The Employment Law Pod

Unpacking the Employment Rights Act: risks, changes and opportunities

• Boyes Turner

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In this episode of the Employment Law Pod, partners Andrew Whitaker and Helen Goss unpack one of the most significant shake-ups to UK employment law in decades: the Employment Rights Act.

With the Act now in force and many changes being phased in through 2026 and 2027, Andy and Helen explore what we know so far, what remains uncertain, and what employers should be thinking about now.

They discuss the headline reforms, including the reduction of the unfair dismissal qualifying period to six months, the proposed removal of the compensation cap, changes to statutory sick pay, collective redundancy rules, trade union law, fire and rehire, and zero-hours contracts. 

Importantly, this episode doesn’t just focus on risk. Andy and Helen take a balanced view, using their famous Venn diagram thinking to explore whether there are genuine positives for both employers and employees, from improved workforce engagement and retention to a more level playing field across sectors.

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Andrew Whiteaker: 00:04
Hello and welcome to the Employment Law Pod from Boys Turner. My name's Andy Whitaker. I'm a partner in the team here, and on the Employment Law Pod, we like to talk about things that we've seen in the news, maybe interesting cases or upcoming legislative changes that we think will be an interesting subject of conversation. And as ever, I'm joined today by one of my colleagues from the team, and I'm very pleased to say that today it's my fellow partner in the team, Helen Goss. Hi, Helen.

Helen Goss: 00:30
Hello, everyone.

Andrew Whiteaker: 00:31
So, Helen, what is it that we're going to be having a chat about today?

Helen Goss: 00:35
Well, I think it has to be the Employment Rights Act. So we're going to look at some of the main changes in relation to that. But then we're going to look at some of the positives, the negatives for both employers and employees, and we're going to talk Venn diagrams. Well, the Act has got a lot of people very excited and not necessarily in a good way. It became an Act on the 18th of December, and the changes are going to be phased in, I suppose, really over the next year. And there's going to be quite a lot of consultation required. So the consultations are pretty much going out now. So there's quite a lot of detail that we don't actually know yet, other than perhaps on a headline basis. So the government's planning to consult on certain points with businesses, with the trade unions. And as we've seen, the consultation results can change things. So the day one unfair dismissal was changed to a month six dismissal period. So where you feel strongly, you should contribute to the consultation. There's a government roadmap for implementation, but again, that may change. So for all the difficult stuff, as always, I'm going to hand over to Andy. So, Andy, can we talk about the main changes and then what's come in straight away and what can we see coming in in the imminent future?

Andrew Whiteaker: 02:03
There's a rare insight into our relationship over the last 15 years. It's good to pull back the curtain, isn't it? Well, look, yeah, you're quite right when you say that there has been a fair amount of parliamentary hokey kokie as far as the bill and now the act is concerned. We've had things put in, taken out, put back in again, and shaken all about. And we have ended up with, as you say, some changes, primarily the biggest changes in respect of the unfair dismissal rights that we have been trailing for quite some time. As you identified, we were trying to get our heads around initial periods and how this would link up with probation periods and all of those kind of interesting perspectives. 

Andrew Whiteaker: 02:41
But where we've landed is with the proposed change from January of 2027 to the qualifying period for unfair dismissal, changing from two years to six months. So the government has produced some an impact assessment in respect to the proposed changes. And in addition to the changes to the qualifying period for unfair dismissal claims, less trailed, but perhaps even more importantly, we've seen the confirmation that the government proposes to remove the unfair dismissal compensation cap.

Helen Goss: 03:16
Yes, now that's pretty significant, isn't it?

Andrew Whiteaker: 03:19
It absolutely is. So as many listeners will know, uh as things currently stand, there is a maximum sum that can be recovered in for a straightforward unfair dismissal claim maxed out at one year's pay or around about £115,000 a year as it stands at the moment. There's there's normally changes every year to keep up with inflation, but around that sort of sum, and it's whichever is the lower sum. So an individual on £40,000, the maximum sum they could recover in the employment tribunal for an unfair dismissal claim is £40,000.

Helen Goss: 03:50
Yes, but of course, that's not much use to a high earner, and that's why then there's always a search for some form of discrimination or potentially whistleblowing to try and recover more or potentially breach a contract.

