Employment Law Top Ten of 2025
18th December 2025
As 2025 draws to a close, we reflect on a year that’s been anything but quiet in the world of employment law. It would not be the end of the year without our annual round up of employment law highlights. The legal landscape has continued to evolve even if, unsurprisingly, it’s the Employment Rights Bill that has dominated the headlines. As of today (18 December 2025), we now need to refer to the Employment Rights Act 2025 because Royal Assent has just been given after an eventful few weeks of continuing Parliamentary ping pong. The Act’s potential impact is already making waves and 2026 promises even more transformation. So, as you enjoy a well-earned break, unwrap our Top Ten employment law developments of the year – served with a seasonal mince pie.
10. Comprehensive report on conflict at work published
It might be the season of goodwill but the report reveals the extent and types of conflict at work, who experiences it, how it is resolved and the impact of conflict. The report is the largest study of its kind with 4,000 responses from both employers and employees. Early conciliation notifications to Acas are at the second highest level in 10 years and other findings in the report are:
- 44% of people reported experiencing some form of conflict during the last 12 months and this is the highest level of individual conflict ever reported in a survey of workers in Great Britain.
- 50% of retail workers reported experiencing conflict at work in the last 12 months, the highest figure of the industries surveyed.
- People working for small and medium enterprises were more likely to report experiencing conflict.
- Conflict levels did not vary much between most age groups but were lower (32%) for those aged 55 to 65.
- 68% of people whose disability had a major impact on their life reported experiencing conflict.
- 38% said their main topic of conflict was capability and performance but this increased to 94% for managers who had conflict with their direct reports.
- 57% of people who reported experiencing conflict said this resulted in stress, anxiety or depression which clearly has an impact on productivity.
- The positive news is that half of people who experienced conflict stated that it was largely or fully resolved either through discussion with their own line manager (45%) or informally with the other person (30%).
- Raising a formal grievance was the most common formal way to resolve conflict and very few people (under 0.5%) tried to resolve the conflict by bringing an Employment Tribunal claim.
Acas research from 2021 estimated the annual cost of workplace conflict between £590 million and £2.3 billion. With the comprehensive data contained in this report Acas has announced that it will be updating the cost of conflict in spring 2026.
Finally, regarding Employment Tribunal claims, Acas says that these have increased by 185%; from around 41,000 in 1979 to around 115,000 in 2024.
The report is well worth reading but there are other important developments to be aware of:
- The extension of the Acas early conciliation period from six weeks to twelve weeks which applies where early conciliation commenced on or after 1 December 2025.
- The Fair Work Agency will be established on 6 April 2026. The FWA will bring together existing enforcement bodies and the intention is to make it easier for individuals to know where to go to for help and to provide a more effective use of resources. We are waiting for further details.
- The extension of Employment Tribunal time limits from three months to six months which is expected in October 2026.
[1] How prevalent is individual conflict at work in Great Britain in 2025?
9. Excluding transgender pool player from women’s teams was not discrimination
Ms Haynes’ case attracted considerable attention because it was the first transgender-related ruling since the high-profile Supreme Court decision in For Women Scotland in April 2025 and appears at number nine.
Ms Haynes, a trans woman with a gender recognition certificate, is a professional pool player. The English Blackball Pool Federation (EBPF) runs county-level pool competitions, including a women’s category. In 2022, female players raised concerns about fairness and discomfort sharing facilities with transgender women.
On 27 August 2023, the EBPF announced that only individuals born female could compete in its women’s teams, with the rule taking effect on 3 December. As a result, Ms Haynes was excluded from the Kent women’s A team and women’s competitions, though transgender players remained eligible for the “open” category. She claimed this amounted to direct discrimination based on gender reassignment.
The County Court accepted that EBPF was a service provider. In its defence, EBPF argued:
- Ms Haynes was excluded because she was born male, not due to gender reassignment. As the claim was not based on sex discrimination, it should be dismissed.
- If there was gender reassignment discrimination, it was lawful under section 195 of the Equality Act 2010, which allows restrictions in gender-affected activities, where physical differences give one sex a competitive advantage.
- The rule change was a proportionate way to promote fair competition and increase female participation.
Five days after the trial, the Supreme Court issued its decision in For Women Scotland and the parties were invited to make further submissions on its impact.
