Government Economic Analysis of the Employment Rights Act 2025

Tribunal Cases on the Rise

The UK government’s economic assessment of the Employment Rights Act 2025, published as part of its impact analysis, projects a notable uptick in employment tribunal activity as a direct consequence of the new statutory rights introduced under the Act.

Central to the government’s analysis is the expectation that reforms expanding workers’ entitlements will increase the number of potential disputes brought before tribunals. Key measures, such as reducing the qualifying period for unfair dismissal claims to six months, extending time limits for filing claims, and broadening rights around shift notice and guaranteed hours, mean more employees are eligible to pursue legal remedies when rights are perceived to have been breached.

Quantitatively, official estimates in the impact assessment indicate thousands of additional cases entering the system: reductions in qualifying periods alone are estimated to add several thousand new ET1 claim forms annually, supplemented by further increases tied to extended time limits and enhanced rights for workers previously excluded. Although the precise total varies by specific measure, these effects taken together have led to official acknowledgements that tribunal receipts could rise substantially compared with pre-Act projections. Independent commentary has placed the expected increase in employment tribunal claims at around 15-17 %, reflecting both the direct legislative changes and amendments made during passage through Parliament.

Government analysis frames this projected rise as a manageable and justified consequence of strengthening worker protections, arguing that the economic benefits of improved job quality and labour market fairness outweigh the administrative and legal costs involved. Still, the assessment acknowledges resource pressures on tribunals and signals ongoing work with HM Courts & Tribunals Service and ACAS to refine estimates and address capacity challenges as the Act’s implementation unfolds.

Overall, while the Employment Rights Act 2025 is presented as a policy designed to promote inclusive employment and productivity, its economic analysis candidly identifies increased tribunal caseloads as a significant transitional effect that policymakers and the justice system must accommodate.

Supporting Employee Mental Health in the New Year

A Compassionate Approach After the Christmas Break

The Christmas and New Year period is often portrayed as a time of celebration, and connection. For many employees, it is exactly that, a chance to rest, spend time with loved ones, and return to work feeling refreshed. However, for others, the festive season can be emotionally challenging. Some may have spent it alone, others may be grieving the loss of a loved one, facing financial pressure, or feeling more isolated than usual. As the new year begins, employers have an important opportunity to acknowledge these realities and actively support employee mental health.

Recognising That Experiences Differ

One of the most meaningful steps employers can take is simply recognising that the holiday period is not universally positive. Returning to work in January can intensify difficult emotions, especially when expectations of happiness contrast sharply with personal experiences. Leaders and managers who openly acknowledge this, without forcing employees to share personal details, help create a culture where people feel seen and understood.

Simple messages such as, "The Christmas break can be different for everyone, and it’s okay if you’re not feeling your best right now," can go a long way in reducing feelings of isolation.

Creating a Gentle Transition Back to Work

The post-Christmas return can feel overwhelming, particularly for employees who are already emotionally drained. Employers can support wellbeing by easing the transition back into work. This might include:

1. Allowing flexible start times or remote working options in early January.
2. Avoiding unnecessary pressure or unrealistic deadlines in the first weeks back.
3. Encouraging teams to prioritise and pace their workload.

A gentler approach signals that employee wellbeing matters as much as productivity.

Encouraging Open and Supportive Conversations

Managers play a key role in supporting mental health. Providing them with guidance on how to check in with their teams, through informal, non-intrusive conversations, can make a significant difference. The goal is not to act as a therapist, but to listen, show empathy, and signpost support where needed.

Employees are more likely to seek help when they feel their manager is approachable, understanding, and respectful of boundaries.

Promoting Available Support and Resources

Many organisations offer mental health resources, such as employee assistance programmes (EAPs), counselling services, or wellbeing initiatives. After the holidays, it’s helpful to remind employees of what support is available and how to access it.

Normalising the use of these resources is key. When leaders openly encourage wellbeing support and frame it as a strength rather than a weakness, employees are more likely to reach out when they need help.

Fostering Connection and Belonging

Feelings of isolation can linger well into the new year, especially for those who spent the holidays alone. Employers can help rebuild a sense of connection by encouraging inclusive team interactions—such as casual check-ins, collaborative projects, or optional social activities that don’t centre solely on festive experiences.

The focus should be on inclusion, not obligation. Giving employees opportunities to connect, without pressure, helps rebuild a sense of belonging.

Leading With Compassion in the New Year

Supporting employee mental health after the Christmas break isn’t about grand gestures, it’s about empathy, flexibility, and consistency. By recognising that the festive season can be difficult for some, and by responding with compassion and practical support, employers can set a positive tone for the year ahead.

A workplace that acknowledges the whole person, not just the role they perform, creates an environment where employees feel valued, supported, and better equipped to thrive in the months to come.

UK Employment Rights Bill

The UK Employment Rights Bill is set to reshape workplace legislation, with key reforms rolling out from autumn 2025 and into 2026. For employers, this marks a critical moment to reassess policies, update procedures, and ensure compliance with new standards.

What's changing?

Some of the most impactful updates include:

1. Statutory Sick Pay: Will be paid from day one of illness, with the lower earnings threshold removed.
2. Unfair Dismissal: Employees will be able to bring a claim from 'day one' instead of 2 years.
3. Paternity and Parental Leave: These will become “day one rights,” allowing employees to take leave from their first day on the job.
4. Industrial Action Protections: Dismissals related to lawful industrial action will be considered automatically unfair, and notice periods for strikes will be shortened.
5. Neonatal Care Leave: Up to 12 weeks of paid leave for parents whose babies require neonatal hospital care.

How Employers Can Prepare

Azura recommends taking proactive steps:

1. Review and update employee handbooks to reflect new leave entitlements and sick pay rules.
2. Train HR teams and line managers on handling sensitive leave requests and industrial action scenarios.
3. Audit payroll systems to ensure compliance with new wage and sick pay structures.
4. Communicate clearly with staff about their evolving rights and your organisation’s support.

We are constantly monitoring what is happening with upcoming legal changes and translating what is happening into practical steps you can take to prepare.

Change is coming — and with Azura by your side, you’ll be ready to lead through it with confidence and clarity.