Employment Rights Act 1996: 2026 Guide

The Employment Rights Act 1996 is the core statute underpinning individual employment rights in the UK. It governs written terms of employment, protection from unlawful deductions, notice periods, redundancy payments, protection from detriment, whistleblowing, flexible working and, most significantly, unfair dismissal. While other statutes such as the Equality Act 2010 and the National Minimum Wage Act 1998 operate alongside it, the Employment Rights Act 1996 remains the legal foundation upon which most employment tribunal claims are constructed.

For employers, the Act is not abstract legislation. It regulates the practical mechanics of the employment relationship from day one documentation through to termination. Payroll errors, poorly handled grievances, flawed redundancy processes and procedurally unfair dismissals typically engage specific sections of the Employment Rights Act 1996. Tribunal litigation frequently turns not on broad fairness principles, but on technical compliance with defined statutory provisions and the terms agreed in the employment contract.

The Act has been amended repeatedly since 1996. Flexible working reforms, whistleblowing developments, changes to written particulars obligations and evolving case law on dismissal have reshaped its application. Employers who rely on outdated summaries risk exposure, particularly where internal processes do not reflect current requirements under the ACAS Code of Practice and related guidance.

What this article is about

This guide provides a structured and up-to-date analysis of the Employment Rights Act 1996 for employers in 2026. It explains the purpose and scope of the Act, then examines the key sections most commonly relied upon in tribunal proceedings, including:

• Section 1 – written statement of employment particulars
• Section 13 – unlawful deductions from wages
• Sections 43A–47B and section 103A – whistleblowing protection and automatic unfair dismissal
• Section 44 and section 100 – health and safety detriment and automatic unfair dismissal
• Section 80F and related provisions – flexible working
• Section 86 – statutory notice
• Section 98 – unfair dismissal
• Section 111A – protected conversations
• Section 203 – restrictions on contracting out
• Redundancy provisions under Part XI

The focus throughout is compliance risk, tribunal exposure and practical employer responsibilities, with links to deeper guidance on key topics such as unfair dismissal, redundancy and termination of employment.

Section A: What Is the Employment Rights Act 1996? Structure, Scope and Application

The Employment Rights Act 1996 is a consolidating statute. It brought together earlier employment protection legislation into a single legislative framework and has since been amended extensively. Although enacted three decades ago, it remains the principal source of individual statutory employment rights in England, Wales and Scotland.

The Act regulates the legal relationship between employer and employee at every stage of employment. It governs documentation at the start of employment, protection of wages during employment and the lawfulness of dismissal at the end of employment. It also creates a number of standalone protections, including whistleblowing protection and statutory time off rights.

While the Act is frequently described as giving “employee rights”, it is more accurate to say that it imposes structured statutory duties on employers, breach of which gives rise to tribunal remedies.

1. Who the Employment Rights Act 1996 Applies To

The majority of ERA rights apply only to employees. An employee is defined under section 230 of the Act as an individual working under a contract of employment, meaning a contract of service.

Whether a contract of service exists is determined by applying established common law tests, including mutuality of obligation, control, personal service and the overall factual matrix of the relationship. Tribunals look beyond labels and examine the reality of the arrangement. Employers should therefore ensure that status aligns with contractual documentation such as the types of employment contracts used across the business.

Some provisions extend to workers. For example:

• The right to a written statement of particulars under section 1 applies to workers.
• Protection from unlawful deduction of wages under section 13 applies to workers.
• Whistleblowing protection extends beyond employees.

However, core protections such as the right not to be unfairly dismissed under section 94 and the statutory redundancy pay regime under Part XI apply only to employees, and usually only after meeting qualifying service requirements.

Misclassification risk is significant. Employers who label individuals as self-employed contractors without properly analysing employment status may inadvertently expose themselves to ERA claims, including claims for wrongful dismissal and statutory redundancy.

2. The Core Parts of the Act

For practical compliance purposes, the most important Parts of the Employment Rights Act 1996 are:

• Part I – Written statement of employment particulars
• Part II – Protection of wages
• Part V – Protection from suffering detriment
• Part VIII – Maternity, paternity, adoption and related leave
• Part IX – Notice of termination
• Part X – Unfair dismissal
• Part XI – Redundancy payments

These Parts form the backbone of tribunal litigation. Most routine employment disputes engage one or more of these provisions, often alongside compliance with the disciplinary procedure and grievance procedure adopted by the employer.

