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ERB ‘ping-pong’ continues – Lords resist removal of unfair dismissal cap
The Lords rejected the amended ERB last night, with the government’s removal of the unfair dismissal compensation cap now being the sole issue of disagreement. The Lords agreed to a six-month unfair dismissal qualification period as a compromise position from the government’s preferred ‘day one’ right to unfair dismissal. The government confirmed that this will take effect on 1 January 2027. The Lords also dropped objections around zero/ low hours, removal of industrial action ballot turnout thresholds and trade union political fund default ‘opt-in’ provisions. However, the Lords did not agree to the late removal of unfair dismissal compensation limits. The cap on the compensatory award for unfair dismissal is currently the lower of £118,223 or a year’s salary. The Lords substituted the removal of the cap with a statutory amendment that would retain the cap but require the government to review the cap within three months of the ERB becoming law. The ERB will now return to the Commons on 15 December. The government has not announced a proposed commencement date for lifting the compensation cap, but it’s likely to be January 2027.
Review of the Year (Part 2)
In this week’s review, we’re covering pay, NDAs awards and settlement, whistleblowing, trade unions, TUPE/ procurement, redundancy, data protection, employment tribunals and apprenticeships.
Pay
Minimum wage - the Autumn budget confirmed new minimum wage rates which apply from April 2026.
Employer NI - From 6 April 2025, the rate of employer NI contributions increased from 13.8% to 15% and the per-employee threshold at which employers became liable to pay NI reduced to £5,000.
Pay equality and transparency – As well as the pay transparency issues we reported on last week, in Northern Ireland, the Department for Communities responded to its 2024 consultation on the Gender Pay Gap Information Regulations. A report by the Centre for Social Justice, an independent think-tank focussed on social justice, reported a reversal of the gender pay gap among young men who are now out-earned by their female peers, including among the university educated. Many employers with an EU presence continue to prepare for implementation by June 2026 of the EU Pay Transparency Directive.
2026
• Consultation on zero-hour worker protections
April 2026
• Improved access to statutory sick pay
• April minimum wage increases
October 2026
• Strengthened tipping law
2026
• Consultation on tipping protection
• Publication of Equality (Race and Disability) Bill
• EU pay transparency rules come into effect
2027
• Zero-hour and low-hour worker protections introduced
NDAs, awards and settlements
NDAs - The anticipated ban on the use of NDAs in relation to sexual misconduct, bullying or harassment allegations in the HE sector came into force on 1 August 2025. It precludes the use of NDAs for staff and students alike in relation to complaints made about sexual abuse, sexual harassment or sexual misconduct, or bullying or harassment which is not of a sexual nature.
On 1 October, legislation prohibited NDAs from restricting disclosures about criminal conduct by victims of crime. The government described the 1 October law as a “temporary measure” and intends to repeal and replace it with “a stronger, simpler protection.” This new protection will allow victims and direct witnesses of crime to disclose information about the conduct to anyone and for any purpose and not just to the bodies and for the purposes specified in the 1 October update to the law. The ERB will also introduce a provision that will make NDAs void in cases of harassment or discrimination.
Compensation - The government announced annual increases to limits used for calculating statutory payments and tribunal awards including unfair dismissal and redundancy. The cap on a week's pay rose to £719 for basic awards and statutory redundancy payments (previously £700) and the cap on compensatory awards in unfair dismissal cases rose to £118,223 (previously £115,115). As of today’s date, the parliamentary debate continues potentially uncapped ordinary unfair dismissal awards as part of the ERB.
Public sector severance - The Treasury updated its guidance for public sector bodies on the use of special severance payments and for the approval of senior pay.
April 2026
• Tribunal award/ compensation and statutory payment limits annually increase in April
October 2026
• Employment tribunal time limits extended
2026 – possibly:
• NDAs for harassment and discrimination prohibited
• NDA prohibition for victims of crime extended
Whistleblowing
The 2025 independent review of the UK’s whistleblowing framework called for clearer guidance, expanded legal protections, enhanced training and a shift in workplace culture. The government’s response is awaited.
The Court of Appeal ended judicial uncertainty by reluctantly confirming that injury to feelings awards are available for whistleblowing dismissals in Rice v Wicked Vision Ltd AND Barton Turns Development Ltd v Treadwell. The Court of Appeal also confirmed that job applicants cannot bring whistleblowing claims in Sullivan v Isle of Wight Council (Department for Business and Trade). In Argence-Lafon v Ark Syndicate Management an employee was not protected under whistleblowing laws after he persistently re-raised allegations that had been fully investigated and his persistence led to a breakdown of trust and confidence.
2026
• Government may publish proposals to strengthen whistleblowing protection
Trade unions and Industrial action
As well as consultations launched under the ERB, which we reported on last week, the CIPD and the Prospect trade union jointly called on the government to back new trade union measures in the ERB by introducing a code of practice on employment relations. Acas also published a policy paper highlighting the importance of strong industrial and employment relations.
