Further changes to Unfair Dismissal under the ERB

Written by HR Connect | Dec 11, 2025 12:03:46 PM

Government introduces further changes to Unfair Dismissal under the Employment Rights Bill

As you will be aware from our previous updates, whilst Labour had originally promised for the 2 year qualifying period for unfair dismissal to be completely removed, during a period of parliamentary ping-pong, the Government has now accepted the House of Lords amendment which substitutes a qualifying period of 6 months before an employee can claim unfair dismissal.

What about removal of the compensatory cap for unfair dismissal?

To further strengthen employee protection, and following criticism from Trade Unions following the removal of the ‘day-one’ right, the Government now wants to remove the current compensation cap for unfair dismissal. At present, compensation for unfair dismissal is limited to the lower of one year’s gross pay or £118,223 (as of April 2025). Under revised proposals, the cap will be removed entirely, and potentially allowing tribunals to award unlimited compensation, similar to discrimination and whistleblowing claims.

We wait to see if this amendment will pass the House of Lords.

When will these changes come into force?

Whilst confirmation of the timescales are awaited there is a suggestion the new qualifying period will apply to employees starting work in July 2026, with the 6-month qualifying period and potential uncapped compensation provisions coming into force in January 2027.

HR Connect will continue to keep you updated as to further changes via Stay Connected, and will be providing bespoke training on the changes under the Employment Rights Bill via our HR and Legal Masterclass Series.

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