The UK’s Employment Rights Act 2025 represents one of the most significant overhauls of the country’s employment and industrial relations framework in decades. The reforms expand trade union rights, strengthen employee protections, and introduce new constraints on workforce management, significantly changing the risk landscape for multinational employers.
In our webinar this week, David Hopper, Partner and Head of Industrial Relations at Lewis Silkin, and Lisa Salas, CHRO Association Director of European Affairs, discussed the implications for employers.
A New Industrial Relations Landscape
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New trade union workplace rights: As of October 30, 2026, unions can seek in-person or electronic access to employees, in historically nonunionized workplaces. Other reforms will make it easier for unions to gain recognition and strengthen protections for industrial action.
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Higher-profile employers face greater exposure: Large U.S household-name brands, particularly in retail, technology, and financial services, may attract union attention and reputational scrutiny. Recent union arrangements involving Meta and John Lewis illustrate how major employers are already responding.
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Impact will be gradual: UK private sector union membership is only 12%, and unions face significant resource and organizational constraints so any changes will depend on union resources, employee interest, and organizing priorities.
Unfair Dismissal Means Significantly Higher Financial Exposure
Beginning January 1, 2027, the qualifying period for ordinary unfair dismissal protection will be 6 months and the existing cap on compensatory awards will disappear.
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Greater financial risk: Claims involving substantial salaries, bonuses, and long-term financial losses could potentially result in multimillion-pound awards, subject to evidence of actual losses, particularly for financial services or companies with highly compensated executives.
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More complex terminations: Employers may need to reassess probationary periods, performance management, and termination procedures, especially for senior executive exits.
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Strategic implications: Higher termination costs could influence decisions about where companies locate senior leadership roles.
Broader Challenges for Employers
Additional reforms will affect guaranteed working hours, collective redundancies, restrictions on “fire and rehire,” and third-party harassment.
Hopper emphasized that while individual reforms may be manageable, their cumulative impact could significantly increase employment costs, potentially influencing future investment in the UK.
Learnings for Global HR Leaders
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Brief US HQ senior leadership: Explain the implications for union activity, termination costs, workforce flexibility, and reputational risks.
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Support UK HR teams: Maintain close communication with local leadership, understand emerging challenges, and provide additional support where needed.
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Integrate reforms into global workforce plans: Consider the implications for restructuring, senior executive appointments, investment decisions, and employment cost projections.
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Monitor developments without overreacting: Distinguish immediate legal obligations from longer-term industrial relations risks, knowing that practical implementation and union activity will evolve over time.
If you have questions about these developments or their implications for your organization, please feel free to reach out to our team.