Andrew Whiteaker: 04:06
Yeah, there's there's often a convergence of two issues there, isn't there? So number one, if you're a very high earner, bearing in mind the compensation that you might recover in tribunal is capped, yeah, if you're on a quarter of a million pounds, half million pounds a year, but hopeless is there's not an enormous amount of compensation that you're going to recover that way. So as you say, Helen, often individuals will try and identify a discrimination element to the claim, or argue that they have potentially blown the whistle, so they've made a protected disclosure. The consequence of that being that the cap on compensation is lifted. But they might also do that, an individual might also do that if they have less than two years service. And we see this quite a lot where individuals whose employment is terminated after nine months, a year, eighteen months trying to assert that a conversation they had with a manager or a colleague three or four months previously, or an argument that they got into, or an email they said where they weren't particularly happy with a strategy or a process that's been followed, somehow represents a protected disclosure. And therefore the reason for their termination was that protected disclosure, that that whistleblowing attempt. And therefore, not only is the cap lifted, but also they are entitled to bring their claim even though they don't have a two-year service. Now, it might sound I'm being slightly dismissive of such claims because obviously lots of valid claims of that nature are made, but but in our practice we see quite a lot of people attempting to frame conversations or emails they've had with colleagues to try and create a protected disclosure to pursue a claim that they otherwise wouldn't be able to pursue.

Helen Goss: 05:44
Yes. Well, just overall, I've I've been reading around the impact of these changes, and there's a suggestion that there are going to be at least another 9,000 claims a year.

Andrew Whiteaker: 05:59
I think it's an extra 3,000 tribunal claims, an extra 9,000 contacts to ACAS. Because obviously, if you contact ACAS, it doesn't necessarily result in. But an employer is nonetheless most likely to be informed about that and therefore a process begun.

Helen Goss: 06:15
Yes, and it's interesting to contemplate how ACAS and then also how the court system is going to cope with so many extra contacts.

Andrew Whiteaker: 06:26
Yeah, and we already know, again, if any of you listening who are unfortunate enough to be involved in any tribunal litigation at the moment, especially in London and the South East, will know the enormous strain that the tribunal system is under. And it's not uncommon at the moment for us to receive claims from our clients where they're being required to defend an allegation that's being pursued against them, and we're getting cases listed for the end of 2027, sometimes 2028. Exactly. So the the the the possibility of these additional tribunal claims being pursued because of I think the government estimates in its impact assessment, impact assessment, that you know 22% of employees are going to benefit from this trek, this change. There's 22% of the the working population who might have less than two years service but have six months service, who were now being had their position protected in a way that they hadn't before. And that this is likely to have a cost to employers because of the additional claims that might be pursued.

Helen Goss: 07:27
Well, we'll get back to our Venn diagram a bit later.

Andrew Whiteaker: 07:29
Yeah, absolutely. So look, that's that's probably the biggest headline change that employers need to be mindful of. But that's by no means the only change. The the ERA as it currently stands does represent probably the biggest shake up of employment law rights that that we've seen in the last 20 years or so.

Helen Goss: 07:48
Yeah, well, it's described as one of the most significant shifts in employment law in decades.

Andrew Whiteaker: 07:53
Yes, that sounds about right to me. Yeah. And I think the way to look at the act as it stands at the moment is it's a bit of a framework. So there are some specifics in the act itself. And as a result of that, we've seen some changes already implemented, and we've got some on the horizon. So, for example, coming next month, we've got the implementation of the repeal of some trade union laws around minimum strike levels, but also changes to the rules around industrial action and ballots, which I won't go into detail here, but the

Andrew Whiteaker: 08:26
 upshot of it is going to make it potentially easier for employer, for trade unions rather, to organize and conduct industrial action ballots. So there are some things that are we already have the detail for, and again, we look forward into the next few months. In April, we're seeing some changes around statutory sick pay and the three-day waiting period being removed. We're seeing some the protective award cap for failure to collectively consult in collective redundancy situations being increased from double, isn't it? Yeah, 90 days up to 180 days. We're seeing again some changes, further changes around trade union recognition rules. We're seeing some changes around sexual harassments, for example, becoming a prescribed whistleblowing disclosure. So these things are happening without there being a necessity for additional legislation. But what the ERA does is it produces a framework saying, okay, well, we are going to introduce secondary legislation on other things, and those consultations are ongoing or are due to commence during the course of the next year or so with a view to then ending up with secondary legislation that specifies exactly what's going to happen in particular areas.

Helen Goss: 09:41
Andy, in relation to that, on the grapevine, is there any suggestion that other areas will be changed?

Andrew Whiteaker: 09:49
Well, so as I said, we we know from the ERA that there are things that are going to change. So again, there's going to be a looking into the future again. We know there's going to be some changes around in October around fire and rehire and how that can be used or not as the case may be. And then as we move into 2027, we've already flagged up the unfair dismissal qualification provisions and the removal of the statutory cap. We know it's been heavily trailed, the rules around zero hours workers. So we know that the rules and provisions around that are going to be changed. But that, for example, is one that's that is definitely going to be.

