UK employment law changes in 2026 and 2027: What SMEs need to do now

Since the Employment Rights Act 2025 received Royal Assent on 18 December 2025, UK employment law changes have been rolling out in phases across 2026 and 2027.

For many small and medium-sized businesses, keeping up with these employment law changes can be overwhelming both in understanding what's changing and knowing which actions to prioritise first. This is especially the case when you don't have a large HR or legal team behind you.

We hosted a webinar in May 2026 where attendees raised a range of practical questions about what employers should be doing. We explored those questions with HR and employment law experts Jemma Fairclough-Haynes (Orchard Employment Law), Juliet Irving (Impact HR), and Oli Moreton (Littler).

Drawing on their advice, along with further government updates, we've pulled together the key employment law changes SMEs need to know about, along with practical steps to prepare for what's coming next.

 

Skip to:

• Unfair dismissal changes in 2027

• "All reasonable steps" and third-party harassment prevention duties from October 2026

• Tighter record-keeping and employment basic requirements

• New trade union laws that impact every business in 2027

• New restrictions on fire and rehire 

• New bereavement leave rights from April 2027

• Changes to flexible working and zero-hours contracts

• The common thread: get your foundations in place now

• Your quick 2026 and 2027 UK employment law changes checklist

• A full breakdown of the Employment Rights Act 2025 changes

 

1. Unfair dismissal changes in 2027

 

Some of the biggest changes in the Employment Rights Act 2025 are the changes being made around unfair dismissals. From January 2027, the two-year qualifying period for unfair dismissal reduces to six months. This means more employees may be able to claim unfair dismissal sooner. The unfair dismissal compensation cap is also being removed, increasing financial risk for businesses.

Further changes are also planned for October 2027 to strengthen dismissal protections for pregnant employees and new parents. Under the government's plans, employers will face tighter restrictions on dismissing employees during pregnancy and for six months after maternity leave. Similar protections are planned for employees taking certain other types of family leave, although the detailed rules are still being finalised.

 

 

And as of 1 October 2026, the time limit for most employment tribunal claims has increased from three months minus one day to six months minus one day, giving employees longer to bring a claim for issues arising on or after that date.

Naturally, employers have a lot of uncertainty around probation and dismissal risk. The employers we spoke to in our webinar wondered whether a six-month probation period is still useful and whether someone can claim unfair dismissal if they fail probation.

Our experts highlighted that a non-renewal or early termination of a fixed term contract is legally classed as dismissal and so, businesses should make sure they follow a fair process, the same as they would when dismissing an employee on a permanent contract.

 

Practical takeaway: Pressure-test your probation and performance processes now

 

Now is the time to tighten your people management processes rather than waiting until the unfair dismissal changes come into force in January 2027. It's also worth checking that your dismissal procedures reflect existing protections for pregnant employees and new parents, ahead of upcoming changes in 2027.

Start by looking at your current probation approach. Keep in mind that length of service determines unfair dismissal risks rather than probation itself. Check which employees will reach six months' service by January 2027 and whether your probation process gives managers enough time to address any concerns.

Remember that some claims, including discrimination and automatically unfair dismissal, don't require employees to have six months' service.

 

Ask yourself:

 

• Are managers clear on what good performance looks like in the role?

• Are review points scheduled early enough to allow time for action if things aren’t going well?

• Are concerns documented properly?

• Do managers know when an informal conversation is no longer enough?

• Do we factor in notice periods when making probation decisions?

 

These questions are especially important if you’re hiring now for roles where performance takes time to judge, such as sales or specialist positions.

Our experts also shared that a six-month probation period may no longer be a comfortable safety net. If you do keep one, it's worth building in an official checkpoint at three or four months so you’re not leaving decisions too late.

You should also revisit your approach to fixed-term contracts and casual arrangements. If you use fixed-term contracts linked to funding, or casual engagement models, make sure managers understand that the end of an arrangement doesn’t automatically make the risk disappear. Clear documentation, fair communication and consistent decision-making will become more important, not less.

