The Employment Rights Act 2025 (ERA) introduces significant reforms that will reshape the employment law landscape. What will this mean for workplace investigations? Overall, employers should expect an increase in the number of investigations they need to carry out, alongside a heightened requirement for those investigations to be thorough, fair and legally defensible. With greater scrutiny and higher stakes, getting the process right will matter more than ever.

What is the ERA changing and what will this mean for employers?

You can read more about all of the changes introduced by the ERA on our dashboard. However,  the following changes are the ones likely to have a significant impact on workplace investigations:

1. Non-disclosure provisions void
   
   In 2027,  the ERA is expected to make any non-disclosure agreement (NDA) provisions void if they prevent an employee from making allegations or disclosures about harassment or discrimination, including the employer’s response to such allegations. This covers all harassment (not just sexual) and discrimination on any ground, and covers third-party harassment claims. The government recently opened a consultation on how these new restrictions on NDAs will operate, and what exceptions will apply. The proposals under consultation include a requirement for prior advice, specific written consent and a cooling off period before an NDA can be valid (known as an “excepted agreement”). Even when an NDA is valid, the government proposes that individuals would always be allowed to disclose harassment to certain people or bodies, including regulators, medical professionals and close family.
   
   This development is likely to change how employers approach workplace investigations. Currently, if an employee agrees to settle their claims in exchange for an ex-gratia payment under a settlement agreement (including standard confidentiality clauses), employers sometimes choose not to pursue a time‑consuming and costly investigation into their allegations - although they must still consider their statutory duty to prevent harassment when making that decision.
   
   Going forward, however, unless employers are able to satisfy the more onerous conditions for a valid NDA  in an excepted agreement, settlement agreements will offer them far less protection in relation to confidentiality and allegations of this nature. If employers are unable to reach an excepted agreement, employees will retain far broader rights to disclosure, including about how the employer has responded, both within the organisation and externally (e.g. potentially to the press). With the possibility that harassment or discrimination allegations could become public at any stage, the reputational risk for employers increases significantly. In light of this, many employers may conclude that it is safer and more responsible to investigate all harassment and discrimination complaints, even where they are hoping to settle.
   
   Practically speaking, it is usually easier to complete an investigation while the employee remains employed.
2. Tougher stance on workplace harassment
   
   From October 2026, the ERA will strengthen the existing employer duty to take “reasonable steps” to prevent workplace sexual harassment to “all reasonable steps”. It will also introduce employer liability for any harassment (not just sexual harassment) of employees by third parties, unless the employer took all reasonable steps to prevent this.
   
   This change means that employers should investigate most, if not all, harassment allegations promptly and thoroughly to comply with their ongoing statutory duties. In particular, the enhanced duty underscores the importance of investigating complaints to ensure that the behaviour in question does not recur. Employers will also be required to investigate allegations of third‑party harassment, even where the third party is under no obligation to participate in the investigation or maintain confidentiality, making the position much more complex.
   
   The higher statutory threshold of taking “all reasonable steps” is also likely to lead to an increase in reports from employees who are aware of employers’ expanded responsibilities. It may also raise expectations around response times and proactive measures, such as ensuring investigators are properly trained. Finally, employers will need to be able to demonstrate, with clear evidence, the steps they have taken in response to complaints, including how they have investigated concerns and addressed any associated patterns of behaviour. Having thorough documentary evidence from an investigation process will be key.
3. Reduced qualifying period for unfair dismissal protection, and removal of the compensation cap
   
   The ERA will reduce the qualifying period for unfair dismissal rights from two years to six months from 1 January 2027. This will mean individuals with six months’ service on or after that date will be able to claim unfair dismissal. As a result, more employees will gain unfair dismissal protection much sooner, increasing the likelihood that dismissals following investigations (e.g. those involving misconduct) will be challenged in the Employment Tribunal.
   
   The government is also planning to abolish the statutory cap on unfair dismissal compensation from 1 January 2027, potentially significantly increasing the financial risk for employers who get dismissals “wrong”.
   
