Employment law changes that have come about in the UK
By Temple & Green Team
Cast your mind back 26 years to 1999. It was a memorable year for many reasons. The Euro was introduced, the Good Friday Agreement came into effect and more importantly it was the year that Manchester United won the treble. It was also the last time there was a major overhaul of workers’ rights with the introduction of the Employment Relations Act 1999, which included expanded family leave rights and better employee rights at disciplinary and grievance hearings.
Now back to the present and the UK employment landscape is going through its biggest shake-up in a generation where employment law advice for employers is especially important. The Employment Rights Act 2025 received royal assent on 18 December 2025 and is now being rolled out in phases across 2026 and 2027 and for employers, HR teams and in-house counsel. Keeping pace with the changes is no longer optional.
The Employment Rights Act 2025
The Act started life as the Employment Rights Bill back in October 2024 and was billed by government as the most significant overhaul of workers' rights in decades. Like its 1999 predecessor, it covers a lot of ground, touching unfair dismissal, sick pay, trade union recognition and whistleblowing among other things. Rather than landing in one go, it's arriving in stages, with major updates due in April, August and October 2026, and further changes running through 2027. That gives businesses time to prepare, but it also means compliance expectations will keep shifting for the next year and a half or so. Take a look here to understand what this reform means for UK businesses.
Unfair dismissal protection
The change getting the most attention is to unfair dismissal rights. The original proposal would have made protection from unfair dismissal a day-one right for everyone. After consultation and some last-minute wrangling, the government settled on a shorter qualifying period of six months instead of the current two years. That change takes effect from January 2027, alongside the removal of the cap on unfair dismissal compensation, currently set at 52 weeks' gross pay or £118,223, whichever is lower. Employees dismissed for an automatically unfair reason, such as whistleblowing or pregnancy, already have day-one protection and that won't change.
Statutory sick pay from day one
From April 2026, statutory sick pay is payable from the first day of sickness. The lower earnings limit goes, as does the current requirement to be off work for more than three days before payments kick in. SSP will be paid at the lower of a fixed flat rate or 80% of an employee's average weekly earnings. It's a real shift for lower-paid and part-time staff, many of whom previously fell outside the system altogether.
Restrictions on fire and rehire
Fire and rehire, dismissing staff and re-employing them on worse terms, is being significantly curtailed. From January 2027, dismissing an employee because they refused to accept a "restricted variation" to their contract, such as a pay cut or a change to guaranteed hours, will be automatically unfair in most cases. There's a narrow exception where an employer can show the business faced genuine financial difficulty with no reasonable alternative. Any employer who has leaned on this tactic to push through contractual change will need to rethink that approach in favour of consultation and negotiation.
Whistleblowing protection widens to cover sexual harassment
From April 2026, disclosing sexual harassment counts as a qualifying disclosure under whistleblowing law. Workers who report sexual harassment will get the same protection from detriment and unfair dismissal as those blowing the whistle on other wrongdoing. This sits alongside a wider duty landing in October 2026, requiring employers to take "all reasonable steps" to prevent sexual harassment, including harassment by third parties such as clients or customers.
A new enforcement body: the Fair Work Agency
Arguably the biggest structural change is the creation of the Fair Work Agency, which began operating on 7 April 2026. It brings together several existing labour market enforcement functions into a single body with powers to investigate employers, demand information, enter premises, issue financial penalties and bring claims on behalf of workers. Its remit also covers holiday pay compliance, an area workers have historically found hard to enforce on their own. Its arrival marks a shift towards more proactive, state-led enforcement rather than leaving it to individuals to bring tribunal claims.
Wider changes on the horizon
A few other reforms are worth flagging. The maximum protective award for collective redundancy consultation failures is doubling from 90 to 180 days' gross pay. Trade union recognition rules are being simplified from April 2026, with electronic and workplace balloting following in August 2026. Employers will also need to keep annual leave and holiday pay records for at least six years. Gender pay gap and menopause action plans become voluntary from April 2026, ahead of becoming mandatory for larger employers from 2027.
What employers should be doing now
With so much change arriving in stages, the sensible approach is to start preparing well ahead of each date rather than waiting for the law to bite. That means reviewing contracts and policies on sickness absence, family leave and whistleblowing, training managers on the expanded risks around dismissal and harassment and rethinking any plans that rely on fire and rehire. It could be an opportunity in disguise given the importance of contracts in business as we’ve outlined in this article. Employers who get ahead of these changes will be far better placed to manage risk than those who leave it until the deadlines are already upon them.
Fortunately for UK companies, Temple & Green provides employer legal advice and support in navigating these legislative changes. Get in touch with us to guide you through them and execute a strategy that works for your business.
