After months (and months…) of debate, delay, amendment and political brinkmanship, the Employment Rights Bill has finally made it through Parliament and will now become law.

For UK employers, this is a genuinely significant moment. Initially trailed as a flagship reform, the Bill stalled, then resurfaced in various forms with key provisions softened, others expanded, and new measures added that weren’t in Labour’s original manifesto. The end result is, frankly, a bit of a hotchpotch.

But is it the existential threat to business and growth that some voices have suggested? In my view, no. Not even close.

That said, there are elements of the Bill that will have real and lasting consequences and at least one change which, as a practitioner who spends a lot of time defending claims, gives genuine pause for thought.

The final version of the Employment Rights Bill reflects a political reality rather than a pure ideological vision.

Some proposals have clearly been watered down following pressure from business groups and the House of Lords. Others have been reframed to allow for further consultation rather than immediate implementation. And a few measures have appeared rather late in the day, without the level of scrutiny you might expect for reforms of this scale.

That inevitably leads to a sense that the Bill is less a single coherent reform package and more a collection of changes moving broadly in the same direction: a rebalancing of rights towards workers, without fundamentally rewriting the UK’s employment law framework.

For most employers, this will feel far more like tinkering under the bonnet than ripping out the engine.

The most significant aspect of the final Bill is the confirmation that employees will be able to claim unfair dismissal after only 6 months’ service, down from the current 2-year period. This is a watering down from the day-one right originally promised but actually a very sensible compromise. Businesses can still assess fit and performance within this timeframe and it shouldn’t stunt growth or recruitment.

More striking though is that we now know the law will change to remove the compensation cap for unfair dismissal completely. In practical terms, this means that once the new regime is in force, there will be no upper limit on the compensation that can be awarded in an unfair dismissal claim.

That is a very big deal.

I have never practised in a legal landscape where unfair dismissal had the potential to be as valuable a claim as discrimination or whistleblowing. Historically, the statutory cap and the “year’s salary” limit have acted as a natural brake on the types of cases pursued and the level of risk faced by employers. Removing those limits will almost inevitably change behaviour.

For senior executives and high earners in particular, unfair dismissal is likely to become a primary battleground, rather than a secondary add-on to discrimination or High Court claims. For my clients, especially those in Film and TV, media, sport and entertainment, this is particularly relevant. Presenters, A-list talent, pop stars, footballers and senior creatives are often engaged on high-value arrangements, and the removal of the cap materially alters the risk profile of exits and disputes.

Unless there is a parallel, serious investment in the Employment Tribunal system (which, at present, seems optimistic at best), this is a change that risks placing even greater strain on an already creaking system.

While much of the detail will be phased in over time (and subject to consultation), the key reforms employers should be aware of include:

• Zero and low-hours contracts – new rights around guaranteed hours and predictability of work, with further consultation on how these will operate in practice
• Tribunal time limits – the time limit to bring most employment tribunal claims will increase from 3 to 6 months
• Flexible working – employers will only be able to refuse flexible working requests where it is “reasonable” to do so
• Fire and rehire – significant protections will be introduced to restrict strategic use of fire and rehire
• Collective bargaining and union activity – unions to be given greater access to workplaces and simpler processes in terms of gaining union recognition and balloting
• Enhanced family-friendly rights – including changes to parental leave, paternity leave and protections relating to pregnancy and family leave
• Ban on gagging clauses – confidentiality provisions will be void in cases of discrimination and harassment

Please see our previous articles for further details on the most relevant changes.

The key point is timing: very little of this bites immediately. Most reforms will be implemented through secondary legislation over the course of 2026 and beyond, with consultation still to come on the most complex measures.

Short answer: no, but they will need to be prepared (although no need to cancel Christmas!).

The UK will remain a very attractive place to do business. Our employment law framework will still be significantly more flexible than many European counterparts, even after these changes take effect. A modest rebalancing in favour of workers is not, in itself, a bad thing.

That said, the removal of the unfair dismissal compensation cap is a material shift, and one that employers – particularly those engaging senior or high-profile individuals – should factor into workforce planning, contractual strategy and exit management.

As ever, the devil will be in the detail.

We will be spending much of the next year helping clients navigate what this legislation actually means in practice, separating noise from substance, and helping businesses prepare sensibly rather than react hastily.

Client briefings, sector-specific guidance and practical updates will follow in due course.

After a very long wait, the Employment Rights Bill is finally here. The challenge now is making sure it works – for employers, for employees, and for a tribunal system already under immense pressure.