March Bulletin

Employment Rights Act 2025: what changes have already taken effect?

The first wave of reforms under the Employment Rights Act 2025 is officially here. While many of the major changes aren’t expected until later this year (and even into 2027), several key updates went live on 18th February.

For this month’s edition of the Sapphire HR bulletin, we’ve broken down these initial changes (which lean heavily toward trade union rights) to ensure you’re ahead of the curve.

What changed on 18th February?

The recent updates significantly streamline the process for trade unions to organise and maintain industrial action. Here is what your leadership team needs to know:

• In several public services, the previous requirement for at least 40% of all eligible voters to back a strike has been scrapped.
• The mandatory notice period unions must provide employers before taking action has been trimmed from 14 days down to 10 days.
• A successful strike ballot is now valid for 12 months (up from the previous six or nine months). This gives unions a much longer window to leverage a mandate.
• Unions no longer need to provide granular data, such as the exact number of staff in specific categories or workplaces, on ballot results or strike notices.
• The legal requirement to have a designated picket supervisor has been abolished.
• Members will now be automatically opted in to union political funds by default, though they retain the right to opt out manually.

One of the most significant shifts involves the protected period for employees taking part in official industrial action. Previously capped at 12 weeks, the time limit for automatic unfair dismissal protection has been removed. Employees are now protected from dismissal for participating in legal industrial action regardless of how long that action lasts.

Our recommendations

While these specific points focus on union activity, they signal a broader shift in the UK’s employment landscape toward increased worker influence.

With simplified recognition processes on the horizon, these changes aren’t just for firms with active unions. Now is the time to review your internal communication strategies and employee engagement levels to ensure your workplace culture remains robust and collaborative.

Navigating disciplinary actions short of dismissal

When faced with serious conduct or performance issues, moving straight to dismissal can seem like the most straightforward path. However, rushing to terminate an individual’s employment often carries the highest level of risk, opening the door to unfair dismissal claims and damaging your employer brand.

Opting for a sanction short of dismissal is often the more pragmatic move, provided HR ensures the response is proportionate, follows a fair procedure, and stays within the bounds of the employment contract.

Contract vs. consent

Before imposing any lesser sanction, you must establish your legal authority to do so.
Generally, these actions fall into two categories:

1. Actions explicitly permitted by the employee’s contract
2. Actions that require the employee’s express consent

This distinction is critical. If an employer unilaterally changes core terms (such as salary, job title, or location) without the underlying authority to do so, they risk a repudiatory breach of contract.

Final written warnings

A final written warning is the most significant tool in an employer’s arsenal before dismissal. When used effectively, it focuses the employee’s mind, sets clear expectations, and creates a solid evidentiary trail should termination become necessary later.

Issuing final warnings for minor issues or cycling through multiple final warnings without taking action devalues the process. It can make a subsequent dismissal appear predetermined or disproportionate. Ensure every warning has a clear duration and a defined purpose.

Demotion

Demotion is often considered when an employee has been promoted beyond their current capability. However, unless your contracts explicitly allow for it or the employee agrees in writing, demotion is legally hazardous.

Without that authority, a demotion can be viewed in law as a dismissal and re-engagement. This allows the employee to potentially claim unfair dismissal from their original role, even if they stay with the company in a lower capacity. Beyond the legalities, demotion can be damaging to team morale and management dynamics if not handled with extreme sensitivity.

Salary reductions and deductions

Reducing an employee’s pay is heavily restricted. Unless a deduction is required by law, authorised by a specific contractual clause, or agreed upon in a separate written document, it is likely to be deemed an unlawful deduction of wages. Punitive fines rarely hold up in a tribunal and can instantly destroy the relationship of trust and confidence.

Our recommendations

To ensure your disciplinary actions are robust and defensible, always stick to these core principles:

1. Never skip the investigation, the formal hearing, or the right to appeal.
2. Clearly record the rationale for choosing a specific sanction over dismissal.
3. Action short of dismissal must be a structured intervention with clear review dates and performance milestones.

The right to be accompanied: knowing the limits and obligations

Disciplinary and grievance meetings are naturally high-stakes environments. To ensure fairness, the law provides a statutory right for workers to be accompanied, but this right is specific, and misunderstanding its boundaries can lead to procedural errors.

