Welcome to the Summer Employment Law Update. In our employment and HR updates, Tom Evans and the Employment & HR team outline recent cases, updates to the law and other Employment and HR news. If you want to ensure you don’t miss the latest in Employment and HR, you can subscribe to our Employment Law Update Newsletter.
Employment Rights Act
The Employment Rights Act 2025 (‘the Act’) introduces significant changes to employment law in the United Kingdom, fundamentally transforming the legal landscape. The Government has described the Act as ‘a key pillar of the government’s Plan to Make Work Pay’’ as well as the ‘biggest upgrade to employment rights in a generation’. The terms of the Act are being implemented in phases across 2026 and 2027, allowing employers time to reflect and prepare. Day one statutory sick pay and greater parental leave protections have already been enforced by the Act, alongside the establishment of the New Fair Work Agency which was introduced to help enforce new and existing employment rights.
Amidst this, the tribunal system has been described as “creaking at the seams, even before the surge in claims we expect to follow the implementation of the Employment Rights Act” and the Employment Lawyers Association unveiled sweeping proposals to totally overhaul the UK’s employment dispute system drawing on two years of research into the delays and bottlenecks that currently hold it back.
Against this backdrop, and with the next phase of change due in October 2026, now is the time to begin reviewing policies and implementing any necessary adjustments to mitigate against this as a business. DTM Legal’s Employment team understand the significance of the Act against not only the employment law landscape but also the wider political and commercial landscape, particularly for small and medium sized businesses and how it may be difficult to navigate a starting point as an employer. If you have any issues or concerns about these updates, please do not hesitate to contact our Employment team.
Changes to be implemented in October 2026:
Sexual Harassment:
The change to employer harassment liability within the workplace will see a fundamental shift this October. Previously, employers were expected to take ‘reasonable steps’ to prevent sexual harassment of their employees. This standard is due to rise in October, placing a liability on employers to take ‘all reasonable steps’ to prevent sexual harassment, including a new obligation for employers not to permit harassment of their employee by third parties. Furthermore, employment tribunals will be able to uplift compensation by 25% where an employer fails to take all reasonable steps.
What to consider ahead of the change: With this uplift in standard of liability, employers will have to demonstrate that all reasonable steps were taken to prevent sexual harassment. It is likely that tribunals will not only scrutinise an employer’s policies, but also how well they are implemented, including investigating the quality and frequency of training.
Practical tips: In 2027, regulations will be released to specify what the requirement to ‘take all reasonable steps’ entails. However, in preparation for the changes being implemented this October, there are practical steps employers can be taking in the meantime:
- Delivering mandatory, regular training exercises to employees on recognising, responding and reporting to sexual harassment incidents. A tailored approach between varying seniority levels within the business is highly recommended to ensure appropriate training is implemented.
- Establishing a clear reporting mechanism for reporting incidents and ensuring this is communicated effectively with all employees and is easily accessible and confidential.
- Reviewing and refreshing policies to ensure anti-harassment policies are updated and communicated
- Creating tailored risk assessments with an aim to prevent issues before they arise. Risk assessments should consider the type of work employees undertake and the people they interact with, identifying areas with the highest risk.
- The nomination of a carefully selected sexual harassment/bullying officer. The nominated officer(s) should create a trusted environment for employees to report issues safely and confidentially.
Trade Union measures:
As part of the Plan to Make Work Pay, from October 2026, employers will have a new duty to inform their employees and workers of their right to join a trade union. The aim of this exercise is to raise awareness of trade union rights and how employees can benefit from membership.
What to consider ahead of the change: Employers currently have no obligation to inform their employees of their right to join a trade union and will soon be required to provide a written statement to all employees detailing their rights. A consultation is available on the Government website detailing what information the Government considers appropriate to be included within the written statement. The consultation was launched at the end of October 2025 and closed in early December 2025. The aim of the consultation was to collate opinions from employers, trade unions, consumers and members of the public in relation to the form, content, manner and frequency of the written statement. The Government is due to consider all responses and finalise the implementation through secondary legislation.
Practical tips:
Amongst other specific suggestions, our understanding is that the ‘written statement’ may be required to:
- Be ‘direct or indirect’ meaning employers may have the option to send it directly to individual employees or simultaneously to all employees and thereafter to new employees.
- Be provided annually to employees
- Include information such as the purpose of a trade union, a brief summary of the employees’ rights in relation to trade unions and sign post any recognised trade unions and the government website’s list of trade unions.
We would encourage you to monitor Government suggestions as the above proposals are not final. It is anticipated further information will become available shortly.