Helen Goss: 10:22
It's a bit of an unknown as to how or what the exceptions are going to be.

Andrew Whiteaker: 10:26
Exactly, as to how that's going to be dealt with as far once we go through the consultation exercise. Also, collective redundancy threshold changes. Again, that's something we know that's going to change, but exactly how that is going to change is uncertain at the moment. So currently there's rules around establishments, so it needs to be 20 or more employees in a particular establishment. And we've known and understood that to mean essentially a place of work, an office, a factory, something like that. It's a little bit more nuanced on that when you look at the case law, but fundamentally that's that's

Andrew Whiteaker: 10:58
 what we're talking about. But the intention is to amend that. The original proposal, again, this is the parliamentary hokey kokie again. The original proposal was that actually it would cover the entire organization.

Helen Goss: 11:10
So going back to the Woolworths position.

Andrew Whiteaker: 11:12
Going back to the Woolworths position, exactly, where an employer might have 20, 30 sites across the entire country, and when they're totting up the number of redundancies they're making, they had to take into consideration all of the all of their particular.

Helen Goss: 11:25
So establishment would be the whole business.

Andrew Whiteaker: 11:28
Yeah. We now know that that's not going to be what it is, and instead, we're probably going to retain that establishment definition as it currently stands, but it that then be amended to say an establishment or and then another alternative, and that could be 10% of your workforce or over a hundred. We don't know, but but again, that's a good example of we know there's going to be a change coming, but that's going to still be dependent upon the consultation that takes place and what that looks like. 

Andrew Whiteaker: 12:01
Just on collective redundancy for one moment, it I'll just flag up a little bit of case law that's come out just in the last, just recently, around how we calculate those 20 people and some clarification that we only look forward and we don't look backwards. So if you're facing a situation where you have to make recollect some redundancies and you are trying to ask the question, well, is there going to be 20 or more in the 90-day period? You only need to look forward rather than taking into consideration redundancies that might have happened in the previous few weeks or months. Although, of course, tribunals are being warned that they need to be mindful of employers attempting to rig the system by making a few redundancies and then going a month and a half later, oh, would you add them and eve it? We've got to make some more now. Oh, we never anticipated doing this. So tribut has been warned to be live to attempts to stagger redundancies to avoid the rules. But fundamentally, we've got to change about looking forwards rather than backwards.

Andrew Whiteaker: 12:59
 So look, there's lots coming down the line, and employers need to start planning and thinking now about what they should be doing about all of this. We do like to try and look on the plus side here at the employment law pod. We've just talked about lots of changes that are being implemented, and there are going to be challenges for businesses as to how they can best address those. But this doesn't have to be all doom and gloom. Despite the impact assessments suggesting that the millions of pounds that this is going to cost businesses, there's some potentially some upsides as well. So let's try and find those, Helen.

Helen Goss: 13:37
I think that's sensible, Andy, because looking out of the window now, it is a little bit of a grey day. And of course, depending on your perspective, you've got a different view as to how this is going to affect you. So from the employee perspective,

Helen Goss: 13:53
 then it's seen as an upgrade in employee rights, strengthening job security, pay, and family-friendly rights. So there are earlier unfair dismissal protections. There are certain day one rights, not necessarily to bring an employment tribunal claim for unfair dismissal. We've already discussed that six months. It strengthened statutory sick pay. There's an end to exploitative zero-hour contracts, we think. Restrictions on fire and rehire, enhanced flexible working provisions, better protection for parents and pregnant workers, and of course, stronger TU rights, trade union rights. But looking at the exactly the same position, a lot of employers have a very different perspective on those same rights. So they what they see are higher operational and compliance costs, increased risk of tribunal claims, which we touched on earlier, removal of the compensation cap, reduced operational flexibility, particularly where zero hours contracts, and that's going to affect certain sectors where there is a lot of seasonal work, so whether that's retail or leisure and hospitality, an administrative burden, and increased third-party liability, which again will affect those that have members of the public coming on site, whether that's retail, leisure and hospitality, etc. So when I was trying to think about the commonality between employers and employees, and I was looking at a Venn diagram where sometimes there's a commonality in these interlocking circles, I was sort of struggling to find where that area of commonality was. So I put my thinking cap on again to see, well, maybe there are positives for employers. I'm sure there've got to be some positives. And then I was thinking, well, I suppose it produces a level playing field. So unscrupulous, if I can call them that, employers who use low-pay models and hire and fire or zero-hour contracts to push down the cost of their contracts. Are they now not going to have that advantage over scrupulous employers?