The legal framework

Under Section 10 of the Employment Relations Act 1999, a worker has a standalone right to request a companion for:

• Any meeting that could result in a formal warning, dismissal, or other sanction.
• Discussions regarding a potential breach of a legal or contractual duty by the employer.

While the legal obligation only kicks in once a worker makes a request, the ACAS Code of Practice advises employers to proactively remind staff of this right in their meeting invitation. Failing to follow this guidance can lead to increased compensation payouts in a tribunal.

Where the right applies and where it doesn’t

It is a common misconception that this right only applies to conduct-related misconduct. In reality, the scope is much broader.

It includes:

• Sickness absence reviews or performance management meetings where a formal sanction (like a warning) is a potential outcome.
• If a warning is documented in writing and added to a personnel file, the law views it as formal, regardless of the label used by management.

It excludes:

• Investigatory meetings that are purely fact-finding missions
• Redundancy consultations (however, many employers allow a companion here as a matter of best practice and fairness)
• Flexible working meetings

Our recommendations

The right to be accompanied is a ‘day one’ right, meaning it doesn’t require a specific length of service.

For HR teams, the key is to look at the outcome of the meeting rather than the title. If the meeting could lead to a formal mark on an employee’s record, you should almost always allow a companion. Getting this wrong can undermine the entire process and make any subsequent dismissal difficult to defend.

The legal threshold: harmless office banter or harassment?

In a professional setting, ‘banter’, which is defined generally as playful or witty teasing, is often viewed as a tool for building rapport and easing the stress of the workday. However, this casual interaction can frequently serve as a smokescreen for bullying or harassment, both of which are serious liabilities for any business.

Context and the ‘unwanted’ criteria

A pivotal factor in harassment law is whether the conduct was unwanted. A recent Employment Tribunal case, Nunn v Crouch Recovery, highlights how an employee’s own participation in office banter can undermine a future legal claim.

Ms. Nunn worked for a family-run business and maintained a close personal friendship with her employer. Their private communications frequently involved sexualised language and vulgarity. After the professional relationship deteriorated, Ms. Nunn filed a claim for sexual harassment based on those messages. The tribunal dismissed the claim. While they acknowledged the messages were objectively vulgar and sexual, they determined the conduct was not unwanted at the time it occurred.

Key factors in the tribunal’s decision

The court looked at several specific behaviours to reach this conclusion:

• Reciprocity: Ms. Nunn had actively engaged in the exchange, laughing at the comments and contributing her own.
• Timing of complaint: No objections were raised while the relationship was healthy; the allegations only surfaced after the working relationship broke down.
• Lack of intimidation: The tribunal found no evidence that she felt forced to join in to protect her job or placate a superior. In fact, evidence showed she had previously challenged the company on other matters, suggesting she was not afraid to speak up.

Our recommendations

While this case offers a successful defence, it is not a strategy employers should rely on. Defending a claim by arguing that a culture of bad behaviour was mutual is rarely a sign of a healthy or productive workplace.

The primary lesson here is that tribunals will evaluate the real-time dynamic between parties. They look for evidence of how the behaviour was received in the moment, rather than how it is recharacterised in hindsight after a fallout.

Is an ‘English only’ rule lawful?

Modern UK workplaces are increasingly multilingual. While a shared language facilitates smooth operations, imposing strict linguistic requirements is a complex legal area. Employers must balance operational efficiency with the risk of race discrimination claims under the Equality Act 2010.

According to the 2021 Census for England and Wales, approximately 9.1% (5.1 million) of the population aged 3 and over spoke a main language other than English. Polish remains the most common non-native language, spoken by roughly 612,000 people. With such a diverse workforce, blanket language policies are rarely the right solution.

Critical legal precedents

To understand where the reasonable line is drawn, HR professionals should consider these three landmark cases:

P F Franco v Fyffes Group Limited

The claimant argued that supervisors speaking Polish created a disadvantage for non-Polish speakers. However, the tribunal sided with the employer. They found that allowing staff to use their mother tongue can actually improve communication clarity. The company was justified because they had actively encouraged staff to be inclusive and only intervened when a non-speaker was excluded from a relevant conversation.

