UK Trends and Developments Contributed by: Diane Gilhooley and Paul Fontes, Eversheds Sutherland
Unfair dismissal While the government will consult on further details, from 2027 the existing two-year qualifying period for unfair dismissal will be removed, making it a day-one right. However, during an initial statutory probation - ary period, a reduced dismissal process is expected to apply to some, but not all, dismissals, along with a lower unfair dismissal compensation cap. Practical implications The effect of removing the qualifying period for unfair dismissal is that employees will be protected earlier in their employment, and employers will face a corre - sponding new legal exposure requiring them to ensure that all dismissals – regardless of length of service – are defensible and well-documented. Businesses will need to strengthen recruitment, performance management and probationary processes in readi - ness, including preparing for an increased volume of investigations to establish the reason for the dismissal and support procedural fairness. An increase in unfair dismissal claims is anticipated. Redundancies and contractual change A number of ERB changes will impact workforce restructuring plans. For example, it: • widens the duty to collectively consult worker rep - resentatives on redundancies by counting affected employees across multiple sites, not just per establishment, when triggering the duty; • doubles the maximum compensation for non-com - pliance with collective consultation; • makes it automatically unfair to “fire and rehire” or “fire and replace” in certain circumstances, unless the employer is in severe financial difficulties and has no reasonable alternative; and • makes dismissals in relation to certain other contractual changes subject to existing “ordinary” unfair dismissal rules, but with closer scrutiny over whether employers meaningfully consult and nego - tiate with employees. So-called “fire and rehire” has been used less regu - larly in recent years due to reputational risks as well as additional penalties being introduced. These new automatic unfair dismissal protections are intended to further inhibit such practices. Only a very small num -
Introduction The employment landscape in the UK is undergoing significant transformation, driven by a combination of economic influences, technological advancements and extensive legislative reforms. Evolving expecta - tions around fairness, equality and responsible busi - ness practices are also contributing to the shift. Major reforms proposed by the recently elected government are set to shape employment law in the coming years, with far-reaching implications for businesses and employees across all stages of the employment life cycle. These changes are prompting organisations to re-evaluate workforce engagement, compliance measures, staffing models and costs, pro - cesses and internal policies. Concurrently, the dynamic economic climate is caus - ing companies to continually review their workforce strategies and organisational structures, while at the same time the rapid advancement of artificial intelli - gence and evolving business and customer demands are reshaping the nature of work itself. The Employment Rights Bill: Advancing Significant Legislative Reforms The Employment Rights Bill (ERB), which is expected to become the Employment Rights Act later in 2025, contains over 28 employment law changes and is a key part of the UK government’s ambitious plan to transform workers’ rights. The scale, breadth and complexity of the reforms are significant, with a staged implementation over 2025, 2026 and 2027. The ERB’s measures span a wide range of workplace rights, including unfair dismissal, contractual change, redundancy, harassment, family leave, zero- and low- hour workers’ rights, sick pay and flexible working. It strengthens the enforcement of employment law by the state and introduces significant new trade union rights. It should be noted that many of the changes described below are subject to further consultation and more detailed regulations. As such, they may be amended before taking effect, and the timescales for imple - mentation may be delayed. Some of the ERB’s key changes include the following.
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