Update on Employment Rights Bill – 2 December 2025

As we reported, the Government issued a press release on 27 November 2025 which gave an update on the changes that they will make to the Employment Rights Bill around unfair dismissal protections. The Government hopes that these changes will allow the Bill to progress toward implementation. 

The Employment Rights Bill is currently in the ‘ping pong’ stage of the legislative process. The House of Lords has rejected several key provisions and proposed amendments, but the House of Commons has repeatedly refused to accept these changes, resulting in ongoing deadlock. The Bill returns to the House of Commons on 8 December 2025.

Key amendments proposed include:

• Reduction of the qualifying period for unfair dismissal claims from 24 months to 6 months, while maintaining existing protections against discrimination and automatically unfair dismissal.
• Removal of the compensation cap for unfair dismissal cases.

At present, it is unclear what the removal of the compensation cap will entail. It could mean eliminating the current limit of 52 weeks’ pay, or it might indicate that the existing cap of £118,000 (which is reviewed annually for inflation) will remain in place but be available to claimants whose losses justify that amount, even if their annual salary is significantly lower.

Interestingly, the Government has confirmed that once the qualifying period for unfair dismissal is reduced from 24 months to 6 months, any future variation will require primary legislation. This change removes the previous ability to amend the period via secondary legislation, making further changes significantly harder.

The Government has again confirmed its commitment to continue conversations with business, employers and unions and to have a detailed consultation on the proposed amendments.