Employment: Looking ahead to 2026 and beyond – ready for change?

With major employment law changes on the horizon, we’ve partnered with a leading local employment solicitor to keep you informed with clear, accurate updates on what’s changing and how it could impact your business.

The start of a new year.  A time for reflection and yes, change.

2025 ended with the implementation of the Employment Rights Act 2025. There was much debate about whether the Employment Rights Act 2025 would ever become law, but after much debate and amendment, the Act finally received Royal Assent just before Christmas.

So, what is to change and are you ready? With further consultation to take place, there remains some uncertainty about the proposed changes and the implementation timetable. However, the key changes to be implemented have now been identified, allowing businesses time to futureproof and take necessary action.

Key changes:

Unfair dismissal rights

Currently, employees need 2 years' service to qualify for protection from unfair dismissal.  The ERA 2025 will reduce the qualifying period to a much shorter service requirement of 6 months, bringing more employees within the scope of this statutory protection.  This will be welcome news for many employees.  However, it does mean that employers will look to more effectively manage performance and respond quickly where an employee is unable to demonstrate their ability to perform to the required standard.

Whilst the implementation date remains uncertain, commentators suggest this is likely to be implemented 1 January 2027 allowing employers time to review their onboarding and probationary procedures to ensure they are fit for purpose.

Removal of unfair dismissal compensatory cap

This was an unexpected change that appears to have enabled the legislation to get over the finish line.  Currently, the award for unfair dismissal is capped at the lower of 52 weeks' pay or £118, 223.  The ERA 2025 will remove the cap.  Whilst it is hoped this will incentivise employers to adhere to the law, this will impact on only a small proportion of claims, with most unfair dismissal claims not achieving compensation anywhere near the current cap. Again, the implementation date has not been specified but many expect this to be introduced at the same time as the amendment to qualifying service provisions. The hope is that this will reduce the number of discrimination and whistleblowing claims pursued by claimants to inflate the claims value for settlement purposes.

Increase time limit

The currently 3-month limitation date allows little time for conciliation, and often results in claimants engaging in litigation at a time when they are not best placed to make informed decisions and where their principal desire is to reach a settlement without recourse to litigation.  Whilst this does mean, especially when in conjunction with the recent extension to early conciliation periods, that litigation may not come to fruition until many months after the act complained of it does afford both parties an opportunity to resolve a dispute without recourse to protracted litigation, which can only be beneficial to both sides and may reduce strain on the Tribunal system.

Again, the implementation date is not thought to be before October 2026.

Parental leave and paternity rights

One of the first changes we expect to see toward to end of this year is changes to parental leave and paternity leave that are set to become a day 1 right.

Family friendly provisions

Currently employees can request flexible working from day 1.  Employers are only permitted to refuse the request based on specific grounds.  Under the proposal changes expected in 2027 an employer’s refusal must be reasonable and explained in writing.

Other enhanced protection against dismissals relating to family leave and in relation to bereavement leave are also expected in 2027.

Sexual harassment

The current protections against sexual harassment which were recently subject to amendment (see my earlier blogs) are expected to be further bolstered in late 2026.

Fire and rehire

The original proposal to impose an outright ban on fire and rehire has been watered down but nevertheless the ability to impose such practices is significantly restricted in proposals expected to come into effect later in 2026, with implications for defaulting employers to be found to have automatically unfairly dismissed employees dismissed for refusing to accept changes to key contractual terms and where applicable exemptions, based on financial constraints of the company are found not to apply.

Industrial relations

Most immediate are as raft of protection aimed at strengthening rights of trade unions that were eroded by previous governments. Changes include simplification of processes for union recognition, strengthening rights of access for trade unions, enhanced protection for employees against dismissal for taking part in industrial action and enhanced protection for union representatives.

How can Lawson-West help?

Their team is extremely friendly and experienced; they’ve handled every instance of employment claim that can be made, not just locally, but nationally, too. You will be in safe hands. Contact them or call 0116 212 1000. 

https://www.lawson-west.co.uk/employment-rights-looking-ahead-to-2026-and-beyond-are-you-ready-for-change/

For hiring advice, contact the Precision team here or call today on 0116 254 5411.