3. Relationship with Other Employment Legislation

The Employment Rights Act 1996 does not operate in isolation.

It does not govern discrimination, which is regulated by the Equality Act 2010. It does not establish minimum wage rates, which are governed by the National Minimum Wage Act 1998. It does not regulate collective consultation obligations in redundancy exercises, which arise primarily under the Trade Union and Labour Relations (Consolidation) Act 1992, though redundancy dismissals will still fall to be assessed under section 98 ERA and the broader redundancy consultation framework.

However, ERA claims frequently run alongside claims under these statutes. For example:

• A redundancy dismissal may give rise to both unfair dismissal under section 98 ERA and protective award claims under collective consultation rules.
• A dismissal may be both unfair under section 98 ERA and discriminatory under the Equality Act 2010.
• A deduction from wages may breach both section 13 ERA and national minimum wage legislation.

Employers must therefore treat the ERA as part of a wider compliance framework.

4. Why the Act Is Central to Tribunal Litigation

In practice, the Employment Rights Act 1996 underpins:

• Most unfair dismissal claims
• Most wrongful dismissal disputes
• Statutory redundancy pay claims
• Wage deduction claims
• Whistleblowing litigation
• Flexible working disputes
• Notice disputes under section 86

Section-specific compliance failures frequently determine tribunal outcomes. For example, failure to provide a compliant section 1 statement can lead to additional financial penalties. Failure to follow a fair procedure under section 98 can render an otherwise legitimate dismissal unfair. Improper reliance on protected conversations under section 111A can invalidate settlement discussions and undermine a proposed settlement agreement.

The Act is therefore both procedural and substantive in its operation.

Section Summary

The Employment Rights Act 1996 is the central statute governing individual employment rights in the UK. It applies primarily to employees, though some protections extend to workers. Its structure is divided into Parts addressing documentation, wages, notice, dismissal and redundancy. Most tribunal claims rely directly on its provisions, making section-specific compliance essential for employers.

Section B: Section 1 Employment Rights Act 1996 – Written Statement of Particulars

Section 1 of the Employment Rights Act 1996 imposes a statutory duty on employers to provide a written statement of employment particulars. Although often treated as administrative, this obligation carries legal and financial consequences if breached.

Since 6 April 2020, the right to receive a written statement of particulars applies not only to employees but also to workers. It is a day-one right. Employers must therefore ensure that compliant documentation is in place before employment or engagement begins, typically incorporated within the employment contract or accompanying documentation.

1. What Section 1 Requires

Section 1(1)–(4) ERA requires employers to provide a written statement setting out the principal terms of engagement. All mandatory particulars listed under section 1(4) and 1(4A) must be provided on or before the first day of employment.

These include:

• The names of employer and employee or worker
• The date employment begins
• The date continuous employment began
• Job title or a brief description of work
• Place of work
• Pay and intervals of payment
• Hours and days of work
• Holiday entitlement and holiday pay
• Sick leave and sick pay entitlement
• Notice periods

Certain supplementary particulars permitted under section 2 ERA, such as pensions or collective agreements, may be provided within two months of the start date. However, employers should ensure clarity between section 1 core particulars and section 2 supplementary information.

The written statement may refer to other reasonably accessible documents, including policies such as a disciplinary policy or grievance policy, provided these are clearly identified.

2. Principal Statement and Additional Particulars

The written statement is often described as comprising:

• A principal statement containing day-one core information
• Additional particulars permitted under section 2 ERA

The distinction is important for compliance audits. Employers must ensure that the principal statement is complete at the point employment begins. Failure to do so cannot be retrospectively corrected without exposure to financial penalty where other claims succeed.

3. Is the Written Statement the Employment Contract?

A section 1 statement is not itself the employment contract. It is evidence of the terms agreed. The contract of employment may exist orally or by conduct.

However, in litigation, tribunals frequently treat the written statement as strong evidence of agreed terms. Inconsistencies between contractual practice and written documentation often undermine employer credibility, particularly in disputes involving breach of employment contract.

Clear drafting therefore reduces litigation risk.

4. Enforcement and Financial Consequences

An employee or worker cannot generally bring a standalone tribunal claim solely for failure to provide a section 1 statement. However, where they succeed in another substantive claim, the tribunal may award an additional two to four weeks’ pay under section 38 of the Employment Act 2002 if the employer failed to provide compliant particulars.