 

2. "All reasonable steps" and third-party harassment prevention duties (October 2026)

 

Another significant change in the Employment Rights Act is the increased harassment prevention duties. In October 2024, the law changed so that employers are now required to take reasonable steps to prevent sexual harassment in the workplace, including things like keeping policies and risk assessments up-to-date, providing regular training, and having clear communication and documentation strategies.

Further changes took effect on 30 October 2026 that mean employers must now take "all reasonable steps" to prevent sexual harassment. The key word change here is "all". Having a policy and responding when something goes wrong isn’t enough. Employers must prove they've actively anticipated risks, planned for them and taken practical steps to prevent sexual harassment before it happens.

 

 

 

The other big change that took force on 30 October 2026 makes employers directly liable if a worker is harassed by a third party, such as clients, customers, or patients, and they haven't taken all reasonable steps to prevent it. And this doesn't just apply to sexual harassment, it's for unlawful harassment related to protected characteristics more widely. This means third-party harassment and wider workplace harassment risks need much closer attention.

The consequences for failing to take reasonable steps include a potential uplift of up to 25% in compensation where an employee wins a sexual harassment claim and the employer has breached its preventative duty. Employers may also face enforcement action by the Equality and Human Rights Commission (EHRC).

Harassment prevention duties were a strong concern during the webinar. Employers were asking what these new duties mean, what "all reasonable steps" looks like, and what kind of training is enough for a small business.

 

Practical takeaway: Move from a harassment policy on paper to practical, visible prevention

 

There’s still uncertainty around exactly what that higher bar will require in practice, because the government has said further regulations will set out minimum steps, but those are not expected until 2027 or 2028.

A practical starting point for these changes is to review whether your current approach is genuinely preventative. Look at things like risk assessments, reporting routes, complaint handling and regular training.

 

Ask yourself:

 

• Have we reviewed our harassment risk assessment recently? Does it cover all types of unlawful harassment?

• Does it cover workers as well as employees, and settings such as off-sites, conferences, travel and work-related social events?

• Have managers received training on how to respond to concerns, including informal or off-the-cuff disclosures?

• Is there a clear reporting route for employees and workers?

• Have we considered which groups in your workforce have the most exposure to third parties?

• Where do volunteers fit into our approach, if we use them?

 

 

Our speakers also highlighted the growing significance of third-party harassment for employers. Employers may need to broaden their existing thinking from sexual harassment alone to unlawful harassment more widely.

For SMEs, “all reasonable steps” doesn't necessarily mean complex programmes or expensive interventions. But stale training is unlikely to be enough. Employers should be able to show they’ve:

 

• Identified risks.

• Refreshed training regularly.

• Maintained robust policies.

• Considered what specific preventative measures make sense in their own setting.

 

This last point could include refreshing training with real-life examples, updating reporting processes, reviewing customer-facing terms where appropriate, using event wording or signage to reinforce a zero-tolerance stance, and making sure managers know what to do if an issue is raised at a social event or by a third party.

 

 

3. Tighter record-keeping and employment basic requirements

 

In April 2026, a whole bunch of employment rights changes came into force.

The previous waiting period for Statutory Sick Pay (SSP) has been removed and the Lower Earnings Limit has gone, widening access to sick pay from day one. Paternity and unpaid parental leave also became day-one rights. Sexual harassment became formally classified as a qualifying disclosure under whistleblowing law. And it became mandatory to keep records showing compliance with annual leave entitlement and holiday pay rules for at least six years.

 

 

The government also launched a new enforcement body called the Fair Work Agency (FWA) on 7 April 2026. The agency makes sure that employers follow the rules on things like minimum wage and employment agencies. The FWA will also be responsible for enforcing holiday pay and Statutory Sick Pay rules in stages.

 

 

With powers to inspect workplaces and issue fines, the FWA has raised a lot of questions for employers about their processes. In our webinar, attendees asked how to keep accurate records and whether their employment contracts need updating.

 

Practical takeaway: Audit your documentation and review your record-keeping process before small admin gaps become bigger problems

 

Start by looking at your documentation. That means checking whether your employment contracts, handbook, training and standalone policies still accurately reflect how your business works.

