Employment law has moved significantly in the last year and several changes affect how settlement agreements should be approached.
The Employment Rights Act 2025
Reforms under the Act are reshaping dismissal and redundancy rights, with further changes expected into 2027. Businesses relying on short service to manage risk should take advice early, as protections are being extended and loopholes closed.
Day one rights
Protection from discrimination has always applied from an employee’s first day, including during recruitment. The Act is closing loopholes some employers previously relied on around “short service” dismissals, meaning tribunal scrutiny now applies much earlier in the employment relationship than before.
Increased injury to feelings awards
From 6 April 2026, the Vento bands used to calculate injury to feelings awards in discrimination cases increased, with the upper band now reaching £62,900 for the most serious cases and exceptional cases exceeding that figure. This has a direct effect on the value of settlements involving any element of discrimination.
Redundancy selection under closer scrutiny
Tribunals are increasingly requiring employers to demonstrate that redundancy selection criteria are genuinely neutral across protected characteristics such as age. Where selection produces disparate outcomes for a particular group, you’ll need to be able to objectively justify it.
Our solicitors can advise on how each of these developments affects your specific situation and what it means for the value of any settlement offer.