Timing For Unfair Dismissal Reforms Confirmed; Consultations Launched On Zero Hours, Carers And Public Duty Time Off

The Government has now confirmed the timing for the changes to ordinary unfair dismissal law under the Employment Rights Act 2025.  Both the removal of the cap on the compensatory award and the reduction of the period of qualifying service from two years to six months will apply for dismissals where the effective date of termination is on or after 1 January 2027. The effective date of termination is the date when notice given by the employer or employee expires, or when the contract ends through termination without notice or on the expiry of a fixed term without renewal.  Employees recruited in 2025 or the first half of 2026 (ie, currently with less than two years' service) will therefore suddenly acquire unfair dismissal rights on 1 January 2027;  those recruited after 1 July 2026 will only have to work six months to become eligible. 

Employers should also note that, for the purposes of calculating an employee's qualifying period, the effective date of termination is extended by the statutory minimum notice period if less than that period of notice was given (whether or not payment in lieu is made), provided it is not a case of gross misconduct.  So employees hired from 2025 onwards and dismissed without notice will acquire ordinary unfair dismissal rights if dismissed after 24 December 2026 but before 1 January 2027, as their entitlement to one week's statutory minimum notice will extend their effective date of termination to on or after 1 January 2027 (and at that point they will have six months' service).  They would not, however, be entitled to an uncapped compensatory award. 

Employers now have a short window to ensure the inclusion and proper operation of appropriate probationary clauses (eg, of three or four months' duration, with the option to extend) in contracts for new hires from July, along with refreshed manager training on addressing performance and misconduct both before and after the six month qualifying period.  It will also be timely to review remuneration structures and strategy for senior exit hires, given the removal of the cap on compensatory awards.  Our client briefing covering action points for 2026 (available on request) discusses these implications in more detail, as does our latest podcast available here.  Please do get in touch with your usual HSF Kramer contact if you would like to discuss this further.

The Government has also launched three more consultations on ERA 2025 reforms covering:

• the requirement to make guaranteed hours offers to zero hours workers and low hours workers, potentially defined as lower than somewhere between 8 and 20 hours per week (open until 25 August);  the consultation seeks views on many (but not all) of the issues of detail not addressed by the ERA 2025 (the hours threshold, the length of reference periods, the definition of regular hours, seasonal work and so on) but the Government has given very few steers as to its preferred options, and there is clearly much more work to be done before these rights are in a workable shape (implementation is currently planned for 2027, month tbc);
• employment rights for unpaid carers and parents of seriously ill children (open until 1 September); options presented include potentially doubling unpaid carer's leave to 10 days, providing some level of pay during carer's leave, introducing a statutory ‘right to return’ following a longer period of carer’s leave of up to 12 months, and introducing a separate entitlement to paid leave for parents of seriously ill children;
• amending the list of public duties for which reasonable time off is available, to include special constables and other roles involving local public duties and remove certain other national roles (open until 4 September); there is no proposal to introduce a statutory right to pay for this time off.