Section 1 failures therefore create indirect financial exposure.

In addition, incomplete or inaccurate written particulars frequently weaken an employer’s defence in claims for unfair dismissal, unlawful deduction of wages or redundancy-related disputes.

5. Compliance Risks for Employers

Common errors include:

• Providing outdated templates
• Failing to update statements after contractual variation
• Omitting reference to probationary terms
• Failing to specify working hours clearly
• Treating workers differently without lawful justification

Section 1 compliance should be reviewed alongside broader employment contract drafting and HR policy documentation to ensure consistency across the organisation.

Section Summary

Section 1 of the Employment Rights Act 1996 imposes a day-one duty on employers to provide written particulars of employment to employees and workers. All core particulars must be provided on or before the first day of employment. Failure to comply can trigger financial penalties and undermine tribunal defence strategies. Accurate documentation is a foundational compliance requirement.

Section C: Section 13 Employment Rights Act 1996 – Unlawful Deductions from Wages

Section 13 of the Employment Rights Act 1996 protects employees and workers from unlawful deductions from wages. It is one of the most frequently litigated provisions of the Act, particularly in payroll disputes, commission claims and termination scenarios.

The principle is straightforward: an employer must not make deductions from wages unless a statutory exception applies. In practice, disputes often arise over whether a deduction was authorised, whether a payment constitutes “wages”, and whether a series of deductions forms part of a continuing breach.

1. What Counts as “Wages”

For the purposes of Part II of the ERA, “wages” are defined broadly and include:

• Salary
• Commission
• Contractually due bonuses
• Holiday pay
• Certain statutory payments

Discretionary bonuses that are genuinely discretionary may fall outside the scope of section 13, but tribunals examine substance over form. If payment is contractually expected or consistently paid, it may be treated as wages.

Failure to pay accrued holiday pay on termination commonly results in unlawful deduction of wages claims, often linked to disputes about holiday pay on termination of employment.

2. When Deductions Are Lawful

Under section 13(1), an employer may lawfully make a deduction only where:

• The deduction is required or authorised by statute, for example tax or National Insurance
• The deduction is authorised by a term of the contract and the employee has been given a written copy of that term
• The employee has given prior written consent to the deduction

Overpayments of wages may also be recovered, even without express contractual authority, although recovery must be exercised reasonably.

Employers must also consider the interaction with the National Minimum Wage Act 1998. Certain deductions may be lawful under section 13 but still cause a breach of minimum wage rules, depending on their nature.

3. Series of Deductions and Time Limits

Under section 23 ERA, a complaint may be presented to an employment tribunal within three months less one day of the date of the deduction, or, in the case of a series of deductions, within three months of the last deduction in the series.

Tribunal case law has clarified how a “series” is defined and when gaps between deductions may break the chain. Employers should therefore assess historical payroll practices carefully where underpayment issues are identified.

In addition, back-pay claims in respect of holiday pay are subject to statutory limitation rules restricting how far back a claimant may recover.

4. Practical Employer Risk Areas

Common risk scenarios include:

• Deducting training costs without contractual authority
• Withholding final salary pending return of equipment
• Failing to pay commission after resignation
• Deducting damage costs without written consent
• Incorrect holiday pay calculations

Payroll systems must be aligned with contractual documentation. Section 13 disputes often arise not from deliberate misconduct, but from poorly drafted contractual clauses or informal payroll practices embedded within the wider employment contract framework.

5. Tribunal Remedies

If a tribunal finds that an unlawful deduction has occurred, it may order repayment of the amount unlawfully deducted. Interest may also be awarded.

Although compensation is limited to the financial loss suffered, wage deduction claims are procedurally straightforward and relatively low risk for claimants. Employers therefore face regular exposure in this area, particularly where deductions are made without clear contractual wording.

Section Summary

Section 13 of the Employment Rights Act 1996 protects employees and workers from unauthorised deductions from wages. Deductions are lawful only where authorised by statute, contract or prior written consent. Claims must generally be brought within three months of the last deduction in a series. Payroll governance and contractual clarity are essential to minimise risk.

