UK employment law changes for 2026/27

The ERA 2025 brings significant employment law changes affecting businesses of all sizes. Whether you already employ staff or plan to hire, you need to understand the reforms and your legal duties. This employment law update explains what the new employment laws mean for your business. It covers key changes already in force, as well as further reforms due in 2026 and 2027.

As a certified B Corporation and accredited real Living Wage employer, Rapid Formations recognises the value of responsible employment practices. We explain how upcoming employment legislation changes may require you to review payroll systems, contracts, and workplace policies to stay compliant.

UK employment law changes at a glance: 2026 – 27 timeline

The upcoming implementation dates may change, so monitor the government’s implementation timeline for the latest updates.

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What is the Employment Rights Act 2025?

The ERA 2025 introduces major new employment law reforms that strengthen workplace rights and broaden employer responsibilities. Its sweeping employment legislation changes impact rules across SSP, family leave, trade unions, workplace protections, flexible working, and unfair dismissal.

The ERA 2025 became law on 18 December 2025. The government is introducing the reforms in phased stages from 2025 to 2027. This gives employers time to prepare for new requirements and allows consultations on measures that need further regulations.

The ERA 2025 mainly applies in Great Britain. Northern Ireland has its own separate employment law framework.

The reforms will affect employer costs, resources, and compliance obligations. Employers should keep up to date with upcoming changes. Several new employment rules are already live, and others will apply later in 2026 and 2027.

Employment law changes already in force in 2026

Several important employment law changes took effect in April 2026, including reforms to SSP, family leave, holiday records, and collective redundancy. As a business owner, you should prioritise compliance, update relevant documents, keep accurate records, and train managers on the new rules.

Day-one Statutory Sick Pay

Employers must now pay SSP to eligible staff from the first qualifying day of sickness absence. The previous waiting period and Lower Earnings Limit have been removed, so more people qualify for SSP.

Employers may therefore face higher sickness-related costs, including for short-term absences.

Day-one paternity leave and unpaid parental leave

Eligible employees now have day-one rights to paternity leave and unpaid parental leave. They no longer need a qualifying service period before taking these types of leave. Employees can also now take paternity leave after shared parental leave.

Requests may now arise earlier in employment. Update family leave processes, policies, and staff handbooks to reflect the new rules. Train managers on eligibility and notice requirements so they can respond correctly.

Holiday record-keeping requirements

Employers must keep adequate annual leave and holiday pay records showing statutory compliance for at least six years from creation. Records should cover leave taken or carried over, holiday pay calculations, and payments for unused holiday when employment ends. Failure to comply is a criminal offence punishable by a fine.

Higher penalties for collective redundancy failures

Employers proposing 20 or more redundancies at one establishment within 90 days must follow collective consultation rules. The maximum protective award for collective consultation failures has doubled from 90 to 180 days’ full pay per affected employee.

This may be less relevant to many small businesses, but it’s still important to understand. Check redundancy consultation duties early, follow the correct process, and seek legal advice before making redundancies.

The New Fair Work Agency

The government established the Fair Work Agency on 7 April 2026 to coordinate enforcement of key employment rights. It has a range of powers and is expected to gain more over time. The Fair Work Agency can inspect and investigate employers and issue notices and penalties within its remit.

Review your employment practices and records now so you can demonstrate compliance and reduce risk.

Employment law changes coming in October 2026

October 2026 marks an important stage in the employment law reforms. Some changes took effect at the start of the month, with others due later in October. Employers should use this period to stay informed and plan for new changes.

Longer time limits for employment tribunal claims

Most tribunal claim time limits increased from three months to six months minus one day. Previously, most deadlines were three months minus one day. Put simply, the longer time limit generally applies where the relevant event occurs on or after 1 October 2026. The longer time limit won’t apply retrospectively to acts an employee complains about which pre-date 1 October.

The longer time limit increases the period in which employers may face legal action and uncertainty. Keep clear records of employment decisions and update internal guidance and training. Review record retention procedures to make sure evidence is available if you need it to defend a later claim.

A stronger duty to prevent sexual harassment at work

From 30 October 2026, changes to workplace harassment legislation are expected. Planned reforms will require employers to take “all reasonable steps” to prevent sexual harassment. This is a higher standard than the current duty to take reasonable steps.

Employers may also face liability if customers, suppliers, or other third parties unlawfully harass employees during their work. This applies where employers fail to take all reasonable steps to prevent it.

Refresh harassment risk assessments and put suitable safeguards in place. Provide training, set clear reporting routes, and support an anti-harassment culture. Document the steps you take to demonstrate compliance.

Expansion of right-to-work checks

Immigration-related duties are also changing. From 1 October 2026, right-to-work checks expanded beyond employees. Section 48 of the Border Security, Asylum and Immigration Act 2025 extends illegal working rules to certain workers, individual subcontractors, and people finding work through some online matching platforms.

Review worker, contractor, and subcontractor arrangements to understand your right-to-work duties and potential civil penalty risks. Check who needs a right-to-work check and update procedures promptly.

Changes to unfair dismissal and fire and rehire in January 2027

The government plans important employment law changes in January 2027. These reforms will affect dismissal decisions, contract changes, and employer risk. Employers should understand the changes now and plan ahead before the new rules take effect.

The unfair dismissal qualifying period drops to six months

From 1 January 2027, ordinary unfair dismissal protection will generally apply after six months’ continuous service, instead of two years. The government will also remove the statutory cap on compensatory awards under unfair dismissal law. This means higher potential liability and uncapped compensation, increasing risk significantly.