   Given these changes, to avoid expensive claims, employers will need to  follow a fair dismissal process (including, where relevant, a proper investigation) in all cases where employees have six months’ service, rather than only those with two years. This is likely to increase the number of high-quality workplace investigations needed, particularly where the employees involved are highly paid, as any shortcomings in the process could expose the employer to high-value claims. In these circumstances, we can also expect to see a greater demand for HR and legal oversight throughout the process.
   
   As well as following the correct procedural steps to minimise the risk of a dismissal being deemed unfair, employers may also wish to carry out a thorough investigation to gather as much information as possible about what has happened before any decisions are made. Doing so can be important even where a dismissal is ultimately judged procedurally unfair. The employer may still rely on the investigatory evidence to limit the compensation awarded by showing that the employee’s conduct caused or contributed to their dismissal.
4. Whistleblowing about sexual harassment
   
   From 6 April 2026, disclosing sexual harassment was added to the list of what counts as a qualifying disclosure for whistleblowing purposes, as long as it still meets the test of reasonable belief that it is made in the public interest (and the other usual tests needed for it to be a protected disclosure).
   
   The overall impact of this change is expected to be relatively low because most disclosures concerning sexual harassment would already qualify under the existing framework. However, it may encourage more employees to raise such concerns as whistleblowers, generating more complaints that require investigation.

How will the FCA’s approach to non-financial misconduct impact investigations?

Separate to the changes brought about by the ERA, organisations regulated by the Financial Conduct Authority (FCA) will need to be aware that the FCA is introducing a new rule to bring certain types of non-financial misconduct (NFM) within the scope of its conduct rules. Broadly speaking, from 1 September 2026, violence and harassment by staff at non-banks towards their colleagues will now fall within scope, if this occurs in any part of the business that involves SMCR financial activities. This aligns the position at non-banks with that at banks.  This new rule will not apply retrospectively and is supported by proposed new guidance on the application of the conduct rules. The FCA has also proposed extensive new guidance on when NFM will be relevant to an individual’s fitness and propriety. Critically, this makes it clear that a wide range of conduct in an individual’s personal life can be relevant to such assessment. You can read more detail about the changes in our article.

These changes make cases of poor behaviour (and in some cases, poor performance) that might typically have been considered internal HR matters only, a regulatory issue.  This is likely to result in an increased need for  thorough investigations since m  any of them will need to inform complex judgement calls on whether conduct rules have been breached and individuals remain fit and proper to perform their regulated functions.  To ensure the investigation gathers the necessary information, careful thought will be needed at the outset, particularly around issues such as scope. In some cases, upheld allegations of NFM may be career‑ending, making it more important than ever for firms to ensure that investigations are handled correctly.
These changes, when coupled with the removal of the unfair dismissal compensation cap (discussed above) are also likely to heighten the incentive for highly paid regulated individuals to bring Employment Tribunal claims – now, not only will they be seeking a helpful judgment that might assist in clearing their name with the regulators, the valuable compensation that might be awarded will make the time/cost of running a claim more worthwhile.

Given the significant legal, regulatory and reputational stakes, firms may wish to consider engaging external investigators to ensure investigations are conducted robustly and in line with regulatory expectations.

What can employers do now?

Given the recent and upcoming employment law changes discussed in this article, employers should expect an increase in complaints, a greater number of investigations (and more in-depth investigations) and heightened scrutiny of how those investigations are conducted. Collectively, these developments mark a step-change in both the volume and complexity of workplace investigations that employers will be required to manage. In response, employers could consider:

• Reviewing and, if necessary, updating disciplinary and grievance procedures to ensure robust procedural fairness.
• Standardising investigation checklists, templates and decision-making records.
• Investing in in-house investigation capability by training a wider pool of HR practitioners  and managers within the business and/or creating a dedicated centralised investigations function in larger organisations.
• Appointing external investigators to increase investigation capacity, ensure high quality investigations and reduce perception of bias.
• Keeping and maintaining detailed notes of all investigative steps.
• Working with communications and legal teams to develop protocols for responding to public allegations.
• Enhancing culture, prevention and reporting pathways (e.g. refreshing anti-harassment training, increasing visibility of reporting mechanisms and providing training to managers on early intervention and conflict resolution).
• Increasing respective budgets to factor in preparation and likely increase in activity.

If you would like any assistance, please contact our specialist investigations lawyers who will be delighted to help.