The UK employment landscape is undergoing significant reform following the introduction of the Employment Rights Act. The legislation represents one of the most substantial updates to employment law in recent years and will introduce a range of new responsibilities for employers across England, Scotland and Wales.
While some measures have already taken effect, further changes will be introduced throughout 2026 and 2027. Businesses that employ staff should start reviewing their employment practices now to ensure they remain compliant.
Unfair Dismissal Rights Reduced to Six Months
One of the most significant changes for employers will take effect from 1 January 2027. Currently, employees generally need two years’ continuous service before they can bring an ordinary unfair dismissal claim. Under the new rules, this qualifying period will be reduced to six months.
In practice, any employee who has completed six months’ continuous service by 1 January 2027 will gain the right to pursue an unfair dismissal claim. This means that employees hired on or before 1 July 2026 are expected to benefit from the new protection immediately when the changes take effect.
For employers, this shortens the timeframe available to assess whether a new recruit is suitable for the role. Recruitment processes, probation periods and performance management procedures may need to be reviewed accordingly.
Reforms to Zero-Hours Contracts
Workers engaged on zero-hours contracts will gain additional protections. Employers will be required to offer contracts that reflect the hours regularly worked over a reference period. Workers may also become entitled to compensation where shifts are cancelled, shortened or changed without sufficient notice. Agency workers are expected to receive similar protections.
Day-One Rights to Family Leave
Employees will gain access to unpaid parental leave and bereavement leave from the start of their employment, removing existing service requirements.
Flexible Working Becomes the Default Position
The legislation aims to strengthen employees’ ability to work flexibly. Employers will need to carefully justify any refusal of a flexible working request and demonstrate that the decision is based on legitimate business grounds.
Additional Protection for Pregnant Employees and New Parents
Further safeguards are expected for employees during pregnancy and after returning from maternity leave. While detailed regulations are still being developed, the government has indicated that dismissal protections may be extended beyond the current arrangements.
Regulation of Umbrella Companies
The government intends to introduce greater oversight of umbrella companies, which may affect businesses that engage temporary or contract workers through these arrangements.
Mandatory Gender Pay Gap and Menopause Action Plans
Following a voluntary introduction phase, larger employers are expected to face new obligations relating to gender pay gap reporting and menopause workplace support.
Statutory Sick Pay Changes
Employees are now entitled to receive Statutory Sick Pay from the first day of sickness absence, rather than after three waiting days. In addition, eligibility is no longer restricted by the previous lower earnings threshold, allowing more workers to qualify for SSP.
Restrictions on “Fire and Rehire” Practices
From January 2027, employers will face tighter restrictions on dismissing employees and offering re-engagement on less favourable terms. Organisations that fail to comply with the new requirements could face financial penalties and employment tribunal claims.
Many of the forthcoming employment law changes will have direct implications for payroll processes. Outsourcing payroll to a specialist provider like Payroll Junction can help you stay up to date with changing legislation and reduce the risk of costly errors. Get a quote today!