Andrew Whiteaker: 16:24
Yeah, and especially with we haven't really touched upon this yet. 

Andrew Whiteaker: 16:27
And I think it's one thing it's useful to flag is that we are one of our colleagues, Shoner, is actually doing a webinar where she's going to be delving into a lot of these legislative changes in a deeper dive and actually going into the specifics of it. But a good example is around the Fair Work Agency. So there are certain still, even though it's uh intended to be implemented in April of this year, there's still some uncertainty exactly how it's going to operate, how it's going to be funded.

Helen Goss: 16:54
There's quite a lot of uncertainty in fairness.

Andrew Whiteaker: 16:56
But but the point is that it's almost going to be the new sheriff in town. It is going to be there to try and highlight these sort of poor and exploitative employment practices, whether it be around paying below the minimum wage, whether it be about health and safety violations that are being conducted within certain workplaces. So, yeah, but if we're trying to find those positive outcomes, then removing or challenging those exploitative employers and making them up their game and creating that level playing field for those more reasonable or more law-abiding employers, then that's a potential positive there.

Helen Goss: 17:31
Exactly. Then, of course, there is that potential for increased staff retention and morale, because that's a constant thing that employers battle, and they're always trying to reduce people leaving and make sure that they provide a workplace where people can flourish and enjoy and increase engagement.

Andrew Whiteaker: 17:54
Yeah, and I think also the unfair dismissal rights, don't get me wrong, I understand that this is going to be challenging and I understand the additional burden and the potential risks that arise from it. But I think this, especially as we've got almost a year's run-up to this now, that does give employers an opportunity to get things right

Andrew Whiteaker: 18:11
 or to prepare properly. And what I mean by that is that you know, you and I in our practice areas, Helen, we'll quite often receive calls from clients who say, Oh, we've decided we've got to get shot of someone because they've been with us for about a year or so now or 18 months, and they're really not doing it. It's not working. It's not working. And you think, okay, I hear you, but we've got probation periods. Why why isn't it that we managed to why how didn't we assess that to begin with? How couldn't we, you know, enable, yeah, identify where someone is not meeting the mark or they've not done that, they're not the person that we thought they were we they were when we hired them, or perhaps we've just failed to manage them as best we could to get the best out of them. So this is going to require a laser focus for employers on both their recruitment exercises and also on their induction processes as well.

Helen Goss: 19:04
So that's going to require managers to properly performance manage their new recruits.

Andrew Whiteaker: 19:10
Yeah, that's right. There's no get out of jail free card after nine, ten months where you think, oh, yeah, this new person's not really up to it. Can we get shot of them, please? You have to engage early and you have to properly run your induction processes, make sure that it's very clear to the employee what you expect them to do. You give them all the support that they need to try and achieve that, because you can't just change your mind at a later date. So don't forget that recruitment is expensive.


Yes.

Andrew Whiteaker: 19:39
There's the cost in terms of you've already said about impacts on staff morale and things like that. There's an impact when someone leaves, it impacts upon the morale of others. There's then going to be a period of time where you're trying to replace them. So productivity is going to fall off. And then when that new person arrives, then it's going to take a while for their productivity to reach the levels that you want them to be at. And then, of course, if it doesn't work out, you've got to start the whole process all over again. And you may or may not have incurred some costs in terms of recruitment, but you've also spent a lot of time that's now been wasted. So you it's difficult sometimes to put a financial figure on that, but it costs a lot

Andrew Whiteaker: 20:15
 of money if you have high churn. So if But that's always been the case. It has always been the case. But if this makes people engage earlier and think about these things earlier and potentially reduce their churn as a result, then there we go. We're looking for positives. That's a potential positive.

Helen Goss: 20:33
No, absolutely, absolutely. Then the other one positive is healthier workforce and productivity, consequently. As a result, if people are feeling more secure in their jobs and are, in their perception, treated better, then that should help with well-being. And again, this is something that we've been talking about for years that a well and happy workforce is a more productive workforce.

Andrew Whiteaker: 21:02
Yeah, that's right. And I think it's potentially easy for businesses to look at these changes as being a problem and something that's going to cost them money and something that they would much rather didn't happen. But the reality is that some of these changes have already been implemented. A lot of them are going to be implemented during the course of this year, and others will be over the next 18 months to two years. And absent any substantial, yeah unpredicted change, this is coming, this is happening. And so the wise employer will recognize the changes and try to implement the necessary amendments and adjustments to how they practice, to how they engage with their people, to try and minimize the impact that it's going to have on them and their people as well, to try and reduce the costs that might be incurred. Because if we take a sort of confrontational approach to it and very Anti-it without trying to be a to take a practical approach to addressing it, then those businesses are the ones that are more

Andrew Whiteaker: 22:07
 likely than not that are going to suffer as a result.