If pay has changed repeatedly over time or you have different versions of employment terms in different places, now is a good time to tidy that up. Make sure you also update your policies to match the new rules enforced by the Employment Rights Act.

The second job is to look at your existing records. Ask yourself:

 

• Are annual leave records accurate and accessible?

• Are sickness and SSP processes consistent?

• Do we document wage changes and contract variations properly?

• Are whistleblowing and concern-raising processes clearly set out?

• Are paternity leave, unpaid parental leave and family-related policies up-to-date?

• Do HR records and payroll records match up?

 

This is also a good opportunity to sense-check where you are relying on manual workarounds. If your team is manually tracking and recording things like holiday, sick leave or contract changes across different systems, that is usually a sign a process needs tightening.

Look into systems that let you store all your records in one secure place with easy but permission-controlled access. Ideally, you’ll be able to request acknowledgements or read receipts from employees once they've read a policy, accepted their contract changes or completed some training.

 

 

4. New trade union laws that impact every business in 2027

 

Whichever sector you operate in, there are trade union changes taking effect throughout 2026 and 2027 that you need to be aware of, even if your employees aren’t members of a trade union.

These reforms are designed to increase trade union visibility and engagement, especially in workplaces that don’t currently recognise a union. We've outlined all the changes on our Employment Law Hub but there are two key points to be aware of.

 

Right to join a trade union

 

From 1 January 2027, employers must give workers a written statement explaining their right to join a trade union. The government is introducing a standardised statement covering what trade unions do, the protections workers have as members, any unions the employer already recognises, and where to find more information. New workers must receive it when they start employment, while existing workers must receive it by 5 April 2027.

 

Right for trade unions to request workplace access

 

As of 30 October 2026, independent trade unions have new rights to request access to workplaces to meet with workers and recruit members. This means trade union representatives may have more opportunities to access workplaces and speak to staff (even if you've previously denied access). This could be in-person meetings, emails, or online calls and you'll have 15 working days to respond to a formal access request.

If you can’t agree on access arrangements, the Central Arbitration Committee (CAC) can decide whether access should be granted and on what terms. Employers can face financial penalties if they breach a statutory access agreement. Businesses with fewer than 21 workers are exempt from having an access agreement imposed on them by the CAC.

 

 

During the webinar, employers wanted to know what some of these trade union changes would mean for their businesses. Questions included whether employment contracts need updating and how to explain trade union rights to staff.

Even if your business has never dealt with a trade union before, it's worth getting familiar with the new rules now. Knowing what information you need to share and how to respond to requests for workplace access will help you avoid confusion later on.

 

Practical takeaway: Prepare statements, update onboarding documents and inform workers and managers of trade union changes

 

Start by checking the government's standardised statement and planning how you'll share it with workers from January 2027. New starters must receive it alongside their written statement of employment particulars. Existing workers must receive it by 5 April 2027, with annual reminders or updates required after that.

You can share the statement with existing workers directly, such as by email, or make it available through your intranet or staff handbook, so long as you meet the rules for telling workers where to find it.

You won't be able to replace the standardised statement with a one-line update to an employment contract. The government has set out what information must be included and when workers need to receive it.

From there, you'll want to look at where trade union rights information should appear across your recruitment and onboarding process.

Ask yourself:

 

• Does our onboarding documentation explain employee trade union rights clearly and consistently?

• Do managers and recruiters know what to say if employees ask questions about union rights or access?

• If trade union representatives requested access, would we know who should respond and what the process would be?

• Is there a consistent internal point of contact for trade union-related queries?

• Does our leadership team understand the likely practical implications?

 

It’s also worth stepping back and looking at the collective employee voice in your small business more broadly. Trade unions often gain traction where there is dissatisfaction and no effective route for concerns to be heard.

Ask yourself:

 

• Are there issues that our employees are unhappy about?

• Do we have existing forums to resolve those issues without the need for a trade union?

• How effective are those forums?
  

