Its core purpose is to boost worker protections, fair pay, family rights, and enforcement. It demands legal teams reassess compliance risks, update contracts and policies, and navigate greater regulatory oversight.
The ERA introduces a wide range of reforms that will require in-house legal teams to adjust workflows, update internal policies, support HR, and manage new litigation risks. With 56% of CLOs aiming to deepen their strategic business role, ACC highlights the essential insights legal teams must know about this transformative Act.
Key Legal Priorities for In-House Counsel Under the ERA
The ERA will significantly change the daily and weekly duties of UK legal professionals. They will need to review government consultations, prepare internal briefings, collaborate with HR and business leaders on compliance, and keep senior leadership informed of government timelines. With this in mind, here are five key areas legal professionals should focus on in the coming year:
- Stricter Regulation of Contractual Changes and Dismissals: Legal teams must advise on the new automatic unfair dismissal protections that prohibit ‘fire and rehire’ practices except in severe financial hardship cases, ensuring contractual changes are carefully negotiated to avoid legal challenges.
- Reduced Qualifying Periods and Removal of Compensation Caps for Unfair Dismissal: The reduction of the qualifying period to claim unfair dismissal from two years to six months, combined with the removal of caps on compensation awards, increases potential legal exposure, requiring vigilance in handling dismissals and disputes.
- Expanded Collective Redundancy and Consultation Obligations: Legal teams will need to navigate enhanced consultation duties for collective redundancies affecting smaller groups of workers and manage increased penalties for failures to properly consult all parties involved.
- Increased Enforcement Powers through the Fair Work Agency (FWA): The establishment of the FWA centralises enforcement with enhanced civil penalties, tribunal case powers, and information-sharing authority, meaning legal teams must prepare for greater scrutiny, regulatory investigations, and compliance obligations.
- Enhanced Protections Against Harassment and Whistleblowing: The Act imposes a stronger legal duty on employers to take “all reasonable steps” to prevent sexual harassment, extends protections to harassment by third parties, and explicitly protects whistleblowers reporting harassment, necessitating rigorous legal oversight of workplace policies and cases.
The Employment Rights Act 2025 introduces significant changes to dismissal practices, consultation obligations, enforcement mechanisms, and workplace protections. Legal teams will be central to interpreting these reforms, updating employment frameworks, and managing heightened regulatory and litigation risk. Careful preparation and ongoing monitoring will be essential to ensure organisational compliance as the Act comes into force.
