Employment Rights Bill: Debate over the unfair dismissal compensation cap.

Employment Rights Bill: Debate over the unfair dismissal compensation cap. | Friday 12 December 2025 | 1 min read

On 10 December 2025, the House of Lords rejected removal of cap on unfair dismissal compensatory awards and proposed an amendment in lieu, requiring a time‑limited review of the cap’s operation, scope, and impact on access to justice, employer certainty, and market outcomes. The review will consult employers’ organisations, trade unions, organisations representing employment law practitioners, and other interested parties, within three months of Royal Assent, with a duty on the Secretary of State to publish the findings.

Following the Lords’ decision, the Bill returns to the House of Commons on Monday 15 December 2025 for consideration of Lords amendments under the “ping‑pong” process. The Commons will decide whether to accept, reject or further amend the review provision and other changes. If both Houses agree on the final text, the Bill will proceed to Royal Assent. If not, further exchanges will follow until consensus is reached.