Upcoming Employment Law Changes for SMEs in the UK
Updated: Aug 21
Another significant set of employment law reforms arising from the Employment Rights Act is on the horizon. Expectations placed on employers are increasing. The changes are phased across late 2026 and into 2027. Preparing now will make the transition far smoother. Here’s a clear breakdown of what’s coming and what it means for your business.
Key Changes to Employment Law
Obligation to Notify Workers of Their Right to Join a Trade Union
October 2026.
Employers will be required to provide workers with an explicit statement confirming their right to join a trade union. This will form part of the required written particulars issued at the start of employment for every employee. SMEs should update onboarding documentation and ensure the information is communicated clearly.
Trade Union Access Rights
October 2026.
Unions will gain wider rights to access workplaces, including digital access, under a new statutory framework. This will make it easier for unions to engage with workers in organisations that have not previously been unionised, as well as those with existing recognition. Employers should prepare for more structured engagement and ensure managers understand the new process and their responsibilities.
Stronger Duties to Prevent Harassment
October 2026.
Employers must take all reasonable steps to prevent harassment, including harassment by third parties. Policies, training, and reporting routes should be reviewed. Businesses will need to consider third-party risks.
Extended Tribunal Time Limits
October 2026.
Employees will have six months to bring employment tribunal claims, an increase from the current three-month time limit. This longer window means issues may resurface later than before. Keeping thorough records will be essential.
Unfair Dismissal Qualifying Period Reduced
January 2027.
The qualifying period for unfair dismissal will fall from two years to six months. This significant shift brings earlier protection for employees. It places greater emphasis on fair, well-documented processes from the very start of employment. Probation periods, early performance management, and clear communication will become even more important as employees reach eligibility much sooner.
Uncapped Unfair Dismissal Compensation
January 2027.
The financial cap on compensation will be abolished for dismissals. Poorly handled dismissals could become significantly more expensive. Clear procedures and manager training are essential.
Restrictions on Fire-and-Rehire
January 2027.
Dismissals used to impose changes to key employment terms will become automatically unfair. Businesses will need to rely on genuine consultation and agreement rather than unilateral change.
Further Changes Expected in 2027
Further changes are expected later in 2027 that will continue to strengthen worker rights. Proposals include:
Guaranteed hours for zero-hours workers.
New rights to reasonable notice of shifts and compensation where work is cancelled at short notice.
Stronger flexible working rights, with employers needing to demonstrate that any refusal is genuinely reasonable and supported by a clear consultation process.
New limits on the use of NDAs, particularly in cases involving harassment or discrimination.
What This Means for SMEs
These reforms will raise expectations around consultation, documentation, and early-stage people management. Employers will need to ensure onboarding reflects new trade union rights. Managers must be equipped to prevent and respond to harassment. Dismissal decisions should be supported by clear, well-evidenced processes.
With earlier unfair dismissal protection, uncapped compensation, and extended tribunal deadlines, the risks linked to poor handling increase. Preparing now will help SMEs strengthen compliance and reduce legal risk.
One way to start is by reviewing your current HR practices. This proactive approach will help you navigate these changes confidently.
About Empower People HR
Empower People HR is an independent HR consultancy supporting SMEs across Sussex and beyond. We regularly share practical employment law updates and people management guidance to help employers navigate change with confidence.
As a starting point, businesses can access our free HR Health Check to review their existing HR arrangements and ensure key foundations are in place: EPHR Health Check
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