 

 

5. New restrictions on fire and rehire  

 

Sometimes, businesses need to change employees' contracts, for example if you’re struggling with rising costs and need to change working hours to keep the business running. To achieve this, some employers use a practice called 'fire and rehire', where they dismiss an employee and offer them a new contract on different, often less favourable terms.

Under the Employment Rights Act 2025, new restrictions on fire and rehire are expected to take effect in March 2027.

The changes mean dismissing an employee to force through certain contract changes will normally count as automatically unfair dismissal. These include reducing pay, changing pension terms or cutting contractual working hours.

There will be a limited exception for businesses facing serious financial difficulties where the changes are absolutely necessary to keep the business going. But employers will need to meet strict conditions to rely on this exception.

The government has also confirmed plans to include certain changes to shift patterns, such as moving employees between day and night shifts, within the new restrictions. At the time of writing, the detailed regulations are still being finalised.

Importantly, the changes don't mean employers can never update employment contracts. Businesses can still agree changes with employees, and different rules apply to changes that fall outside the restricted categories.

 

Practical takeaway: Review how you change employment contracts

 

If you're planning changes to pay or working arrangements, now is a good time to check how your business handles contract updates.

Start by looking at whether your managers understand the importance of consulting employees before making changes. Fire and rehire should already be treated as a last resort, and the new restrictions will make this even more important.

Ask yourself:

 

• Are we planning any changes to pay or contractual working hours?

• Do we understand which contract changes could be restricted under the new rules?

• Do we give employees enough opportunity to discuss proposed changes before making decisions?

• Are managers keeping records of consultation meetings and employee responses?

• If an employee refuses a proposed change, do we know what options are available before considering dismissal?

 

It's also worth reviewing your employment contracts to make sure the terms are clear and up-to-date.

If you're considering dismissing and rehiring employees to change their contracts, seek employment law advice before taking action. The financial risks could be significant, particularly alongside the wider unfair dismissal changes coming in 2027.

 

6. New bereavement leave rights from April 2027  

 

Losing someone close to you is difficult enough without having to worry about whether you can take time off work. At the moment, there's no general legal right to bereavement leave, although eligible parents can take leave following the death of a child under 18 or a stillbirth after 24 weeks of pregnancy.

But under the Employment Rights Act 2025, new bereavement leave rights will be introduced from April 2027.

The changes will give employees a day-one right to unpaid bereavement leave if they lose a close family member, including a spouse or partner, parent, adult child or sibling. The rules will also cover relationships such as stepchildren and foster family members.

 

 

There's also an important change for employees who experience pregnancy loss before 24 weeks. Under the government's plans, employees and their partners will be entitled to up to two weeks of unpaid leave. This includes miscarriage, pregnancy termination and unsuccessful IVF embryo transfers.

 

 

The government has confirmed that employees will be able to take bereavement leave flexibly within 56 weeks of their loss, including as individual days. They won't have to provide evidence of the bereavement, and they'll be protected against dismissal or unfair treatment for taking their leave.

The detailed rules will be introduced through further legislation ahead of April 2027.

 

Practical takeaway: Review your bereavement leave policy before April 2027

 

If your business already offers compassionate leave, check whether your policy will meet the new legal requirements.

Start by looking at who can take leave and how much time off you currently offer. Remember that the new rights will apply from an employee's first day, so you won't be able to make them wait until they've completed probation.

It's also worth thinking about how managers handle sensitive conversations, particularly when an employee has experienced pregnancy loss. Staff shouldn't feel pressured to share personal details to explain why they need time off. 

Ask yourself:

 

• Does our bereavement leave policy cover the family relationships included in the new rules?

• Do we have a clear approach to supporting employees who experience pregnancy loss?

• Will employees be able to take leave flexibly rather than in one block?

• Do managers know how to respond sensitively when someone requests bereavement leave?

• Are we clear about which types of leave are paid and unpaid?

• Can our HR system record bereavement leave without requiring employees to share unnecessary personal information?