Section D: Sections 43A–47B, 103A and 44 Employment Rights Act 1996 – Whistleblowing and Health & Safety Protection

The Employment Rights Act 1996 provides robust protection against detriment and dismissal in specific protected circumstances. Two of the most significant areas are whistleblowing protection under sections 43A–47B and health and safety detriment protection under section 44, with automatic unfair dismissal provisions under sections 103A and 100 respectively.

These protections frequently apply from day one of employment and can expose employers to significant compensation awards, including uncapped compensation in certain dismissal cases.

1. Section 43A and the Whistleblowing Framework

Section 43A defines a “protected disclosure”. The broader statutory framework governing whistleblowing protection appears across sections 43A to 47B ERA.

A protected disclosure arises where a worker discloses information which, in their reasonable belief, tends to show wrongdoing such as:

• A criminal offence
• A breach of legal obligation
• A miscarriage of justice
• A danger to health and safety
• Environmental damage
• Deliberate concealment of wrongdoing

The disclosure must be made to an appropriate person and must, in most cases, be made in the public interest.

Workers who suffer detriment because they have made a protected disclosure may bring a tribunal claim under section 47B. Employees dismissed for whistleblowing may claim automatic unfair dismissal under section 103A.

There is no qualifying service requirement for whistleblowing protection.

2. Compensation and Risk Exposure

Whistleblowing claims carry significant financial exposure. Compensation for unfair dismissal in whistleblowing cases is uncapped. Injury to feelings awards may also be available in detriment claims under section 47B.

Tribunals scrutinise the employer’s motive carefully. Attempts to characterise dismissal as performance-based or restructuring-based will fail if the protected disclosure materially influenced the decision.

Employers should ensure that internal reporting systems, including any whistleblowing policy, are properly implemented and that managers understand the legal significance of a protected disclosure.

3. Section 44 – Health and Safety Detriment

Section 44 protects employees from suffering detriment where they:

• Leave or refuse to return to a workplace in circumstances of serious and imminent danger
• Take appropriate steps to protect themselves or others
• Carry out designated health and safety activities

An employee does not require two years’ service to bring a section 44 claim.

If dismissal occurs for these reasons, it may constitute automatic unfair dismissal under section 100 ERA.

Health and safety dismissals frequently overlap with broader workplace safety obligations, including those arising under the Health and Safety at Work Act 1974, and may also generate claims framed as health and safety unfair dismissal.

4. Practical Employer Considerations

Common risk scenarios include:

• Disciplining an employee shortly after a whistleblowing complaint
• Failing to investigate a safety concern before taking action
• Treating a safety refusal as misconduct
• Ignoring the public interest element of a complaint

Managers frequently underestimate the breadth of these protections. Documentation, timing and internal consistency are often decisive in tribunal findings.

Section Summary

Sections 43A–47B and 44 of the Employment Rights Act 1996 provide strong protection against detriment and dismissal in whistleblowing and health and safety contexts. Automatic unfair dismissal provisions under sections 103A and 100 remove qualifying service requirements and can expose employers to uncapped compensation. Careful handling of complaints and safety concerns is essential.

Section E: Section 80F Employment Rights Act 1996 – Flexible Working

Section 80F of the Employment Rights Act 1996 establishes the statutory right for employees to request flexible working. Following reforms that took effect in April 2024 under the Employment Relations (Flexible Working) Act 2023, this right is now a day-one entitlement.

Employers must treat flexible working requests as part of a structured statutory framework. Failure to comply with procedural obligations may lead to tribunal claims and can also create wider risk, including discrimination allegations.

1. Who Can Make a Request

Under section 80F, any employee may request a change to:

• Hours of work
• Times of work
• Place of work

There is no longer a qualifying service requirement. An employee may make a statutory request from the first day of employment.

Employees may make up to two statutory requests in any 12-month period.

Workers who are not employees do not benefit from the statutory right under section 80F, although employers may extend internal flexibility under their own flexible working policy.

2. Employer Obligations Under Sections 80G–80I

While section 80F establishes the right to request, sections 80G–80I govern how employers must handle requests and the tribunal complaint mechanism.

When a statutory flexible working request is made, the employer must:

• Deal with the request in a reasonable manner
• Consult with the employee before refusing the request
• Make a decision within two months (unless extended by agreement)

The duty to consult before refusal is a key reform. Employers can no longer reject a request without meaningful engagement.

Requests should be assessed in line with the statutory framework and broader flexible working legislation requirements.

