Employment Law in 2026: The Rules Have Changed- Has Your Business Changed With Them?

For UK employers, 2026 is proving to be a year of significant employment-law change.

The Employment Rights Act 2025 is introducing reforms in stages, with some important changes already in force and further changes scheduled for 2027.

For SMEs, the challenge is not simply understanding the legislation.

It is making sure that employment contracts, policies, payroll systems and management practices actually reflect the new rules.

Some important changes are already here

From 6 April 2026, significant changes were introduced to Statutory Sick Pay.

The lower earnings threshold was removed and the waiting period was abolished, meaning eligible employees can receive SSP from the first full day of sickness absence.

There were also changes concerning parental leave, paternity leave and protections relating to sexual harassment and whistleblowing.

These changes are not just an HR issue.

They affect payroll, employment contracts, absence management and the way managers deal with employees.

And 2027 is approaching

Perhaps one of the most significant forthcoming changes concerns ordinary unfair dismissal.

The Government's current timetable provides for the qualifying period for ordinary unfair dismissal protection to reduce from two years to six months, with the change expected to take effect from 1 January 2027, subject to the legislative timetable.

For employers accustomed to thinking:

"They've been here less than two years, so we can dismiss them."

that approach will need to change.

There are already important day-one protections, including discrimination and automatically unfair dismissal protections. The forthcoming change would substantially alter the position for ordinary unfair dismissal claims.

Why SMEs should act now

Employment problems rarely begin with a tribunal claim.

They often begin much earlier.

Perhaps:

• a manager has failed to document performance concerns;

• an employee has raised an informal complaint;

• an absence problem has not been addressed;

• a disciplinary process has been handled inconsistently;

• an employment contract is out of date; or

• an employee has been dismissed without a clear process.

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When the employment relationship breaks down, those earlier decisions suddenly become important.

Your handbook may already be out of date

Many businesses update their staff handbook occasionally perhaps once every few years.

That approach is becoming increasingly risky.

Employers should consider whether their policies properly address areas such as:

• sickness absence;

• family leave;

• flexible working;

• disciplinary procedures;

• grievances;

• harassment;

• whistleblowing;

• equality and discrimination;

• redundancy; and

• employee monitoring and technology.

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The Government's current implementation timetable also includes further changes later in 2026 and 2027.

Good employment practice is good risk management

Employment law is sometimes treated as something businesses turn to when an employee threatens a tribunal claim.

That is too late.

A well-run business should ideally have:

clear contracts + clear policies + properly trained managers + good records + consistent procedures.

That combination can make difficult employment situations much easier to manage.

Managers need training too

One of the most overlooked aspects of employment compliance is the role of line managers.

An employer may have an excellent HR policy.

But if a manager says something inappropriate in a meeting, ignores a grievance or handles a disciplinary issue badly, the policy will not solve the problem.

Managers should understand when they need to involve HR or obtain legal advice.

What should employers do before 2027?

A sensible review could include:

Employment contracts

Are your contracts compliant with current requirements?

Staff handbook

Do the policies reflect the latest legal position?

Absence management

Has payroll been updated for the new SSP rules?

Disciplinary and performance procedures

Are managers following a consistent process?

Harassment and whistleblowing

Are employees and managers aware of the strengthened protections?

Dismissals

Are managers prepared for the forthcoming reduction in the unfair-dismissal qualifying period?

The important point

Employment law is becoming more demanding.

But compliance does not have to be complicated.

For SMEs, the most effective approach is often to identify the areas where legal risk is greatest and address them systematically rather than waiting for a dispute.

At Pure Business Law, we advise employers on employment contracts, staff handbooks, disciplinary and grievance procedures, restructuring, redundancy and contentious employment matters.

If your employment documentation has not been reviewed recently, 2026 is a good time to ask whether it still reflects the law — and the way your business actually operates.

This article reflects the position as at September 2026. Some future implementation dates remain subject to parliamentary processes and may change.