The new qualifying period will apply to dismissals where the termination date is on or after 1 January 2027. This means that someone with 6 months’ service on or after that date will be able to make a claim.

New restrictions on fire and rehire

Fire and rehire means dismissing employees and offering re-hire on different, and often worse, terms. The government plans changes to the fire and rehire law from January 2027.

Dismissals to impose certain pay cuts, hour reductions, pension, or holiday changes will generally become automatically unfair. This includes rehiring or hiring replacements on those terms.

A narrow exception covers financial difficulties threatening business survival now or in the immediate future. Employers must show they couldn’t reasonably avoid the changes.

Carefully consider rules, train managers, and update contracts to reduce risk, including reviewing variation clauses.

New trade union rights

From 1 January 2027, the government will require employers to give workers written statements about rights to join a trade union. This is in addition to various other trade union reforms. Upcoming regulations will lay out further details on this requirement.

Once the government publishes relevant information, revise onboarding and induction materials for new starters to cover the rules. You’ll also need to decide how the information will be given to existing workers.

Further employment law changes expected in 2027

The government plans further ERA 2025 reforms in 2027. These will affect working hours, flexible working, and family-related rights. Not all dates or details are confirmed, so monitor developments closely. Plan for how the reforms could affect staffing arrangements and costs.

Zero-hours contracts and guaranteed hours

Under planned 2027 rules, employers will need to offer guaranteed hours to eligible workers on zero-hours contracts and some low-hours contracts. These hours will reflect their regular working patterns. Workers can accept or reject the offer, receive reasonable notice of shifts, and could get compensation if shifts are cancelled. The rules will also apply to eligible agency workers.

These changes could impact working arrangements and labour costs. Employers should monitor developments, audit zero-hour and irregular-hour working arrangements, and plan how to manage casual workers.

Stronger protection for pregnant employees and new mothers

The government plans to strengthen dismissal protections with enhanced safeguards for pregnant employees and new mothers in 2027. The protections are expected to cover pregnancy, maternity leave, and a period after returning to work.

Review policies in line with new rules, train managers on the changes, and take legal advice before making dismissal decisions.

Bereavement leave

In 2027, eligible employees should gain up to two weeks’ unpaid bereavement leave from day one of employment. The right will cover deaths of certain family members and pregnancy loss before 24 weeks.

Update bereavement policies and procedures to get ready for the new requirements and train managers on the new rights.

Changes to flexible working

Planned flexible working reforms are expected in 2027. You’ll need a statutory business reason, to consult, and give a written explanation of why your refusal is reasonable. This pushes a greater onus on employers refusing requests.

Look at your flexible working practices, plan ahead, and train managers on the new flexible working law.

Changes from 2024 and 2025 that still apply

Employment law reforms introduced earlier still apply, until any relevant changes take effect:

• Employees can make up to two statutory flexible working requests in any 12 months, from day one. You’ll need to handle requests in a reasonable manner.
• Eligible employees can take up to one week of unpaid carer’s leave every 12 months.
• Eligible employees can take up to 12 weeks of neonatal care leave.
• Offer suitable alternative vacancies as priority to pregnant employees (and other eligible employees) during redundancy, where available.
• Remember specific holiday rules applying to irregular-hours and part-year workers.
• Eligible employees can take paternity leave in two separate weeks.
• Share qualifying tips, gratuities, and service charges fairly and transparently.
• Follow the Dismissal and re-engagement: code of practice when considering dismissal and re-engagement to change contract terms.

Statutory pay rates for 2026/27

Employers should be aware of the current statutory pay rates.

What the changes mean for small businesses and how to prepare

This is the biggest overhaul to employment law in recent years, and compliance requires ongoing review and planning.

If you run a small business or plan to hire your first employee, review your workforce practices now. These reforms may increase costs, employer duties, and make claims more likely.

You should build these reforms into your HR documentation, staffing plans and budgets now. Investing time in contracts, policies, training, and processes is key. Your business should establish strong governance to prevent risk.

It’s better and cheaper to invest in training, documentation, and compliance now than face a claim or penalty later.

Key actions to consider include:

• Plan for the financial impact of the changes and budget ahead for increased costs. Make sure your payroll systems are set up for day-one SSP and budget for more costs.
• Review and manage probation periods actively. Set clear expectations, hold regular reviews, and address performance concerns early. Record feedback, decisions, and improvement plans.
• Update employment contracts, written statements, and workplace policies.
• Check workplace policies cover applicable legal requirements, including harassment, flexible working, family leave, sickness absence, and tipping where relevant.
• Support your policies with regular training for managers and staff, and keep both under review as the law develops.
• Keep accurate employment records, document key decisions, and maintain clear audit trails. Robust records can help demonstrate compliance and reduce risk.
• Keep annual leave and holiday pay records for at least six years from creation.
• Carry out sexual harassment risk assessments, identify areas of risk, and take appropriate preventative steps.
• Keep detailed records of employment decisions and compliance steps, which could be crucial in an employment claim.
• Stay clear of fire and rehire practices, which can cause significant legal risks.
• Add key compliance dates to your calendar and take legal advice as needed.

Employment law is one part of running a compliant business. For employment advice, contact the Acas helpline. If you haven’t already, you can register your company with Rapid Formations. Our Hassle-Free Compliance service helps company owners save time and money with legally reviewed business documents and company filings.

Disclaimer. This article provides general information on key employment law reforms at a high level for businesses in England and Wales. It does not cover every change, and various other reforms may affect your business. The impact of the changes on your business will depend on your circumstances and working practices. Consider seeking legal advice for detailed guidance on employment law rules and their specific impact on your business operations.