3. Statutory Grounds for Refusal

An employer may refuse a request only for one or more of the statutory business grounds:

• Burden of additional costs
• Detrimental effect on ability to meet customer demand
• Inability to reorganise work among existing staff
• Inability to recruit additional staff
• Detrimental impact on quality
• Detrimental impact on performance
• Insufficiency of work during the proposed working times
• Planned structural changes

Refusals must be evidence-based. Generic or unreasoned responses increase tribunal risk and may also intersect with indirect discrimination claims.

Employers should ensure managers understand the permissible reasons to reject a flexible working request.

4. Tribunal Remedies

An employee may bring a tribunal claim where the employer:

• Failed to deal with the request in a reasonable manner
• Failed to consult before refusal
• Failed to notify the decision within the statutory timeframe
• Based refusal on incorrect facts

Compensation is capped at a statutory maximum. However, poorly handled requests frequently lead to broader disputes, including constructive dismissal claims or discrimination claims, particularly in relation to sex or disability.

5. Overlapping Legal Risk

Flexible working disputes frequently intersect with:

• Indirect sex discrimination claims
• Disability discrimination and reasonable adjustment duties
• Constructive dismissal allegations

Employers should approach section 80F requests as part of a broader risk assessment, particularly where hybrid arrangements are in place, such as hybrid working models.

Section Summary

Section 80F of the Employment Rights Act 1996 provides employees with a day-one statutory right to request flexible working. Employers must consult before refusal and can only reject requests on specified business grounds. Mishandling requests can lead to tribunal claims and wider discrimination exposure.

Section F: Section 86 Employment Rights Act 1996 – Statutory Notice Periods

Section 86 of the Employment Rights Act 1996 sets out the statutory minimum notice that an employer must give to terminate employment. It establishes a mandatory legal floor. Contracts of employment may provide for longer notice periods, but they cannot lawfully provide for less than the statutory minimum required under section 86(1).

Notice compliance is frequently overlooked in dismissal planning. Failure to provide the correct notice may give rise to claims for wrongful dismissal, breach of contract or disputes arising from flawed termination of employment processes.

1. Statutory Minimum Notice Entitlements

Under section 86, once an employee has been continuously employed for at least one month, they are entitled to statutory minimum notice as follows:

• One week’s notice where employment has lasted between one month and two years
• One week’s notice for each complete year of service between two and twelve years
• Twelve weeks’ notice where employment has lasted twelve years or more

These minimum periods apply unless dismissal is for gross misconduct justifying summary dismissal.

Statutory notice applies only to employees, not workers.

2. Interaction with Contractual Notice

Most contracts provide for notice periods that exceed statutory minimums, particularly for senior employees. Where contractual notice exceeds statutory notice, the contractual period governs.

However, employers must still consider statutory notice for certain purposes, including calculation of the effective date of termination in unfair dismissal scenarios under section 94 and section 98 ERA.

Employers should ensure that notice clauses are clearly drafted within the employment contract, including provisions dealing with:

• Payment in lieu of notice
• Garden leave
• Termination for gross misconduct

Poor drafting can increase exposure, particularly where employers seek to rely on summary dismissal.

3. Pay in Lieu of Notice (PILON)

Pay in lieu of notice is lawful where:

• The contract contains an express PILON clause
• The employer is prepared to accept that payment without notice may technically constitute breach of contract

Express PILON clauses reduce legal risk. Without such a clause, summary termination with payment may technically amount to wrongful dismissal, even if financial loss is limited to notice pay.

Tax treatment of termination payments must also be considered, as statutory and contractual termination payments are subject to defined tax rules.

4. Wrongful Dismissal Risk

Failure to provide the correct notice, or to follow contractual termination provisions, may give rise to wrongful dismissal claims.

Wrongful dismissal differs from unfair dismissal. It is a contractual claim rather than a statutory fairness assessment. An employer may have a potentially fair reason under section 98 yet still be liable for breach of contract if notice obligations were not met.

Senior employees frequently pursue wrongful dismissal claims in parallel with unfair dismissal claims.

5. Summary Dismissal and Gross Misconduct

An employer may dismiss without notice where the employee has committed gross misconduct amounting to a fundamental breach of contract.

However, allegations of gross misconduct must be substantiated and supported by a fair process, often in line with the employer’s disciplinary procedure. If a tribunal concludes that conduct did not justify summary dismissal, the employer may be liable for notice pay in addition to any unfair dismissal compensation.

