Employment Law Changes: What SMEs & Charities Need to Know (2025–2027)

Clear, practical updates—what’s in force now, what’s coming next, and how to stay compliant with confidence.
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2027

What is next in 2027?


Additional ERA 2025 reforms are expected to come into force, including major changes to unfair dismissal qualifying periods and compensation rules. (Debate / pending regulations)


Key Actions

Prepare for the new unfair dismissal qualifying period of six months (down from two years).
Strengthen probation, onboarding, and performance management to avoid risk once employees gain rights more quickly.
Train managers on conducting faster, fair, well‑documented assessments during the first months of employment.
Review all contracts and handbooks to ensure alignment with the ERA 2025 expected changes in 2027.

2026

What is changing?

6 April 2026 – Statutory Sick Pay Reform
SSP becomes payable from day one, and the Lower Earnings Limit is removed under ERA 2025. (Debate / awaiting final regulations)
6 April 2026 – National Minimum Wage & Statutory Rate Updates
Annual updates to the National Minimum Wage and statutory payments take effect. (Update)
6 April 2026 – Day‑One Paternity Leave
Paternity leave becomes a day‑one employment right under ERA 2025. (Debate)
6 April 2026 – Day‑One Unpaid Parental Leave
Unpaid parental leave becomes available from day one of employment. (Debate)
April 2026 – Collective Redundancy, TU Rights & Whistleblowing Changes
ERA 2025 introduces reforms to collective redundancy, trade union laws, labour enforcement, and whistleblowing protections. (Debate)
21 January 2026 – Enhanced DBS Checks for Contractors
Employers permitted to request Enhanced DBS certificates directly from self‑employed contractors. (Legally enforceable)

Key Actions

Update sickness policies and payroll to reflect SSP becoming a day‑one right and the removal of the lower earnings limit.
Update paternity and unpaid parental leave policies to reflect both as day‑one rights.
Review collective redundancy, trade union, industrial action, and whistleblowing procedures to meet new ERA 2025 standards.
Strengthen safeguarding processes as Enhanced DBS checks can now be requested directly for self‑employed contractors.
Monitor annual updates to statutory rates and the National Minimum Wage.
Review zero‑hours arrangements, ensuring compliance with new limitations and notice requirements introduced under ERA 2025

2025 Employment Law Changes

What has changed?


18 December 2025 – Employment Rights Act 2025
The ERA 2025 becomes law, setting the foundation for major reforms across 2026–2027. (Legally enforceable)
16 December 2025 – Immigration Skills Charge Increase
The Immigration Skills Charge increases by 32%. (Legally enforceable)
2 December 2025 – Extension of Right‑to‑Work Checks
Right‑to‑work checks will expand to cover agency workers, sub‑contractors, gig‑economy workers, and zero‑hours arrangements once commencement regulations are confirmed. (Upcoming law)
1 December 2025 – ACAS Early Conciliation Extended
Early conciliation period doubles from 6 to 12 weeks. (Legally enforceable)
1 December 2025 – Redundancy Notifications Go Digital
Employers must submit notifications for 20+ redundancies digitally only. (Legally enforceable)
5 November 2025 – Economic Inactivity Review
Publication of the Keep Britain Working report. (Update)
14 October 2025 – Fair Work Agency Chair Appointed
New labour market enforcement body leadership confirmed. (Update)
1 October 2025 – New Rights for Victims of Crime
New statutory rights for victims of crime take effect. (Legally enforceable)
4 September 2025 – EHRC Code of Practice
Updated Code submitted to government for review. (Debate)
1 September 2025 – Failure to Prevent Fraud Offence
New corporate criminal offence for failing to prevent fraud. (Legally enforceable)
21 August 2025 – EHRC Agreement with Lidl GB
Public equality and harassment compliance agreement published. (Update)
2 August 2025 – Ban on Using AI Outputs in EU Markets
Restrictions extend on the commercial use of AI‑generated outputs within EU markets. (Legally enforceable)
5 June 2025 – Supreme Court Ruling: Religious Expression Case
Key judgment on freedom of religious expression in the workplace. (Update)
28 April 2025 – NI Employment Rights Bill Measures
Planned reforms under Northern Ireland’s employment rights programme. (Debate)
16 April 2025 – Supreme Court Ruling: For Women Scotland
Important decision affecting gender definitions and policy interpretation. (Update)
6 April 2025 – Neonatal Care Leave & Pay
New statutory right to up to 12 weeks neonatal leave and pay. (Legally enforceable)
2 February 2025 – EU AI Output Use Restrictions
UK businesses banned from using certain AI‑generated outputs in EU markets. (Legally enforceable)
20 January 2025 – 25% Increase in Protective Awards
Protective awards increase where employers breach the new fire and rehire statutory code. (Legally enforceable)
6 January 2025 – Employment Tribunal Reforms
New tribunal processes come into effect. (Legally enforceable)
1 January 2025 – eVisas Replace BRP Cards
Online eVisas replace Biometric Residence Permits for proof of immigration status. (Legally enforceable)Foundation HR Support

