Recently we were catching up with some clients in our London office and discussing the potential implications of the Employment Rights Act (ERA) 2025. What became clear from our conversations was that many businesses are grappling with similar issues as they prepare for implementation of this very significant new piece of employment legislation.
Below is a brief snapshot of the three key issues that businesses had questions about, together with our key takeaways.
- The unfair dismissal changes: Unsurprisingly, the main issue that is challenging employers at the moment is the forthcoming change to the unfair dismissal regime (the reduction in the qualifying period to bring an “ordinary” unfair dismissal claim from two years to six months and the removal of the compensatory award cap). This change is prompting businesses to review their current recruitment processes to ensure they are robust and effective, with the aim of getting the right candidates for the job first time, given there will be a much shorter window of opportunity to assess a new recruit in role before they gain unfair dismissal rights (whereas the current two-year qualifying period has allowed a certain latitude to “try before you buy” with new hires).
We discussed the need to have the right procedures in place to support employees who are underperforming, while at the same time ensuring they do not become unnecessarily long and drawn out. It was agreed that managers will be under greater pressure to make hard decisions about suitability at an early stage in the employment relationship – and this is not always easy. Businesses flagged the challenges with certain roles of being able to accurately assess an employee’s performance and broader suitability during the first six months of employment – whether because significant on-the-job training is required to get recruits up to speed, or whether because the outputs of that role tend to be measured over longer periods, to name but two examples. In these cases, making decisions early enough to allow an individual to be exited prior to gaining unfair dismissal rights will not be straight-forward, and employers will need to ensure that the rationale for such exits is properly documented to rebut any allegation that the decision was taken for a discriminatory reason. At the same time, we are recommending that businesses review the length of their current probationary periods to ensure they are shorter than the new six-month qualifying period for unfair dismissal protection, as well as putting in place stricter processes around probation.
We also explored how these new provisions will change the current landscape when it comes to exiting senior employees and how the new regime will greatly increase the costs and legal risks of such dismissals. On that note, sign up for our forthcoming webinar on this topic.
- The changes to the harassment provisions: The ERA 2025 will introduce materially more onerous obligations on employers to prevent sexual harassment in the workplace, as well as harassment of staff by third parties, such as clients and customers. We discussed with clients the importance of reviewing the steps they are taking to comply with the current duty to take reasonable steps to prevent sexual harassment and consider whether there are any other things they could be doing, or doing better or more often, that may further reduce the risk of sexual harassment in the workplace. In terms of the new third party obligations, we explored the challenges that this new duty will create for all employers, but especially those in sectors where employees have daily contact with third parties given that employers have far less control over the actions of external parties than they have over those working for them.
A recorded risk assessment will be key in not only helping a business to identify the practical steps it needs to take to reduce the risk of such harassment taking place, but also in demonstrating that it has complied with this duty should the matter ever end up in an Employment Tribunal. We also talked about potential changes to commercial agreements with clients, contractors, staffing agencies, etc. – essentially any business whose staff may have dealings in person or remotely with those of the employer – again with an eye to being able to demonstrate to a Tribunal that the business has taken “all reasonable steps” to prevent such harassment. Such provisions are not currently typical, but are likely to become much more common.
- Trade union changes: A number of clients had questions about the new trade union framework. Those businesses with an existing trade union presence were keen to understand how the recent changes would impact their day-to-day dealings with trade unions. All businesses (with or without an existing trade union presence) were keen to hear more about the changes that will be coming into force in October 2026, in particular the new rights for trade unions to access workplaces and the steps they should be taking to prepare for this. See our FAQs, which set out the typical questions employers may have about this new right and our outline answers.
- We discussed how employees are less likely to be interested in trade union representation if they feel that they already have a voice in the business and that now would therefore be a good opportunity for employers to review their current lines of communication with the workforce to see if these need bolstering.
The ERA 2025 is, as expected, creating a huge amount of work for in-house employment counsel and HR professionals as their businesses prepare for all the changes. It will inevitably put more pressure on line managers, as they will be at the coal face in relation to some of these changes.
A key takeaway from our discussions with clients was the need for businesses to support those managers. Once the new unfair dismissal provisions come into force, it will be more important than ever that your managers are confident when recruiting, managing and dismissing staff. They will also need extra support on having difficult conversations with employees in a timely manner (for example, no longer will it work to put the conversation about an individual failing a probationary period on the proverbial “too difficult pile” until the manager is less busy, as the risk is that by then the employee will have unfair dismissal rights). On that note, a number of businesses said they are rolling out refresher training over the next few months to help their managers understand the ERA 2025 changes, as well as considering how they can use existing systems and technology to support them, e.g. automatic notifications during probationary periods to prompt managers to have the necessary conversations/take the required actions. We commend this approach and suggest that managers will also need detailed, specific training on the new duties to take all reasonable steps to prevent sexual harassment in the workplace and harassment of employees by third parties, as they are likely to be the business’ first line of defence in this regard.
All this, and of course they will need to keep doing their day jobs. If you don’t already have a good coffee machine installed in the office, now may be the moment to reconsider how best to fuel your managers through what is likely to be an extremely busy time.