Section Summary

Section 86 of the Employment Rights Act 1996 establishes statutory minimum notice periods for employees. Employers must provide at least the statutory minimum unless dismissal for gross misconduct is justified. Notice obligations interact closely with contractual drafting, wrongful dismissal exposure and overall termination strategy.

Section G: Section 94 and Section 98 Employment Rights Act 1996 – Unfair Dismissal

Section 94 of the Employment Rights Act 1996 establishes the right not to be unfairly dismissed. Section 98 sets out the legal framework that tribunals apply when determining whether a dismissal is fair or unfair.

Unfair dismissal remains one of the most litigated areas of UK employment law. Employers must satisfy both substantive and procedural requirements. Failure in either respect may result in liability.

1. The Five Potentially Fair Reasons

Under section 98(1) and (2), an employer must establish the reason for dismissal and show that it falls within one of five potentially fair categories:

• Capability or qualifications
• Conduct
• Redundancy
• Statutory illegality or breach of a statutory restriction
• Some other substantial reason (SOSR)

The burden of proof initially rests on the employer to identify and evidence the reason for dismissal.

If the employer fails to demonstrate a potentially fair reason, the dismissal will be unfair.

2. The Reasonableness Test (Section 98(4))

Even where a potentially fair reason is established, section 98(4) requires the tribunal to determine whether the employer acted reasonably in treating that reason as sufficient to dismiss.

This involves assessment of:

• Whether a fair investigation was undertaken
• Whether a fair procedure was followed
• Whether dismissal fell within the “range of reasonable responses”

Tribunals do not substitute their own view for that of the employer. Instead, they assess whether the decision fell within the band of reasonable responses open to a reasonable employer.

Procedural failures frequently lead to findings of unfair dismissal even where misconduct or capability concerns were genuine. Compliance with a robust disciplinary procedure, appropriate disciplinary investigation and properly conducted disciplinary hearing is critical.

3. Qualifying Service Requirement

In most cases, an employee must have two years’ continuous service to bring an ordinary unfair dismissal claim. This generally applies to employees whose employment commenced on or after 6 April 2012.

However, numerous statutory exceptions apply where no qualifying service is required.

4. Automatic Unfair Dismissal

The Employment Rights Act 1996 identifies a range of circumstances in which dismissal is automatically unfair, including dismissal for reasons related to:

• Pregnancy or maternity
• Whistleblowing
• Health and safety activities
• Trade union membership or activities
• Requesting flexible working
• Asserting a statutory right
• Taking certain forms of family leave

In automatic unfair dismissal cases, the employer cannot rely on a potentially fair reason defence if the prohibited reason materially influenced the decision.

Compensation is uncapped in certain automatic unfair dismissal cases, particularly whistleblowing under section 103A.

Further detail is available in our guide to automatically unfair dismissal.

5. Compensation and Remedies

If dismissal is found to be unfair, the tribunal may award:

• A basic award calculated using a statutory formula based on age, length of service and capped weekly pay
• A compensatory award reflecting financial loss attributable to the dismissal, subject to an annually uprated statutory cap in most ordinary cases

In some cases, reinstatement or re-engagement may be ordered, though this remains relatively rare in practice.

Tribunals may reduce compensation where the employee contributed to their dismissal or where dismissal would have occurred in any event following a fair procedure.

6. Strategic Employer Risk Areas

Common areas of exposure include:

• Poorly conducted investigations
• Inadequate redundancy consultation
• Dismissal during probation without fair process
• Reliance on “loss of trust and confidence” without evidence
• Failure to document decision-making rationale

Unfair dismissal litigation often turns on documentation quality, procedural discipline and alignment between the reason given and the evidence relied upon.

Section Summary

Sections 94 and 98 of the Employment Rights Act 1996 establish the right not to be unfairly dismissed and the legal framework for assessing fairness. Employers must demonstrate both a potentially fair reason and that dismissal was reasonable in all the circumstances. Automatic unfair dismissal categories remove qualifying service requirements and can significantly increase financial exposure.

Section H: Section 111A and Section 203 Employment Rights Act 1996 – Protected Conversations and Settlement Agreements

Sections 111A and 203 of the Employment Rights Act 1996 regulate how employers can lawfully negotiate termination and compromise statutory claims.