 

Although the new statutory entitlement will be unpaid, your business can still choose to offer paid compassionate leave.

If you already offer more generous arrangements, there's no need to reduce them. Just make sure your policies reflect the new minimum rights and that managers understand how to apply them.

 

7. Changes to flexible working and zero-hours contracts

 

If your business offers flexible working or relies on casual staff to cover busy periods, there are more changes on the way under the Employment Rights Act 2025.

Two areas worth paying attention to are how employers handle flexible working requests and the rights of people on zero-hours or low-hours contracts.

 

Flexible working changes from October 2027

 

Employees already have the right to request flexible working from their first day of employment. But from October 2027, employers will face stricter rules when turning down a request.

Under the new flexible working rules, employers will still be able to refuse requests for one or more of the eight business reasons allowed by law. The difference is they'll also need to explain why refusing the request is reasonable.

 

 

The government is introducing further rules about how employers must consult employees before rejecting requests, and at the time of writing these details are still being finalised. This doesn't mean every flexible working request must be approved. But employers will need to give more thought to their decisions and be prepared to explain them.

 

New rights for zero-hours and low-hours workers

 

There are also changes planned for businesses that use zero-hours or low-hours contracts. Under the government's proposals, eligible workers will have the right to be offered guaranteed hours based on the hours they regularly work. They won't have to accept the offer if they prefer to keep their current arrangement.

Workers will also have new rights to reasonable notice of shifts and payments when shifts are cancelled or changed at short notice.

The government hasn't confirmed when these changes will take effect. Further regulations will set out important details, including how the qualifying period for guaranteed hours will work.

 

Practical takeaway: Review flexible working and shift arrangements

 

If your business already receives flexible working requests, start by checking how managers currently deal with them.

Make sure decisions are based on genuine business reasons rather than personal preferences. It's also worth keeping a clear record of why a request was refused and what alternatives were discussed.

For businesses using zero-hours or low-hours contracts, take a closer look at how you organise shifts. If workers regularly work similar hours each week, the new guaranteed-hours rules could affect how you offer them work.

 

Ask yourself:

 

• Do managers understand the existing rules for flexible working requests?

• Can we clearly explain why a flexible working request has been refused?

• Are flexible working requests and decisions documented?

• Do any zero-hours workers regularly work the same hours?

• How much notice do we give workers about their shifts?

• What happens when we cancel or change a shift at short notice?

• Can our current HR system track working hours accurately?

 

There's working and shift planning will make it easier to prepare. 

Keep an eye on government updates, particularly if you rely on casual workers during busy periods.

 

The common thread: get your foundations in place now

 

To prepare for the Employment Rights Act, it’s important to get the basics right. This starts with creating clearer policies and committing to better record-keeping, before making sure managers understand their responsibilities.

If you start there, you'll be in a far better position to respond to the next wave of employment law changes with confidence rather than urgency.

Below we've pulled together a quick checklist with practical actions from this blog post to help you get started.

 

Your quick 2026 UK employment law changes checklist

 

• Review probation and performance management processes ahead of the six-month unfair dismissal qualifying period

• Check dismissal procedures for pregnant employees and new parents

• Refresh sexual harassment risk assessments and staff training

• Review how your business prevents harassment by customers or other third parties

• Audit contracts and HR records to meet the latest employment law requirements

• Check that holiday entitlement and pay records are kept for at least six years

• Prepare trade union rights statements and update onboarding documents

• Make sure managers know how to handle trade union workplace access requests

• Review how your business consults employees about contract changes

• Update bereavement leave policies to reflect the new rights from April 2027

• Check how managers handle flexible working requests

• Review shift planning and working patterns for zero-hours or low-hours workers

 

Want a full breakdown of the Employment Rights Act 2025 changes?

 

This blog covers seven of the key areas SMEs should start preparing for now, but there are more changes coming through 2026 and 2027..

For a complete date-by-date guide, download our free ebook, 2026-2027 employment law changes: the complete guide for managers. It breaks down the key changes that are confirmed and expected, and turns them into clear actions for HR teams, business owners and line managers.