Employment Tribunal time limits:
From October 2026, employees will have six months to bring a claim to an employment tribunal (with certain breach of contract claims excepted). This represents an increase from the current three-month time limit. This is due to take effect from 01 October 2026 and will apply where the ‘relevant date’ falls on or after 01 October 2026.
What to consider ahead of the change: The aim of this amendment is to allow employees greater opportunity to prepare claims, allowing more time to gather evidence, seek advice and thoroughly consider their position. This is likely to lead to an increased number of claims with longer-running disputes. The Government has suggested that the volume of cases going through arbitration and employment tribunals could increase by 17%. Although, industry sources believe this is an understated figure. This increase will add to the current significant delays which are causing final hearings to be listed several years into the future.
Practical tips: Ahead of the changes, employers are encouraged to:
- Ensure records are retained for longer. The period for ACAS conciliation has already increased from 6 to 12 weeks. Therefore, from October 2026, employers may receive a claim up to 12 months after the original incident/departure of an employee (12 weeks ACAS conciliation plus 6-month limitation period to bring a claim, plus 3 months wait for the employment tribunal to issue a claim form). It is therefore very important that key documents such as disciplinary records, payslips and grievances are retained safely for at least 12 months.
- Act quickly and seek legal advice early if you believe a departing employee may have a dispute.
Changes to be implemented in January 2026:
Unfair Dismissal:
Protection from unfair dismissal is due to become a right after six months of employment, replacing the current two-year continuous employment requirement. From 01 January 2027, employees with 6 months service will have the right to claim unfair dismissal. When considering this in relation to the increased tribunal limitation period, this could result in an employee that worked for 6 months, raising a claim against their employer up to 18 months after being hired.
Additionally, the limit on the compensatory award for unfair dismissal is due to be removed. This means compensation could be very costly where employees hold long service- see below an example calculation for compensatory reward:
Employee’s date of birth: 02.06.1969
Length of service: 23 years
Annual salary: £80,000.00
Before January 2026: £20,652.50
After January 2026: £51,538.41
What to consider ahead of the change: Reducing the qualifying period enables a greater number of employees to raise a claim for unfair dismissal. This also shortens the window for employers to assess new employees and take any action required. Both points stress the importance for employers to act now and prepare for the changes ahead of January 2027.
Practical tips: Due to the significance of the change and its possible implications, employers are encouraged to start preparing as soon as possible. Employers may want to consider the following:
- Strengthening recruitment processes to reduce the likelihood of issues (for example, incorrect experience, conduct, performance and time keeping) when employment begins.
- Shortening probation periods to avoid employees gaining the right to claim unfair dismissal on/immediately after expiry of probation.
- Schedule frequent reviews and feedback to ensure employees are aware of their obligations. This will also help identify any performance and/or conduct issues early. Managers/senior members of staff should be trained to hold feedback sessions and undertake disciplinary processed fairly and constructively.
Ban on ‘fire and rehire’:
Dismissing an employee and rehiring them on worse terms, often referred to as the process of ‘fire and rehire,’ is due to give rise to automatic unfair dismissal in January 2027 where an employee does not agree to the variation of terms. Any variation to core contractual terms, such as reduction of pay, pension benefits, reduction of annual leave allowance and significant changes to shift patterns/working hours will be prohibited.
Currently, employers can ‘fire and rehire’, provided that their reason for doing so fits into one of the 7 prescribed business reasons, with the category of ‘some other substantial reason’ covering most circumstances. However, from January 2027, employers will have to prove that the business would not be able to survive without the change being made, presenting a much higher threshold.
What to consider ahead of the change: Alternative avenues to try and negotiate terms should be taken and it is important to remember that even where contractual changes are proposed to employees, there is no requirement for them to accept.
Practical tips: Employers should consider the following:
- Seeking agreement with employees where possible and ensuring all information is provided as early as possible, allowing employees sufficient time to digest and consider proposals.
- Be open to consider alternative solutions where employees are unhappy with proposals and take feedback where possible.
- Ensure all proposals, consultations and responses are documented securely, especially when agreements are reached.
Whilst significant changes to employment law may be discouraging for employers, the Act creates a great opportunity to review and revise policies, contracts, training and procedures; practices that often get overlooked. It is important to consider that strengthened employee protections will ultimately help provide greater clarity and a lower risk for employers once implemented, reducing miscommunications that often lead to complicated disputes.
It is always best practice to seek accredited legal advice. The employment team at DTM Legal is fully equipped to assist with expertise across a wide range of matters including complex tribunal claims, TUPE issues, redundancy and settlement agreements.
For further advice on recent Employment Law Changes, please contact the employment team at employment@dtmlegal.com or call 01244 354 800 / 0151 321 0000