These provisions are frequently misunderstood. Improper reliance on them can invalidate negotiations and increase litigation exposure.

1. Section 111A – Protected Conversations

Section 111A allows employers and employees to engage in “pre-termination negotiations” that are inadmissible in ordinary unfair dismissal proceedings.

This statutory protection applies even where no dispute exists at the time of the conversation.

However, the protection is limited:

• It applies only to ordinary unfair dismissal claims
• It does not apply to automatic unfair dismissal claims
• It does not apply to discrimination, whistleblowing or breach of contract claims

If an employer engages in “improper behaviour”, such as undue pressure or discrimination, the protection may be lost.

Employers frequently rely on section 111A when initiating discussions about a potential settlement agreement. However, conversations should be carefully structured and documented.

2. Improper Behaviour and Risk

Improper behaviour may include:

• Harassment or intimidation
• Threatening dismissal without basis
• Discriminatory comments
• Failure to provide reasonable time to consider an offer

ACAS guidance suggests employees should normally be given at least 10 calendar days to consider a settlement offer.

Where improper behaviour occurs, tribunals may admit evidence of the conversation.

3. Section 203 – Restrictions on Contracting Out

Section 203 ERA provides that statutory employment rights cannot be waived except through a valid settlement agreement or ACAS conciliated agreement.

A settlement agreement will only be valid if:

• It is in writing
• It relates to particular proceedings or particular complaints
• The employee has received independent legal advice
• The adviser holds appropriate professional indemnity insurance
• The agreement identifies the adviser

Failure to satisfy these statutory requirements renders the waiver ineffective.

Employers must therefore ensure that settlement documentation is legally compliant and aligned with section 203 requirements. Inadequate drafting can result in claims proceeding despite apparent settlement.

4. Interaction with Unfair Dismissal Strategy

Section 111A negotiations are commonly used where performance concerns, restructuring or relationship breakdowns exist but where dismissal risk under section 98 is uncertain.

However, employers must assess:

• Whether qualifying service exists
• Whether automatic unfair dismissal risk may arise
• Whether discrimination issues are present

Protected conversations are not a substitute for procedural compliance. If negotiations fail, the employer must still ensure any subsequent dismissal satisfies the fairness requirements under section 98.

Section Summary

Section 111A of the Employment Rights Act 1996 permits protected pre-termination negotiations in ordinary unfair dismissal cases, subject to limits. Section 203 restricts contracting out of statutory rights and sets strict conditions for valid settlement agreements. Employers must handle termination negotiations carefully to preserve legal protection.

Section I: Redundancy Under the Employment Rights Act 1996 (Part XI)

Part XI of the Employment Rights Act 1996 governs statutory redundancy payments, while section 139 defines redundancy for the purposes of unfair dismissal law. Redundancy dismissals therefore engage both the statutory redundancy payment regime and the fairness framework under section 98.

Employers frequently misunderstand redundancy as a purely financial obligation. In reality, redundancy is a legally defined form of dismissal, requiring both a genuine redundancy situation and a fair procedure.

1. Definition of Redundancy – Section 139

Under section 139 ERA, redundancy arises where dismissal is wholly or mainly attributable to:

• The closure of the employer’s business
• The closure of the employee’s workplace
• A reduced requirement for employees to carry out work of a particular kind

Tribunals assess the factual matrix carefully. A role relabelled but substantially unchanged may not amount to a genuine redundancy.

Redundancy dismissals are assessed for fairness under section 98(4), meaning employers must follow a reasonable procedure, including fair selection and consultation.

2. Statutory Redundancy Pay Entitlement

Employees with at least two years’ continuous service are entitled to statutory redundancy pay under Part XI.

Payment is calculated based on:

• Age during each year of service
• Length of continuous service (capped at 20 years)
• A statutory cap on weekly pay (uprated annually)

The statutory formula provides:

• 0.5 week’s pay for each full year of service under age 22
• 1 week’s pay for each full year of service aged 22–40
• 1.5 weeks’ pay for each full year of service aged 41 or over

Employers must apply the correct statutory cap in force at the date of dismissal. Failure to pay statutory redundancy entitlements may result in tribunal claims.

Further practical guidance is available in our overview of statutory redundancy pay.

