Commencement regulations made bringing unfair dismissal changes into effect from 1 January 2027
The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 have been made. This brings into force the substantive changes to the unfair dismissal regime with effect from 1 January 2027. This includes (1) the reduction of the qualifying service required by an employee to raise a claim from 2 years to 6 months and (2) the removal of the cap on the level of compensation that an Employment Tribunal can award. It also removes the power to vary the qualifying service period by regulation. This means that any future change to the length of service required to raise an unfair dismissal claim would need to be done via primary legislation, making such a change more difficult and therefore less likely.
Feedback on the changes to the unfair dismissal regime
The Department for Business and Trade ("DBT") has published a summary of feedback from stakeholders on the upcoming changes to the unfair dismissal regime (see above). Concerns about the capacity and capability of the employment tribunal system to cope with the changes were referenced, with further guidance and support for the employment tribunal being identified as important for implementing the changes. The summary also noted stakeholder suggestions that guidance on how to manage performance and dismissal in executive roles would be helpful. The DBT has undertaken to provide guidance for employers and employees to help them understand the likely practical implications of the changes. Given the significant nature of these changes, the DBT's report has been criticised for lacking detail and information. It is also unclear who participated in the roundtable discussions which resulted in the report.
Fair Work Agency publishes report suggesting at least 5.4 million workers' rights breached
The Fair Work Agency ("FWA") has published Working Lives: The Scale and Nature of Labour Market Non-Compliance and Other Work-Based Harms in the UK. The independent report found that 14% of UK workers have experienced at least one legal violation of core rights that are now within the remit of the FWA. Common violations relate to national minimum wage and failure to provide itemised payslips, contracts or key information documents. 70% of workers were found to have experienced other issues including unlawful deductions from wages, difficulties taking annual leave and bullying or harassment. Precarious workers (those on a low income, working in the gig or other atypical economy, having an immigrant background and/or working at a small workplace) were most affected.
The report provides valuable evidence on the scale and causes of non-compliance and concludes that stronger enforcement, supported by recent reforms including the introduction of the FWA, provides a real opportunity to work towards a better future.