Kellington-Crawford v Newlands Care Angus

In a contrasting ruling, an English-speaking employee successfully claimed discrimination when her managers spoke Polish throughout her disciplinary hearing. The tribunal found this was a deliberate act of exclusion during a formal process. Crucially, the court noted that while speaking a native tongue in an open-plan office might be acceptable, doing so to shut someone out of a direct meeting is discriminatory.

Konieczna v Whitelink

This case serves as a warning against outright bans. The employer required English to be spoken at all times, regardless of the task or setting. The tribunal ruled this was unjustified and amounted to race discrimination, as the business could not prove that such a strict rule was necessary for their specific operations.

Our recommendations

To mitigate risk, HR consultancies should advise clients to move away from all-or-nothing rules and toward nuanced, documented practices:

• Identify specific scenarios where a common language is vital for safety or coordination versus social settings where native speech should be permitted.
• It is generally reasonable to require English for customer-facing roles or when issuing work orders. However, these requirements must be proportionate to the role’s demands.
• Regularly remind employees that while they may prefer their native tongue for ease, they must be mindful of colleagues. The goal is to ensure no one feels marginalised or the subject of gossip in a language they don’t understand.
• Ensure your language expectations are clearly written in the employee handbook. Relying on unwritten rules is a significant legal liability.

The government sticks to planned Employment Rights Act 2025 rollout

The Government’s recent policy paper confirms that the Employment Rights Act 2025 remains largely on schedule. While some minor dates have shifted, the core reform program is moving forward as planned.

For HR professionals, this confirms a busy 18-to-24-month window for compliance updates. Below is the condensed timeline of the key changes.

April 2026: Day one rights and SSP reform

The first major wave of changes focuses on immediate worker protections and union ease-of-access:

• Paternity and parental leave become day one entitlements.
• Statutory Sick Pay (SSP) will be payable from the first day of illness, with the lower earnings limit abolished.
• The maximum protective award for collective redundancy doubles to 180 days, and the Fair Work Agency officially launches.
• Sexual harassment is now categorised as a qualifying disclosure.

August-October 2026: Heightened liability and union rights

Late 2026 marks a significant shift in employer responsibility and industrial relations:

• Employers must take “all reasonable steps” to prevent harassment, including new liability for third-party actions.
• The window for bringing tribunal claims extends from three to six months.
• New requirements to notify staff of their right to join a union and expanded physical/digital access for union officials.
• New consultation duties regarding tipping policies and electronic voting for most union ballots.

2027: Structural changes to dismissal

The final phases of the rollout introduce fundamental shifts in how employment is terminated:

• January 2027: The qualifying period for unfair dismissal drops to six months, and the existing compensation cap is removed. New restrictions on ‘fire and rehire’ also take effect.
• Later in 2027: Expect further legislation regarding unpaid bereavement leave, zero-hours contract restrictions, and enhanced protections for pregnant employees or those returning from family leave.

Our recommendations

The UK is moving toward a more regulated, worker-centric landscape. To manage risk, businesses should begin auditing their current sickness, dismissal, and harassment policies now to ensure they are robust enough for the updated 2026-27 legislation.

When collective agreements become contractual

While the written employment contract is the primary foundation of the working relationship, it is rarely the only source of legal obligation. Beyond implied terms like ‘trust’ and ‘confidence’, employers often overlook how easily terms from external documents, such as collective agreements, can become legally binding on an individual level.

The case: MN v NHS Foundation Trust L

A recent Court of Appeal decision involving a consultant doctor highlights the risks of vague cross-referencing. In this case, the doctor was subject to a disciplinary investigation. His contract stated that procedures would be consistent with a collective agreement known as Maintaining High Professional Standards in the NHS (MHPS).

The MHPS stated that the Medical Director must act as the case manager for consultants. However, the Trust delegated this role to a senior manager instead. They claimed this specific procedural detail was merely a guideline, not a contractual right. The Court of Appeal disagreed. They ruled that because the provision was clear and specific, it had been incorporated into the doctor’s individual contract.

The Court confirmed that not every line of a collective agreement becomes contractual. Instead, they apply a suitability test based on four key factors:

1. Importance: How critical is the term to the individual working relationship?
2. Precision: Is the language clear and specific, or is it aspirational?
3. Workability: Can the term be practically applied to an individual contract?
4. Context: In what setting was the agreement created and how is it currently used?