3. Fair Redundancy Procedure

To defend an unfair dismissal claim arising from redundancy, employers must demonstrate:

• A genuine redundancy situation
• Meaningful consultation with affected employees
• A fair and objective selection process
• Consideration of suitable alternative employment

In larger-scale redundancies, collective consultation obligations may also arise under separate legislation. However, individual consultation remains necessary even where collective obligations apply.

Employers should align redundancy exercises with established redundancy consultation principles and ensure documentation supports decision-making.

4. Suitable Alternative Employment

Employees unreasonably refusing suitable alternative employment may lose entitlement to statutory redundancy pay. However, suitability is assessed objectively, and reasonableness is assessed subjectively from the employee’s perspective.

Trial periods of up to four weeks may apply in certain circumstances.

5. Common Redundancy Risk Areas

Frequent areas of employer exposure include:

• Predetermined outcomes
• Failure to consult adequately
• Inconsistent application of selection criteria
• Failure to consider redeployment
• Miscalculating redundancy pay

Redundancy dismissals often generate both unfair dismissal claims under section 98 and statutory redundancy pay claims under Part XI.

Section Summary

Part XI of the Employment Rights Act 1996 establishes statutory redundancy pay rights for eligible employees, while section 139 defines redundancy for dismissal purposes. Employers must demonstrate a genuine redundancy situation, follow a fair procedure and calculate statutory payments accurately to minimise tribunal risk.

Conclusion: Why the Employment Rights Act 1996 Remains Central in 2026

The Employment Rights Act 1996 remains the core statute governing individual employment rights in the UK. Although originally enacted as a consolidating measure, it has evolved into a dynamic framework shaped by amendment, case law and interaction with related legislation.

For employers, the Act is not theoretical. It governs:

• Day-one documentation under section 1
• Payroll compliance under section 13
• Whistleblowing and health and safety protection under sections 43A–47B and 44
• Flexible working rights under section 80F
• Statutory notice under section 86
• Unfair dismissal under sections 94 and 98
• Protected conversations and settlement agreements under sections 111A and 203
• Redundancy definitions and statutory redundancy pay under Part XI

Tribunal litigation frequently turns on technical compliance with specific statutory provisions. Documentation quality, procedural fairness and accurate statutory calculations are decisive.

Many rights apply from day one of employment. Others depend on qualifying service. Some, particularly whistleblowing and certain automatic unfair dismissal grounds, carry uncapped compensation risk.

Employers who treat the Employment Rights Act 1996 as a practical compliance framework rather than a background reference point are better positioned to manage risk effectively. Governance, HR training and properly drafted employment contracts remain foundational.

Employment Rights Act 1996 FAQs

What is the Employment Rights Act 1996?

The Employment Rights Act 1996 is the principal UK statute governing individual employment rights. It regulates written particulars of employment, protection from unlawful deductions from wages, statutory notice, unfair dismissal, redundancy pay and various detriment protections.

Who is covered by the Employment Rights Act 1996?

Most core rights under the Act apply to employees working under a contract of employment. Certain provisions, including protection from unlawful deductions and whistleblowing protection, extend to workers. Employment status is determined by legal tests rather than job title alone.

What does section 1 of the Employment Rights Act 1996 require?

Section 1 requires employers to provide a written statement of employment particulars on or before the first day of employment. This must include key terms such as pay, hours, holiday entitlement and notice periods.

What is section 13 of the Employment Rights Act 1996?

Section 13 protects employees and workers from unlawful deductions from wages. Deductions are only lawful if authorised by statute, contractual term or prior written consent.

What is section 98 of the Employment Rights Act 1996?

Section 98 sets out the legal framework for determining whether a dismissal is fair. An employer must show a potentially fair reason for dismissal and that it acted reasonably in all the circumstances.

What is section 111A of the Employment Rights Act 1996?

Section 111A allows employers and employees to engage in protected pre-termination negotiations that are generally inadmissible in ordinary unfair dismissal proceedings, subject to important exceptions.

How is redundancy defined under the Employment Rights Act 1996?

Redundancy is defined under section 139 and arises where dismissal is due to business closure, workplace closure or reduced need for employees to carry out work of a particular kind. Eligible employees with at least two years’ service are entitled to statutory redundancy pay under Part XI.

What happens if an employer breaches the Employment Rights Act 1996?

An employee or worker may bring a claim before an employment tribunal. Remedies may include compensation, reinstatement, re-engagement or statutory financial awards depending on the nature of the breach.

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