Key Actions

Update family‑leave policies to include the new statutory Neonatal Care Leave and Pay (from April 2025).
Prepare for expanded right‑to‑work checks that will soon apply not only to employees but also contractors, agency workers and gig/zero‑hours staff.
Adjust HR processes for ACAS conciliation, moving to 12 weeks and digital redundancy notifications.
Review anti‑fraud, EDI, sexual‑harassment, and victim‑of‑crime policies due to multiple new legal and guidance changes.
Plan for increased sponsorship costs if recruiting via the Skilled Worker route.
Begin an ERA 2025 readiness review, as major reforms land from 2026.

FAQs

1. What are the most significant UK employment law changes coming in 2025, 2026, and 2027?
From 2025, Neonatal Care Leave and Pay comes into force (from 6 April 2025).
In 2026, central Employment Rights Act (ERA 2025) reforms begin, including day‑one Statutory Sick Pay, new paternity and parental rights, and significant changes to industrial action and collective consultation rules.
In 2027, the unfair dismissal qualifying period will be reduced from two years to six months, and further flexible working obligations may be strengthened. 

2. What should SMEs and charities prioritise for the 2026 reforms?
Key priorities include updating SSP policies for day‑one eligibility, revising family‑leave policies, reviewing redundancy and collective consultation procedures, updating zero‑hours arrangements, and preparing for new trade‑union and industrial‑action rules.
These changes start from February and April 2026, so early preparation is essential.

3. When does day‑one Statutory Sick Pay (SSP) start?
Day‑one SSP begins in April 2026. Employers must remove the existing three‑day waiting period and pay SSP from the first day of absence, with the Lower Earnings Limit removed. Payroll and absence policies will need updating. 

4. What changes are happening to unfair dismissal in 2027?
From 1 January 2027, the qualifying period for unfair dismissal will reduce from 2 years to 6 months, and the compensation cap will be removed once impact assessments are finalised. Employers will need stronger recruitment, onboarding, and probation processes. 

5. What’s changing with zero‑hours contracts?
From 6 January 2026, the ban on exclusivity clauses extends to all zero‑hours arrangements, not just formal contracts.
Separately, ERA 2025 introduces duties on predictable working hours and shift notice, with further details expected through secondary legislation.

6. What is Neonatal Care Leave, and who qualifies?
From 6 April 2025, eligible parents can take up to 12 weeks of Neonatal Care Leave when their baby receives specialist care for seven days or more within the first 28 days after birth. Pay may apply if service and earnings thresholds are met. This is a day‑one right. 

7. Will there be further changes to flexible working?
Yes. While day‑one flexible working now applies, ERA 2025 includes plans for strengthened obligations around refusing requests and requiring greater justification. Additional rules are expected during 2026–2027.

8. How can HR SPARK™ help my organisation manage these changes?


We offer:
Whole ERA 2025 compliance reviews
Updated templates and policies
HR system implementation support
Training for managers
Retained HR or project‑based support
Regular updates and alerts on new legislation

Stay compliant and confident through every change.
HR SPARK™ can help you update your contracts, policies, HR systems and processes ahead of the new ERA reforms.

 2026 HR SPARK™
 

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