Helen Goss: 22:10
Yes, and of course, we do hear a lot in the press how employers are saying that there's a potential reduced job opportunities going forward because of these changes. I think that that argument started with the increase in national insurance and then it's continued to sort of gather momentum, hasn't it, with the proposed new changes?

Andrew Whiteaker: 22:31
It has. I think I'm no economist and I don't have any data to my fingertips. I know that those arguments are as old as the Hills. So, for example, when the national minimum wage was introduced back in the 90s, this was going to have a disastrous impact upon employability and employers weren't going to hire as many people, and that proved not to be the case. Now, and I'm sure that those arguments have been run in the past in respect of other employment law changes that have been implemented. I'm not poo-pooing them and I'm not suggesting that it's untrue, but I am saying that it's quite common for there to be pushback when employment law is amended saying, well, this is going to have a huge impact upon recruitment and there's not going to be as many jobs available and it's going to be a disaster. And sometimes it does have those impacts and sometimes it doesn't. I suppose we're going to have to wait and see, aren't we?

Helen Goss: 23:19
Well, I've got two more positives.

Andrew Whiteaker: 23:21
Okay, good.

Helen Goss: 23:22
Um there's going to be a clearer framework, isn't there? 

Helen Goss: 23:25
So there's a clear framework in respect of probationary periods, for example, for flexible working requests. So I think that is a potential positive. Yes. And then improved reputation about how employers treat their employees. That's got to be quite a big one, hasn't it?

Andrew Whiteaker: 23:46
Yeah, I think so. And you know, the changes around the moratorium on dismissal of individuals who have been on maternity leave or are returning from maternity leave, that's a societal problem. We know the statistics are appalling on that. So actually, imposing those sort of restrictions might feel problematic and difficult for businesses, but actually those people who've been away have got skills and experience and knowledge, and it's best to try and retain them. So if that has the consequence of keeping, not just from a societal perspective and from the individual perspective of supporting those people and making sure that they're not going to lose their job and they do have some additional protections, but also to retain those skills and experience within a business as well is potentially a valuable thing.

Helen Goss: 24:32
Yeah. But I suppose we're going to be dealing

Helen Goss: 24:35
 with the argument going forward that yes, there are better rights for employees, but the commercial argument that this is costing business at a time when there are a host of other costs are going to be commercially quite damaging. We are apolitical.

Andrew Whiteaker: 24:53
Yes.

Helen Goss: 24:54
We are just repeating the arguments and the discussions that we have heard. But we have to wait and see what actually happens when these rights come into force and are actually being used.

Andrew Whiteaker: 25:07
Yeah, it's feeling slightly uncomfortable here, sat on this fence at the moment. It's quite a thin one. So we are trying our best to give both sides of the story. But I think if you look hard enough, you you can find some potential positives of businesses. But I guess the message is the more confrontational or the more frustrated or the more annoyed that a business might be about these changes potentially increases the likelihood that this might prove problematic for them.

Helen Goss: 25:32
Yes. And with my Venn diagrams, the interlocking part, it is quite a small little slither at the moment. But it might be interesting to come back in a couple of years and see whether that interlocking part of the two circles has grown a little and that the areas of commonality have developed into more than they look at the moment.

Andrew Whiteaker: 25:54
Absolutely. Well, look, I think that will probably bring us to the end of our discussion today.

Helen Goss: 25:60
Let's

Helen Goss: 26:00
 wait and see and let's wait and see.

Andrew Whiteaker: 26:02
As we have said already, we have webinars that are available on the Boyce Turner website where we have a deeper dive into the specifics of the changes. Also on our monthly newsletter as well. Again, we're giving frequent updates on the particular changes as we go through the consultation exercises. So if you need to know the specifics about exactly what's changing and when, then there's plenty of resources available on the website for you. But also, people can give us a call and we're more than happy to have a conversation with everyone about those changes and what they should be doing to deal with any one change in particular.

Helen Goss: 26:35
Yes, and don't forget, if you feel strongly about something, join the consultation and put your view forward.

Andrew Whiteaker: 26:41
Absolutely. Okay, well look, thanks very much, Helen.

Helen Goss: 26:44
Thank you, Andy.

Andrew Whiteaker: 26:46
And thank you all for listening to the Employment Law Pod. You can find more episodes on the Boyce Turner website, and you can also follow the show wherever you listen to your podcasts. So thanks again and speak to you all soon.