At present, many provisions of the Employment Rights Act (ERA) 2025 await further prescription within Regulations. Based on what we currently know, its potential impact is set out below.
Unfair dismissal
From February 2026, the ERA 2025 removed the 12-week limit on claiming automatic unfair dismissal during strike action. This means that protection will now cover the full duration of any lawful and official strike (s.78).
From October 2026, the time limit for submitting employment tribunal (ET) claims will increase from three months to six months, giving individuals more time to lodge their cases.
On 1 January 2027, the qualifying period for unfair dismissal will be reduced from two years to six months, and the cap on compensation will be removed (s.25). Currently, compensation for unfair dismissal is limited to the lower of 52 weeks’ pay or a statutory amount (£118,223 as of April 2025).
In 2027, the ERA 2025 will introduce additional protections against dismissal for pregnant employees and for new mothers returning from maternity leave. The specific details of these protections will be set out in forthcoming Regulations (s.27).
On 1 January 2027, the ERA 2025 introduces further restrictions on ‘fire and rehire’ practices, by making it automatically unfair to dismiss an employee for refusing “restricted variations” to their contract (except in situations of severe financial crisis) (s.28).
Discrimination, harassment, and whistleblowing claims
From October 2026, the ERA 2025 strengthens protections against workplace harassment. Employers, who are already required to take “reasonable steps” to prevent sexual harassment, will now have to take “all reasonable steps” (s.20). The Act also removes the ability of employers to use non-disclosure provisions in an effort to prevent employees disclosing allegations of discrimination or harassment (s.24). In addition, employer liability for harassment by third parties – removed in 2013 – will be reinstated, allowing claims based on a single act of harassment, rather than a course of harassment. Employers will have a defence if they can show they took “all reasonable steps” to prevent such harassment from occurring (s.21).
From 6 April 2025, disclosures relating to sexual harassment will be treated as qualifying disclosures for the purposes of whistleblowing legislation where the individual has a reasonable belief in the concern and as long as the disclosure meets the public interest test. As a result, workers who raise concerns about sexual harassment are more likely to benefit from statutory protection against detriment and dismissal under the whistleblowing regime. This change enhances existing legal protections rather than creating a new cause of action.
Collective redundancy and consultation failures
In 2027, the ERA 2025 anticipates that the threshold for triggering consultation will be revised from the current requirement of 20 or more proposed redundancies at a single establishment within 90 days (s.29). Perhaps more significantly for insurers, from 6 April 2026, the maximum protective award for failure to consult will double, increasing from 90 days’ pay to 180 days’ pay (s.30).
Employer’s liability insurers
We foresee a significant increase in claims under employment practices liability insurance.
Increasing the time limit for ET claims from three to six months will naturally lead to an increase in claims, both in volume and value. Insurers need to be prepared not just for a substantial increase in unfair dismissal claims, but for greater exposure when claims are brought by high earners.
This may also have implications for reinsurers. The removal of the cap could cause excess limits under reinsurance treaties to be breached, in circumstances that underwriters may not have anticipated under the current law. We would expect future reinsurance treaties to be negotiated with this in mind.
We also foresee a greater number of high value claims in respect of discrimination, harassment, and whistleblowing, in light of increased employee protections in this area.
Larger scale restructurings also carry an increased risk, with the potential for higher‑value claims for procedural breaches.
The impact on D&O and other lines
While there may be some impact upon Directors & Officers (D&O) lines, given the increased risk of claims involved in larger restructurings, we believe changes through the ERA 2025 are likely to impact primarily upon employment practices liability lines.
Where an increase in employee protections naturally leads to an increase in claims, we would expect an impact upon legal expenses cover. The key difference is that such cover is often held by employees, as well as employers.
The Birketts view
Clearly, the best way to mitigate against claims is for employers to be aware of the above changes. As lawyers, we are frequently approached after key decisions have been made that result in an increased risk of claims. Where decisions are taken with an up-to-date knowledge of the ERA 2025 and the phasing in of its provisions, the risk to insurers should decrease accordingly.
For advice on the ERA, please contact Birketts’ insurance and reinsurance team, which has extensive experience of advising major (re)insurers.
Key Contacts
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at May 2026.