EBPF excluded Ms Haynes from the Kent women’s A pool team because her biological sex is male. They argued this was sex discrimination, not gender reassignment discrimination, as their rules did not prevent trans men from competing in women’s events. Following the Supreme Court’s decision in FWS, which confirmed that “sex” under the Equality Act 2010 means biological sex, even with a gender recognition certificate, Ms Haynes must be regarded as male. As her claim was based solely on gender reassignment discrimination, the court agreed it could not succeed. It held that Ms Haynes’ claim could “not survive the outcome of FWS.” On comparators, the court confirmed that the correct comparator must be of the same sex – male.
Although the claim had already been dismissed, the court considered whether pool is a gender-affected activity. Expert evidence confirmed men’s physical advantages, so it qualified under section 195(3) of the Equality Act 2010. EBPF argued that excluding trans women ensured fairness and supported female inclusion. The court agreed. If this were a case of gender reassignment discrimination, exclusion was justified under section 195(2) of the Equality Act 2010 as a proportionate means to ensure fairness of competition.
[2] Haynes v English Blackball Pool Federation County Court August 2025
8. Mandatory ethnicity and disability pay gap reporting
The consultation closed on 10 June 2025 and the responses are now being considered.
It was back in July 2024 that the Draft Equality (Race and Disability) Bill was announced and its aim is to promote equality and support economic growth. Key proposals included:
- Enshrining the right to equal pay for ethnic minorities and disabled people.
- Mandatory pay gap reporting for employers with 250 or more employees.
The consultation paper was published on 18 March 2025 and it noted that most ethnic minority groups and disabled people earn less than their White British and non-disabled peers. The UK Government believes gender pay gap reporting has improved transparency and hopes to replicate this success, while acknowledging distinct challenges in data collection and analysis for ethnicity and disability pay gap reporting.
Mandatory reporting is proposed for large private and voluntary sector employers in England, Wales and Scotland. It is also proposed for large public bodies in England and certain public authorities operating UK-wide for non-devolved functions.
Employers would report:
- Mean and median hourly pay and bonus differences.
- Percentage of employees receiving bonuses.
- Pay quartiles by protected characteristic.
- Workforce breakdown by ethnicity and disability.
- Percentage of employees who did not disclose personal data.
Significantly, the UK Government is seeking views on requiring employers to produce action plans to address pay gaps. For public bodies, additional reporting may include:
- Ethnicity pay differences by grade or salary band.
- Recruitment, retention and progression data by ethnicity.
- Whether similar requirements should apply to disability.
Helpfully, reporting dates would align with gender pay gap reporting. This is the snapshot date of 5 April (private/voluntary sector) and 31 March (public sector). The reporting deadline is 4 April and 30 March the following year, respectively.
Reports would be published online and enforcement would fall to the Equality and Human Rights Commission.
Data collection and privacy are challenging issues. Ethnicity data collection would follow country-specific census categories. A minimum of 10 employees per ethnic group is proposed to protect privacy. Where numbers are low, employers may need to group categories or use binary comparisons (e.g. White British and ethnic minority).
Disability pay gap reporting would compare disabled and non-disabled employees using a binary approach. The Equality Act 2010 definition of disability applies, but disclosure remains voluntary. A minimum of 10 employees per group is also proposed.
Many large employers already report ethnicity pay gaps voluntarily. The UK Government acknowledges the complexity of ethnicity data and the lack of consistent employee information. This consultation is the first step in this important area and we are waiting for further details.
Finally, it is worth mentioning the call for evidence about supporting the job prospects of disabled people.[4] There is a persistent “disability employment gap” which is the difference in employment rates between disabled and non-disabled people. The gap is currently 28%. The deadline for submitting evidence was 29 September 2025 but oral evidence is still being given, most recently on 17 December 2025.
[3] Equality (Race and Disability) Bill: mandatory ethnicity and disability pay gap reporting
[4] House of Commons Work and Pensions Committee inquiry Employment support for disabled people
7. Court of Appeal upholds race discrimination claim against Council
The Court of Appeal upheld earlier decisions that Leicester City Council’s treatment of a senior social worker raised an inference of race discrimination which the Council failed to rebut.
It held that Mrs Parmar was directly discriminated against on the grounds of race. Mrs Parmar, of Indian origin, was placed under disciplinary investigation and temporarily removed from her role as Head of Service, actions which gave rise to an inference of race discrimination. The Council failed to show, on the balance of probabilities, that its treatment was not racially motivated.
Mrs Parmar had responsibility for several teams, each managed by a team leader. She had over 30 years of experience and had not been subject to any disciplinary or capability proceedings until 2021. These arose because of strained working relationships between Mrs Parmar’s area and another section and there was often conflict between team leaders.
Mrs Parmar alleged direct race discrimination under the Equality Act 2010. Her claim centred on being treated less favourably than others due to her race, including being transferred, investigated, and not offered alternatives such as mediation.
- Section 23 of the Act requires comparators to be in materially similar circumstances.
- Section 136 of the Act shifts the burden of proof to the employer if facts suggest discrimination may have occurred.
In January 2023, the Employment Tribunal found that only BAME employees had faced disciplinary action in Adult Social Care since 2017. Ms Lake, the senior manager involved, had only commissioned investigations against Asian-origin staff. In similar cases involving white employees, informal approaches were used instead.
The Employment Tribunal concluded that the disciplinary process lacked substance. Allegations were vague, and key evidence, such as interview notes and recordings, was not disclosed. It found no credible non-discriminatory explanation and held that race was a factor in the decision to investigate and suspend Mrs Parmar.
The Council appealed on 11 grounds to the EAT, including that the decision was “perverse”. The EAT dismissed the appeal in March 2024, finding that the Employment Tribunal had provided clear reasoning. It agreed that the burden of proof had shifted and that the Council failed to justify its actions.
The Council appealed again, arguing legal error. The Court of Appeal dismissed the appeal in July 2025. It held that the Employment Tribunal had correctly applied the law on comparators and was entitled to draw inferences from the Council’s failure to disclose evidence. It agreed that the Council had not provided a credible non-discriminatory reason for its treatment of Mrs Parmar.
This case offers key lessons for employers:
- Consistency: Apply disciplinary procedures uniformly.
- Clarity: Provide specific allegations so employees can respond.
- Retention: Preserve all documents and records, especially once legal action is anticipated.
The case underscores the importance of fair and consistent disciplinary processes, particularly where decisions may disproportionately affect ethnic minority staff. There is a separate unfair dismissal claim relating to Mrs Parmar’s dismissal in April 2022 which has not yet been heard.
The Council has announced that is seeking an independent review of its procedures and Mrs Parmar’s remedies hearing is still to take place.
[5] Leicester City Council v Parmar Court of Appeal July 2025
6. Can better workplace health bridge the UK’s employment gap?
The Review was commissioned by the UK Government in late 2024 and was led by Sir Charlie Mayfield. It examines economic inactivity linked to ill-health and disability. The final report published on 5 November 2025 estimates the annual cost of such economic inactivity at £212 billion, reflecting lost output, increased welfare payments and additional pressure on the NHS. Since 2019, nearly 800,000 additional people have become economically inactive for health reasons, representing a 40% rise. Currently, one in five working-age adults report a condition that limits their ability to work. The Review sets out recommendations for employers and the UK Government to address these challenges. The key developments are as follow:
- Employers’ role in prevention
The final report identifies employers as central to prevention and early intervention. It suggests that strengthening workplace health provision could reduce reliance on reactive NHS treatment and better support ongoing wellbeing. - Fit note reform
Currently, 93% of fit notes state individuals are “not fit for work,” often without phased return options. GPs lack occupational health training and time, causing delays and stress. Recommendations include flexibility and better communication among employers, employees and healthcare professionals. - The Vanguard initiative
More than 60 major employers, including British Airways, Google, Sainsbury’s, BUPA and Holland & Barrett, have committed to a three-year programme (2026–2029) to test and refine workplace health strategies. The initiative aims to develop a Healthy Working Standard and comprehensive Workplace Health Provision by 2029. Objectives include improving retention of employees with health conditions, supporting longer working lives for older workers and strengthening assistance for disabled individuals. - Wider adoption
Post-vanguard, certified standards for workplace health and fit note reform are expected to be introduced nationally. Incentives such as tax relief, sick pay rebates and procurement advantages may encourage engagement. A seven-year plan seeks to normalise inclusive working standards and integrate workplace health with NHS records. - Managing absence and return to work
The report recommends structured return-to-work planning, involving both the employee and manager. Phased returns, temporary adjustments and ongoing support can ease reintegration and reduce the risk of grievances.
What does this mean for employers?
- Early Adopters: vanguard organisations will pilot approaches and share data to inform national standards.
- Incentives: certified organisations may benefit from financial and procurement advantages.
- Cultural change: employers are encouraged to reduce stigma and support rehabilitation plans.
- Data-driven practice: benchmarking and outcome sharing will help demonstrate the impact of workplace health initiatives.
The Mayfield Review signals a shift towards integrated workplace health standards. Employers have an opportunity to strengthen compliance, improve retention and reduce risk. By adopting proactive measures, such as early intervention, flexible return-to-work planning and open communication, organisations can prepare for future requirements while creating a resilient, inclusive workforce.
This is increasingly important especially in light of this year’s CIPD report[7] which found that sickness absence levels have increased significantly to 9.4 days a year per employee (7.8 days in 2023 and 5.8 in 2022). The increase is across all sectors and highest in the public sector. Further, the CIPD report found that employers’ approach is largely reactive.
[6] Keep Britain Working: Final Report
[7] CIPD Health and wellbeing at work September 2025
5. £1.2m award for constructive dismissal
It explores how the EAT found that the Employment Tribunal had misapplied the law on constructive dismissal and the risks of making substantive changes to an employee’s role during sickness absence[8].
Ms Wainwright, Head of Installations at Cennox plc, went on sick leave in August 2018 following a cancer diagnosis. During her absence, the company permanently appointed a colleague to her role, believing there would be sufficient work for both upon her return. Ms Wainwright discovered the appointment via LinkedIn in November 2018.
She queried the decision and was assured by the HR Director that her role remained unaffected. The permanent nature of the appointment was not disclosed, with HR citing concern for her wellbeing during treatment.
On returning in July 2019, Ms Wainwright was given a revised job description with reduced responsibilities. Feeling demoted, she raised a grievance. The UK Managing Director expressed disappointment at her decision, and the grievance process stalled due to illness of the chosen investigator.
In September 2019, citing the unresolved grievance and the earlier appointment of her colleague, Ms Wainwright resigned. Her resignation letter referenced the assurances given and her dismay at how the situation was handled.
The Employment Tribunal upheld her claim of discrimination arising from disability but dismissed claims of direct disability discrimination, victimisation, wrongful dismissal and constructive unfair and discriminatory dismissal.
Ms Wainwright appealed to the EAT arguing that the Employment Tribunal had failed to assess whether the discriminatory acts were repudiatory breaches of contract and whether they contributed to her resignation. She also argued that the Employment Tribunal had misapplied the law on constructive dismissal and failed to consider whether she had affirmed the contract.
The EAT found that the Employment Tribunal did not provide a suitable explanation about why the discriminatory acts did not amount to repudiatory breaches of contract. Further, the Employment Tribunal had not explained why the evidence in Ms Wainwright’s resignation letter was ignored or rejected and had failed to analyse the discriminatory acts.
The case was remitted to a differently constituted Employment Tribunal which upheld the claims for constructive unfair dismissal, wrongful dismissal and discriminatory dismissal. The Employment Tribunal found that the permanent appointment of her colleague and the HR Director’s misleading reassurance were central to Ms Wainwright’s resignation and amounted to repudiatory breaches of the implied term of mutual trust and confidence.
The company argued that Ms Wainwright had affirmed the contract by continuing to work and engaging with the grievance process but this was rejected. Ms Wainwright’s actions were attempts to allow the company to clarify or rectify the situation.
In its May 2025 remedies judgment, the Employment Tribunal awarded Ms Wainwright £1,224,861.94, including:
- £40,000 for injury to feelings
- Approximately £350,000 for past loss of income, bonus and pension
- Approximately £57,000 for loss of employee benefits
- £37,000 in reasonable expenses for setting up her own business
- The remainder covered future loss of income and benefits, plus interest
This case highlights the risks of making substantive changes to an employee’s role during sickness absence, however well meaning. If business changes are unavoidable or cover is essential whilst the employee is away, employers must keep employees informed and avoid giving misleading assurances. Finally, note that cancer is automatically deemed a disability under the Equality Act 2010, and protections apply from the point of diagnosis.
[8] Wainwright v Cennox plc EAT July 2025
4. Failure to prevent fraud corporate offence
According to the UK Government, fraud accounts for approximately 40% of all crime in England and Wales, with the National Crime Agency estimating that 86% of fraud goes unreported. The new corporate offence was effective from 1 September 2025. The legislation reflects the UK Government’s determination to make organisations accountable for fraudulent behaviour committed for their benefit or the benefit of their customers, regardless of whether senior management was aware. It also reflects a broader strategy to protect victims, enhance corporate accountability, and restore confidence in UK businesses.
An organisation such as a company or limited liability partnership commits the offence if a person associated with it, such as an employee, agent, subsidiary or contractor, commits fraud intending to benefit the organisation or any customer for which the associated person provides services on the organisation’s behalf and the organisation did not have reasonable fraud prevention procedures in place. There is no need to show that the directors or senior management knew about or authorised the fraud.
The range of fraudulent conduct covered is extensive and includes false representation, failing to disclose information, abuse of position, false accounting, cheating the public revenue, fraudulent trading and obtaining services dishonestly.
The offence carries significant penalties, with companies facing unlimited fines as well as reputational harm.
The offence applies to large organisations, defined as those meeting at least two of the following thresholds:
- Turnover exceeding £36 million;
- Total assets above £18 million; or
- More than 250 employees.
Importantly, these thresholds are assessed across the corporate group, so subsidiaries can be caught if their parent company meets the criteria, regardless of where it is based. Companies incorporated outside of the UK may be prosecuted if there is sufficient UK connection, for example, if a UK-based employee commits fraud for their benefit or is targeting victims in the UK.
A defence available to an organisation is demonstrating that it had put in place reasonable procedures designed to prevent fraud. In limited circumstances an alternative defence that it was unreasonable to expect the organisation to have put in place any such procedures may be available. However, it will rarely be considered reasonable not to have even conducted a risk assessment and documented steps to mitigate identified risks.
The UK Government has identified six areas of reasonable prevention procedures that organisations are encouraged to review and implement:
- Top level commitment from senior management endorsing the organisation’s intolerance of fraud, for example a clear statement on its website and fraud prevention procedures.
- Risk assessment to assess level of risk in potential areas according to opportunity, motive and rationalisation and putting in place appropriate mitigating steps and policies.
- Proportionate risk-based prevention procedures such as a fraud prevention plan and sanctions/disciplinary measures for individuals or entities which commit fraud.
- Due diligence of new employees or suppliers and a contract review with agents and sub-contractors covering compliance obligations and termination in the event of a breach.
- Communication such as fraud prevention training to employees, agents and other associated persons and compliance with policies including whistleblowing procedures.
- Monitoring and review to include detection of fraud and attempted fraud, investigations, monitoring the effectiveness of fraud prevention measures and of whistleblowing procedures.
Clearly, proactive steps towards compliance are required as well as maintaining a strong audit trail, documenting what information has been provided, when and by whom. This transparency is crucial not only for compliance but also for demonstrating cooperation during regulatory scrutiny.
[9] The Economic Crime and Corporate Transparency Act 2023 (ECCTA)
3. Consultation on Services Code of Practice following legal definition of “woman”
It is not often that the Equality and Human Rights Commission (EHRC) write to the UK Government urging it to “act at speed” to ensure that accurate and up-to-date statutory guidance on the Equality Act 2010 is available.
The updated draft Code of Practice for Services, Public Functions and Associations has been very high-profile and features at number three of our countdown.
As a reminder, in April 2025, the Supreme Court held that the terms “woman”, “man” and “sex” in the Equality Act 2010 refer to biological sex. Following the judgment, the EHRC issued an interim update to highlight the main consequences of it for workplaces and services open to the public. It advised for instance, that single-sex toilets and changing rooms must be restricted to biological sex and mixed-sex options should be provided where possible, alongside single-sex facilities.
The EHRC had already consulted on the Services Code between October 2024 to January 2025. It then updated the parts affected by the Supreme Court judgment and consulted on these between 20 May 2025 and 30 June 2025. Interestingly, the EHRC originally announced that there would be a two-week consultation period but after some criticism this was extended to six weeks.
The updated draft Services Code issued for consultation included an updated definition of legal sex which is “the sex recorded at birth.” It also included a section on definitions and defined a trans person as someone with the protected characteristic of gender reassignment. It reinforced protections for trans people against discrimination based on gender reassignment or sex. It also stated that asking about birth sex is permissible only when necessary and proportionate and must be done sensitively. There was also an explanation when separate/single-sex services can be provided lawfully if it is proportionate to a legitimate aim, for example safety or privacy.
On 4 September 2025, following the consultation exercise, the EHRC sent the updated draft Services Code (300 pages) to Bridget Phillipson, Minister for Women and Equalities, for approval. Once approved by her, the next stage is to lay the draft Services Code before Parliament for a 40-day scrutiny period before it can become statutory guidance.
What’s happened in the last three months?
On 15 October 2025, the EHRC withdrew the interim update and wrote to the Minister asking that the updated draft Services Code be “brought into force as soon as possible to reflect the law as it has now been clarified by the Supreme Court. The EHRC said this was urgent because of “the spread of misinformation and misleading information on the law following the Supreme Court judgment which continues to circulate widely.”
The Minister’s response was that they are “taking the time to get this right.” There is no further information available.
On 21 November 2025, a leaked copy of the draft Services Code was apparently provided to the Times but the EHRC has not commented on this.
In the meantime, organisations continue to deal with the challenges of the Supreme Court judgment. Girlguiding announced that from 2 December 2025, trans girls and young women are no longer able to join Girlguiding. The Women’s Institute announced that with effect from April 2026 it will no longer offer membership to trans women.
Regarding the interim update, judicial review proceedings were brought by the Good Law Project against the EHRC in the High Court. It argued that the interim update was “rushed, legally flawed and overly simplistic.” Judgment has been reserved.
2. Supreme Court confirms “woman” means biological sex under Equality Act 2010
However, this year, featuring at number two is the Supreme Court decision in For Women Scotland[10].
The Supreme Court clarified that the terms “woman”, “man” and “sex” in the Equality Act 2010 refer to biological sex. A transgender woman with a Gender Recognition Certificate (GRC) does not fall within the legal definition of “woman” under the Equality Act 2010.
Understanding the legal context is important. Under the Gender Recognition Act 2024, adults can apply for a GRC, which changes their legal gender “for all purposes”. However, this does not override definitions in other legislation.
The Equality Act 2010 protects against discrimination and harassment. Protection is based on nine “protected characteristics” and the two relevant to the Supreme Court case were sex (defined as male or female) and gender reassignment (which applies to trans individuals regardless of GRC status). Each characteristic provides separate legal protection. The Equality Act 2010 does not use the term “biological”.
As to the background to the case, in 2018, the Scottish Parliament passed legislation to improve gender representation on public boards, aiming for 50% of non-executive members to be women. The definition of “woman” included certain individuals with the protected characteristic of gender reassignment. Statutory guidance was issued accordingly.
The campaign group For Women Scotland challenged the guidance via judicial review. After a revision that included those with a GRC, FWS brought a second challenge, arguing the guidance remained unlawful. The case reached the Supreme Court. The focus of the appeal was not on the status of the large majority of trans people who do not possess a GRC (whose sex in law remains their biological sex). The appeal addressed the position of the small minority of trans people with a GRC, a total of 8,464 people in June 2024.
The Supreme Court held that interpreting “sex” as certificated would undermine the Equality Act 2010’s coherence. It held that “sex”, “man” and “woman” have their biological meaning (and not a certificated sex meaning) because the protections relating to pregnancy and maternity discrimination and the references to breastfeeding and risks to pregnant women are predicated on the fact of pregnancy or giving birth and only biological women can become pregnant. There are other provisions whose proper functioning requires a biological interpretation of “sex”. These include separate spaces, single sex services (such as changing rooms and medical services) and single sex associations. Further, trans people have the protected characteristic of gender reassignment. Gender reassignment and sex are separate bases for discrimination and inequality. The Scottish Ministers’ approach would, within the same protected characteristic of gender reassignment, give trans people with a GRC more rights than those without a GRC.
The definition of “sex” in the Equality Act 2010 is binary, a person is either a woman or a man. The Supreme Court unanimously held that the meaning of the words “sex”, “man” and “woman” is biological. Interpreting “sex” in the Equality Act A 2010 as certificated sex would cut across the definitions of “man” and “woman” and “sex” in an incoherent way and “would render the Equality Act 2010 incoherent and impracticable to operate.”
The Scottish Ministers’ guidance was therefore incorrect.
Importantly, the Supreme Court stressed that this interpretation does not remove protections for transgender people. They remain protected under the characteristic of gender reassignment and are safeguarded against discrimination and harassment in their acquired gender.
[10] For Women Scotland Ltd v The Scottish Ministers House of Lords April 2025
1. Employment Rights Bill: Royal Assent given
The difference to 2024 is that the Bill has now completed its Parliamentary process and Royal Assent was given today (18 December 2025). We now need to refer to the Employment Rights Act 2025.
Other developments relating to the Act during the course of 2025, include the publication of the UK Government’s Roadmap with details of the phased approach to consultation and implementation of the Act as well as a number of consultation papers being issued.
The past few months have been eventful to say the least. The House of Commons and House of Lords could not agree on a final version of the Bill which meant a delay in Royal Assent being given. Two key issues were in dispute. Day-one unfair dismissal rights was a Labour party election commitment but the House of Lords wanted instead a six-months’ qualifying period. This was because of widely-held concerns that the day-one right would have a detrimental impact on recruitment and the economy. Also in dispute was the obligation placed on employers to offer a guaranteed hours contract which the House of Lords objected to (but that issue was later resolved).
We were in the stage of Parliamentary ping-pong where the Bill went back and forth. It looked as if the stalemate would continue indefinitely until the UK Government’s surprise announcement on 27 November 2025 that it agreed to reducing the qualifying period for unfair dismissal from two years to six months. This significant U-turn followed “a series of constructive conversations between trade unions and business representatives.” The UK Government also announced that the unfair dismissal “compensation cap will be lifted” but no details were given at that time. However, on 5 December 2025, it was proposed that both the 52 weeks’ pay cap and £118,223 limit on compensation will be removed. This was not part of the original Bill and was rejected by the House of Lords on 10 December 2025.
In an interesting development, on 15 December 2025, six business organisations wrote to the Secretary of State for Business and Trade expressing their view that the Employment Rights Bill should be passed by Parliament “this week”. These organisations include the CIPD, CBI and British Chambers of Commerce.
On 15 December 2025, the House of Commons voted to proceed with removing the unfair dismissal compensation limits and all eyes were on the House of Lords vote the following day. Would it accept the changes? If it did not, the Parliamentary ping-pong would continue. On 16 December 2025, the House of Lords agreed to the changes on the basis that the UK Government would publish an assessment of the impact of removing the compensation limits and would meet with stakeholders in the new year to obtain their views on the impact.
With that final hurdle cleared, Royal Assent, which is the last stage of the Parliamentary process, was given today and the Bill became an Act of Parliament.
However, it is important to understand that the Act’s measures do not take effect immediately. We need extensive consultation on key aspects of it and separate Regulations before most of the changes in the Act come into force.
One provision that does have immediate effect however is the repeal of the controversial (and never used) measure relating to minimum service levels during industrial action[11]. That repeal took effect on 18 December 2025.
With a number of important changes expected on 6 April 2026, such as the right to SSP and paternity leave from day one and the new Fair Work Agency being established and other rights throughout 2026, there is a good chance that the Act will top our countdown next year too!
We have written extensively about the Act, see our Employment Rights Act 2025 Hub for more details.
[11] Strikes (Minimum Service Levels) Act 2023
Conclusion
Our Top Ten 2025 countdown may be dominated by certain issues such as the Employment Rights Act 2025 and the implications of the Supreme Court judgment in For Women Scotland but it also shows the wide-ranging challenges faced by organisations in keeping up to date with employment law developments and case law.
We already know that 2026 will be eventful because as mentioned above, a number of important measures in the Employment Rights Act 2025 will be implemented. We will cover these in our next briefing Looking Ahead to 2026 which will be published in January 2026.
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