The ERA 2025 - a planning and readiness guide for employers

Navigating the

Navigating the Employment Rights Act 2025 - A planning and readiness guide for employers Unfair dismissal • Qualifying period of employment for entitlement to bring an ordinary unfair dismissal claim reduces from two years to year months. • Employees with six months or more employment on 1 January 2027 (including those on fixed-term contracts) will be entitled to claim from that date. This means an employee recruited in July 2026 will have sufficient service to bring an unfair dismissal claim in January 2027, an employee recruited in August 2026 will gain unfair dismissal rights in February 2027 and so on. • Find out more about the reform Review all hires with less than two years’ service between now and 1 January 2027 to assess/ confirm suitability for continued employment. Where this is not feasible, identify and review high-risk groups e.g. senior/ highly paid staff. Review and tighten recruitment processes to reduce the risk of bad hires. Review your use of probationary periods - will the timeframes and processes need to change. How will you manage extensions? Do you need to limit the amount of holiday that can be taken during the probationary period (whilst adhering to Working Time requirements)? Do you need to amend your template offer letter and/ or contract of employment to reflect any changes to probationary periods? Do enhanced terms and/ or benefits attach after the successful completion of the probationary period? Given probationary periods may be shorter, do your timeframes for when enhancements attach need to be revised particularly in relation to enhancements to family/ sick leave where enhancements may lead to an employee being absent for much of the probationary period/ first six months of employment? Burges Salmon 18

Navigating the Employment Rights Act 2025 - A planning and readiness guide for employers • Consider how will you mitigate the risk of unfair dismissals for employees with more than six months’ service? Do your contractual notice periods or other contractual terms need to be amended? For example, to ensure maximum flexibility in relation to permitted grounds for dismissal? How will you introduce additional rigour and accountability to monitor and address performance and/ or conduct issues? Should you restrict who has authority to dismiss? Have you trained your line managers on the impact of the change to the qualifying period and their role in reducing the risk of claims? Review your use of fixed-term contracts. Can you reduce them to under 6 months in duration? If not, put in place mechanisms to ensure the dismissal on expiry is handled fairly including making line managers aware. • The compensation cap limiting financial awards in ordinary unfair dismissal claims will be removed from January 2027. • This change is likely to make it more difficult to reach a settlement on the termination of a senior executive appointment and/ or settlements may be for much higher amounts. • Employees (irrespective of seniority) may also have unrealistic expectations of how much their claim is worth - making settlements potentially more difficult to achieve. • Find out more about the reform How often do your senior level appointments fail to work out? Do you need to revise your approach to conducting senior executive appointments to reduce your risk of poor hires? How will you structure and draft remuneration packages including bonus, commission and incentive schemes to better protect against the risk of large awards or settlements on termination? Do governance and/ or approval mechanisms need to be amended/ tightened? How will you manage performance of senior executives in the first 6 months and thereafter? Who will set objectives, who will assess and monitor, who will carry out performance reviews etc? Burges Salmon 19