Upcoming changes to UK employment law could significantly affect both the financial risks and career mobility of senior professionals, with potential implications for the advice given to high-earning clients, according to Bloomsbury Square Employment Law.
Under the Employment Rights Act 2025, employees will gain unfair dismissal protection after six months rather than two years, and the cap on compensation for unfair dismissal of £118,233 will be removed. For senior individuals with substantial fixed pay, bonuses or deferred incentive arrangements, this means claims could potentially reflect the full value of significant earnings.
Chris Hogg, partner at Bloomsbury Square Employment Law, says:
“Senior professionals often have complex remuneration structures linked to performance, profit participation or long-term incentives. Earlier legal protection combined with uncapped compensation increases the financial stakes considerably in an exit situation.”
The removal of the compensation cap may also change the nature of claims. In the past, many senior professionals relied on discrimination or whistleblowing claims, which carry uncapped damages, to pursue higher-value settlements. With unfair dismissal compensation no longer capped, some disputes may become more straightforward and predictable but at a higher cost to employers.
The reforms, being phased in from this year and in 2027, also double the time limit for most employment tribunal claims from three months to six. This could prolong uncertainty after senior departures and delay financial resolution. New limits on the use of non-disclosure agreements in harassment or discrimination cases will also reduce employers’ ability to rely on confidentiality in settlements, further increasing their risk.
When faced with far higher potential payouts in an employment dispute, organisations are likely to become far more risk-averse when it comes to senior-level hires.
Chris Hogg adds:
“Although the reforms may make it easier for senior professionals to pursue substantial employment claims without relying on more complex discrimination arguments, the broader effect could be reduced mobility. Senior-level appointments already commonly take six to nine months, and we may see timelines extend further as firms adopt a more cautious approach to hiring.”
For professional and financial advisers, the changes may prompt more clients to seek guidance around employment risk, contractual protections and the financial implications of career moves, particularly where remuneration is heavily performance-linked or deferred.
