Qualifying period for unfair dismissal rights

Throughout the progression of the Employment Rights Bill, ICAEW has proactively engaged with parliamentary stakeholders to share members’ concerns, particularly around cumulative business costs, unfair dismissal, and the impact on SMEs.

ICAEW’s advocacy contributed to the government reconsidering its approach in response to strong business concerns. Ultimately, ICAEW’s position was reflected in a significant policy change: the government dropped the proposal for day-one unfair dismissal protection, opting instead for a six-month qualifying period.

Ahead of key stages – including the second reading and committee stage in the Lords, and the Bill’s return to the Commons – ICAEW sent targeted briefings to peers, as well as to government and opposition MPs.

ICAEW has called for:

• exemptions for small and microbusinesses,
• reductions in the administrative burden of flexible working, and
• a more balanced approach to probation and dismissal. 

ICAEW’s positions have been repeatedly referenced during parliamentary debates and in the press, with Lord Leigh further amplifying ICAEW’s position in an op-ed for CityAM.

We were able to provide specific member insights to support Lord Vaux of Harrowden (an ICAEW member himself) in bringing forward an amendment to implement a qualifying period for unfair dismissal protections. Meanwhile, Lord Londesborough referenced ICAEW research while calling for a full business impact assessment of the proposed regulations.

ICAEW’s Business Confidence Monitor was mentioned in committee debates and in the Bill’s final session, Lord Sharpe quoted an ICAEW member saying: “We worry businesses will start playing it too safe, choosing a ‘safe pair of hands’ over bold, innovative talent that could drive real change.

The addition of a six-month qualifying period for unfair dismissal rights, informed by ICAEW member feedback, balances employee protections with business needs and has been widely welcomed by stakeholders.

Shaping the UK’s industrial strategy

ICAEW engaged extensively with the government as it developed its industrial strategy, in particular helping to shape the Professional and Business Services sector plan.

Engaging with key stakeholders, including the Secretary of State for Business and Trade, Jonathan Reynolds, and the Minister for Industry, Sarah Jones, ICAEW emphasised the vital role of the accountancy profession in the UK’s economy and called for a focus on developing skills needed for growth. ICAEW underscored the importance of supporting future-focused industries, such as technology and net-zero initiatives, to ensure long-term prosperity for the UK.

ICAEW convened a roundtable bringing member firms from across the UK and officials from the Department for Business and Trade together to discuss the professional and business services facet of the industrial strategy. A wide range of issues were covered, including regulatory challenges, audit reform, innovation and the talent pipeline.

Following the publication of the industrial strategy, ICAEW advocated for:

• simplifications to the application process for the AI Upskilling Fund,
• bespoke resources to facilitate scale-ups in the UK, ensuring access to financial advice is more readily available, and
• making Local Skills Improvement Plans a key part of any drive to invest in a specific area.

In addition, ICAEW also fed into other government strategies this year – from trade, to financial services, to small business.

Funding for apprenticeships

Another policy priority for ICAEW in 2025 was funding for Level 7 apprenticeships. In the face of government proposals, ICAEW consistently warned that funding for Level 7 apprenticeships should remain for those aged 25 and under, given their role in the economy and in enabling social mobility.

Letters were sent to a range of political stakeholders on the possible consequences for the UK’s long-term growth prospects, including:

• Secretary of State for Business and Trade Jonathan Reynolds,
• Secretary of State for Education Bridget Phillipson,
• Shadow Secretary of State Laura Trott,
• Shadow Education Minister Neil O’Brien, and
• members of the Education Select Committee. 

ICAEW’s Chief Executive, Alan Vallance, also raised the issue when he met with Shadow Secretary of State for Business and Trade Andrew Griffith. In a parliamentary debate on apprenticeships, Shadow Education Minister Neil O’Brien referenced ICAEW’s concerns that removing the funding will lead to work leaving the UK.

In April, ICAEW, ACCA and CIPFA issued an open letter raising concerns about government plans and suggested an alternative of restricting Level 7 levy funding to under-25s.

The government ultimately confirmed that Level 7 apprenticeship funding will be scrapped for those over the age of 21 from the start of January 2026. Following the announcement, ICAEW expressed disappointment with the decision – highlighting that the average age of students starting Level 7 apprenticeships in this priority sector is 22.

ICAEW has maintained communication with member firms throughout and has urged the government to review the impact of its decision on growth after 12 months.

Audit and corporate governance reform

ICAEW engaged extensively this year on the long-awaited Audit and Corporate Governance Reform Bill. Several meetings took place with ministers, advisers and senior officials in the Department for Business and Trade, and briefings were shared with ICAEW members in the Lords and other peers.

ICAEW argued consistently for the importance and urgency of this legislation, in strengthening the sector and in providing much-needed certainty to businesses. Issues, such as managed shared audit and ways to encourage a more competitive sector, were discussed, including lowering regulatory barriers for a more dynamic market.

Chief Policy and Communications Officer Iain Wright offered ICAEW’s assistance in amplifying ministerial messages and providing member views on policy areas, including director responsibilities and the definition of public interest entities.

In July, the government confirmed that the draft Audit Reform and Corporate Governance Bill would not be put forward for pre-legislative scrutiny in this parliamentary session.

ICAEW subsequently reached out to political stakeholders to reiterate its view that a statutory regulator, with proportionate powers and a focus on growth, would:

• strengthen investor confidence,
• help prevent disorderly corporate failure, and
• support the UK’s status as a global hub for capital and investment. 

ICAEW believes these reforms constitute urgent and necessary legislation, and it has warned policymakers against the loss of momentum on an initiative that is vital to unlocking growth and boosting resilience.