In Morais and others v Ryanair DAC the Court of Appeal confirmed that blacklisting can apply to lists of striking employees even if the strike action is unprotected.
The Council of the EU adopted a directive that aims to make the representation of workers through European Works Councils in large multinational companies more effective. Changes to the EWC rules include clarifying the scope of transnational matters to ensure that decisions substantially affecting workers in more than one member state trigger an obligation to inform and consult an EWC.
On Royal Assent of ERB
• Repeal of the Strikes (Minimum Service Levels) Act 2023
2026
• Consultation on simplifying trade union recognition processes and new trade union codes of practice
• Consultation on protection against detriments for taking industrial action and blacklisting.
Two months from Royal Assent of ERB
• Requiring a simple majority of those voting for industrial action for ballot to be successful
• Information a TU must include on ballot paper will revert to the simpler form pre-Trade Union Act 2016
• Notice a TU must give employer of industrial action after ballot will reduce from 14 to 10 days
• Legal mandate period for industrial action extended (6 months to 12 months)
• Requirements around TU supervision of pickets will be repealed
• Protections against dismissal for taking industrial action
April 2026
• Workplace electronic balloting introduced
• Simplified mechanisms for trade union recognition
October 2026
• Workers to be informed of their right to join a trade union
• Extended rights for trade union representatives
• Extended detriment protection to industrial action
• Introduction of trade union access agreements
• Fair Pay Agreements process established in the Adult Social Care sector
2027
• Extension of blacklisting protection
TUPE/ procurement
Social value - As part of the National Procurement Plan, new procurement guidance set out enhanced social value requirements, effective from 24 February and mandatory from 1 October 2025. It includes a number of significant employment/ workforce angles in the social value menu, including bringing in aspects of policy which form part of the ERB and other government initiatives. Similarly, government plans for growth in its infrastructure and industrial strategies, including in its clean energy sector workforce plan, outline plans to link ‘good jobs’ criteria to funding, bonuses and contract award.
Equal pay in outsourcing – In Djalo v Secretary of State for Justice the EAT rejected a discrimination claim based on unequal pay brought by a supplied worker directly against a customer organisation. The Court of Appeal decided last year (in Boohene v Royal Parks Ltd) that any sex based discrimination claim about unequal pay should be brought against the supplier who directly employed the cleaner. The current law on this point appears settled, with leave to appeal the Boohene decision to the Supreme Court having been refused this year too. However, the ERB will require organisations to state which companies employers outsource from to motivate them to support efforts to improve equality and transparency.
TUPE - In ABC v Huntercombe (No.12) Ltd & Ors a transferor remained liable for the negligence of a transferring employee. Mach Recruitment Ltd v Oliveira was a reminder to consider the applicability of TUPE to agency workers. The Welsh Government launched a consultation on a draft public services outsourcing and workforce code.
2026
• Consultation on TUPE
October 2026
• Code to protect workers impacted by public sector outsourcing
2027 – possibly
• Pay gap reporting will cover outsourced workers
Redundancy
Online submission of HR1 forms became compulsory from 1 December: Redundancy payments: HR1 form - advance notification of redundancies.
2025
• Consultation on fire and rehire
2026
• Consultation on collective redundancy reform
April 2026
• Increased protective awards for failure to collectively consult
October 2026
• Restriction on replacing employees with agency workers
• Strengthened protections on fire and rehire
2027
• Collective redundancy rights strengthened
Data protection
The ICO published new guidance covering a comprehensive suite of common questions and scenarios involving data protection laws and the retention and use of employment records. The ICO launched a new AI and biometrics strategy to ensure that new technologies, including those used in recruitment, are innovating and growing in a lawful way. The ICO also issued new guidance on disclosing documents to the public and an anonymisation guide to help organisations determine whether data they handle is subject to data protection laws.
Employment tribunals
The Law Society of England and Wales raised concerns about the anticipated impact of the ERB on the growing backlog of ET cases, but the Home Secretary ruled out the rumoured reintroduction of ET fees to mitigate the impact of the ERB. On 1 December, regulations increased the Acas early conciliation period from six weeks to 12 weeks to help Acas manage its increasing caseload.
October 2026
• Employment tribunal time limits extended
Apprenticeships
Reform to apprenticeships were made to give employers more flexibility and included:
• allowing employers to decide whether adult learners aged over 19 when they start their apprenticeship course need to complete a level 2 English and maths qualification (equivalent to GCSE);
• the reduction of the minimum duration of an apprenticeship to eight months, down from 12 months; and
• a restriction on the use of the apprenticeship levy so that it can no longer be used to fund new Level 7 apprentices for those under 22.
Ofqual also launched a consultation on a new regulatory framework for apprenticeship assessments, seeking views from employers, providers and apprentices.
2026
• Further apprenticeship reform
This page is updated weekly with News and Views from that week’s employment weekly briefing email. For previous articles, please contact us: Employment Law Plus.
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