In the MN case, the requirement for a specific high-level manager to oversee the process was deemed workable and significant, especially given the potential impact on a professional’s reputation.

This ruling serves as a reminder that the contract often extends far beyond the initial offer letter.

Our recommendations

To manage liability, businesses should:

• Be wary of phrases like ‘consistent with’ or ‘in accordance with’ external documents. If you intend for a policy to be for guidance only, state so explicitly.
• Periodically assess any agreements made with trade unions. Consider if the procedural steps outlined are ones you are prepared to be legally bound by in every individual case.
• If a collective agreement specifies a certain role must perform a task (e.g., a director), ensure that any delegation of that task is legally permitted by the underlying contract.

Why each allegation should be considered separately in gross misconduct cases

When an employee faces multiple disciplinary charges, employers often make the mistake of bundling them into a single case for dismissal. However, recent legal precedents demonstrate that failing to assess each allegation independently can turn a potentially fair dismissal into an unfair one.

Cumulative vs. standalone charges

The Employment Appeal Tribunal (EAT) in Tayeh v Barchester Healthcare Limited clarified that tribunals look at whether an employer treated charges in one of two ways:

• Cumulative: Multiple incidents are added together to justify a dismissal.
• Standalone: Each incident is assessed as being capable of justifying dismissal on its own merits.

If you treat allegations cumulatively and one significant charge is later found to be unsupported by evidence, the entire dismissal is likely to be ruled unfair. Conversely, if allegations are treated as standalone reasons, the dismissal can remain fair even if some charges are ultimately dismissed.

Case study: Chand v EE

The case of Chand v EE serves as a stark warning. The employer dismissed an employee for four incidents of alleged fraud. The tribunal later found that none of the incidents amounted to fraud, although one was a serious policy breach.

The EAT ruled the dismissal unfair because:

• The employer relied on the fraud label for the bundle of charges.
• Once the fraud allegations failed, the court could not save the dismissal by reframing it as a simple policy breach after the fact.
• The employer’s mistake was failing to state what disciplinary outcome each individual incident would have justified on its own.

Our recommendations

To protect the business against unfair dismissal claims, businesses should follow a split-assessment approach:

1. Individual findings: Reach a clear factual conclusion on every single allegation.
2. Transparent reasoning: Explain exactly why each charge is proven or unproven based on the evidence.
3. Independent sanctions: Explicitly state what level of disciplinary action (e.g., final written warning or dismissal) each proven allegation would justify if it were the only issue at hand.

By documenting that allegation A is sufficient for dismissal regardless of allegations B and C, you create multiple layers of legal protection.

The appeal stage is more than a formalities check

A common misconception is that a dismissal is final once the initial decision is made. However, the case of Milrine v DHL serves as a vital reminder that the appeal is an integral part of the overall fairness of a dismissal.

Mr. Milrine, a long-serving driver, was dismissed on capability grounds following a two-year sickness absence. While the grounds for dismissal were likely defensible, the appeal process was catastrophically managed. The first appeal manager refused to hear the case, and a second manager failed to attend the scheduled hearing. Ultimately, no formal appeal hearing ever took place.

The Employment Appeal Tribunal (EAT) found the dismissal unfair. Even though the original decision to dismiss for capability might have been correct, the procedural failure at the appeal stage invalidated the entire process.

While the Milrine case shows how a fair dismissal can go wrong, Unsted v Wickes demonstrates how a clear policy can protect an employer, even in extreme circumstances.

In this case, a store manager admitted to using cocaine the night before her shift and arrived at work hungover. When her behaviour during the shift sparked further suspicion, she refused a drug test. Following their policy (which stated that a refusal to test is treated as a positive result) Wickes dismissed her for gross misconduct.

The tribunal dismissed the manager’s claim for unfair dismissal. They emphasised two critical points:

• Because the drug and alcohol policy explicitly equated refusal with a positive result, the employer’s actions were transparent and fair.
• While employers generally don’t police an employee’s private life, they are entitled to manage the safety risks and workplace impact of off-duty substance use.

Our recommendations

Ensure your Drug and Alcohol policy is explicit about the consequences of refusing a test. When dealing with social drug use, focus your disciplinary case on the health and safety risk and the employee’s fitness for work rather than a moral judgment of their lifestyle.