to employees. However, with new employment rights come changed employer obligations to be aware of and policies and processes that may need to be amended.
The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 bring into force section 25 and Schedule 3 of the 2025 Act and make two important changes:
- The qualifying period for an employee to claim they have been unfairly dismissed reduces from two years to six months;
- The qualifying period for an employee to request a written reason for dismissal also reduces from two years to six months; and, if the claim goes to an Employment Tribunal
- The compensatory cap on awards is removed (currently the lower of either £123,543 or 52 weeks’ gross pay)
For Bookkeepers
Note that there are no changes with regards:
- Dismissals that are fair, for example, misconduct. The change only impacts employees who challenge the employer about a dismissal they deem unfair; or
- The calculation of Statutory Redundancy Pay which will still require two years’ service.
ICB suggests the changes are something to be aware of, as the starting or ending of an employment relationship is outside the scope of members’ work. If clients have queries, we suggest they take independent advice and / or point to the following sources of guidance: