Following the Lords accepting the amendments to unfair dismissal and the removal of the compensation cap, the Employment Rights Bill received Royal Assent on 18th December, becoming the Employment Rights Act 2025. Further information can be found on the REC's Legal Timeline. 

On 27th November, the government u-turned on its manifesto commitment to offer unfair dismissal rights from Day 1 under the Employment Rights Bill. Following tripartite negotiations between business groups including the REC, unions and government, and businesses voicing their concerns that it would discourage firms from hiring, an amendment to the ERB has been agreed to ensure there will be a 6-month qualifying period for unfair dismissal. The compensation cap will also be lifted. Further information can be found here. 

Now, as of 1st January 2027, anyone engaged under a contract of employment with six months' service will be protected from unfair dismissal. However, what the new rules mean in practice is that all all employees recruited on or before 1^st July 2026 will automatically gain unfair dismissal protection on 1^st January 2027 (and a week earlier if they are dismissed without statutory notice). We explore what employers can do to prepare for this change in our Video Bitesize series, available here.

Further information on the amendments can be found here. Our most recent publication on changes to statutory payments under the ERB can be found here. We recently hosted a webinar on the ERB which included updates for the REC campaigns and legal teams. The recording can be found here. On 1st July 2025, the government published the Roadmap on Implementing the Employment Rights Bill which sets out when different provisions contained in the Bill are scheduled to come into force. On 7th July 2025, several amendments were made to the Bill, details of which can be found here.

The umbrella company landscape is entering a period of major change. With new and changing obligations on the horizon for recruitment businesses, including critical changes to legislation coming into force in April 2026, now is the time to prepare. To support you through this transition, the REC has launched an Umbrella Company Hub: your go-to source for updates on these changes as more details emerge, with clear and insightful information and guidance on what these changes mean for your business and what you can do to prepare for them. Watch our recent webinar on demand to understand what the new obligations on the horizon mean, how Umbrella Companies are legally defined and how to prepare your business accordingly.

The draft Finance (No. 2) Bill was published on 4th December 2025. It is currently going through the parliamentary process.

In February 2026, the REC will be delivering expert-led sessions on tax and legal changes, including umbrella company compliance and PAYE obligations. In partnership with Qdos, we’ll break down the legislation, highlight the risks, and provide clear, practical steps your business can implement immediately to stay compliant. The sessions will be hosted in London, Birmingham and Manchester. More information, including booking details, can be found here.

On 6th February 2026, the government launched a consultation on bringing umbrella companies within the scope of the Conduct Regulations, as proposed by the ERA 2025. The consultation closes at 11:59pm on 1st May 2026.

The Legal Helpline has had an increase of calls regarding Statutory Sick Pay. You can find further information on our Legal Guide on SSP.

On 21st January, the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2025 amended the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975, extending the requirements to disclose spent convictions to domestic workers. The extension of the exception will allow private individuals who hire an individual to provide domestic or personal services (e.g., nannies, home-helps, domestic staff, private tutors, carers) to ask about and take into account spent convictions and cautions when deciding whether to engage someone.

Self-employed individuals and personal employees can now apply through a DBS umbrella body, provided their role is eligible, or employers can continue to apply on their behalf. Use the find an Umbrella Body tool on GOV.UK and filter for organisations that process checks for self-employed individuals. The existing DBS fees apply, and Umbrella Bodies may charge their own administration fees. Further guidance is can be found here.

We have seen an increase of queries surrounding holiday pay, including members looking to move from the accrual method to rolled up holiday pay. You may wish to see our Legal Guide on Holiday Pay and our Frequently Asked Questions on the amendments to the Working Time Regulations 1998.

As the year comes to an end, it may also be the end of the leave year for many businesses. You should ensure that you are reminding employees/workers of their entitlement to take leave and that any accrued but untaken leave at the end of the leave year may be lost. For further information on this, you may wish to see our Legal Guide on Holiday Pay or contact the REC Legal Team.