Employment Rights Act 2025: what changes in 2027 and what small employers should update now

Small business owner reviewing a staff handbook and contracts with a red pen

The Employment Rights Act 2025 received Royal Assent on 18 December 2025, and it’s being switched on in stages rather than all at once. Some parts are already law. The biggest change for most small employers, the six-month qualifying period for unfair dismissal, applies to dismissals from 1 January 2027.

If you run a security, cleaning, construction, or facilities business with a mix of permanent, part-time, and casual staff, this matters to you directly. In this guide I’ll set out what has already changed, what the government has confirmed for 2027, and the practical updates I’d make to contracts, handbooks, and manager training before the new year.

One important point first. Everything below comes from the government’s own Plan to Make Work Pay and Employment Rights Act: timeline update on gov.uk and from the Act and regulations on legislation.gov.uk. The government says “all future dates remain subject to parliamentary processes and may change”, so check that page before you act on any date.

What has already changed

A good number of measures are already in force. The ones most likely to affect a typical SME are these:

From 6 April 2026, Statutory Sick Pay changed, with the government “removing the Lower Earnings Limit (LEL) and waiting period”.
Also from 6 April 2026, paternity leave and unpaid parental leave became “Day 1” rights.
Again from 6 April 2026, the maximum period of the protective award in collective redundancy cases doubled, and whistleblowing protection was strengthened for people reporting sexual harassment.
The Fair Work Agency was established on 7 April 2026.
From 1 October 2026, the time limit for bringing an Employment Tribunal claim increased from three to six months.
From 30 October 2026, employers must take “all reasonable steps” to prevent sexual harassment of their employees, and there’s a new obligation on employers not to permit harassment of their employees by third parties.

There were also several trade union measures in February, August, and October 2026, including changes to union access and recognition. If you have a recognised union or you’re approached by one, take specific advice.

The tribunal time limit change is easy to overlook, but it means a former employee now has longer to bring a claim. In practice, that makes your records more important than ever. If you can’t find the investigation notes or the signed contract six months after someone leaves, you’ll struggle to defend a claim.

The harassment duty is the one I’d prioritise if you haven’t already. For security and FM businesses, staff often work on client sites, in public-facing roles, or at night. Think about how a guard on a retail site or a cleaner in an office would report harassment from a member of the public or a client’s employee, and what you would actually do about it.

What the government has confirmed for January 2027

Under the heading “Measures that will take effect on 1 January 2027”, the timeline lists the duty to inform workers of their right to join a trade union, strengthened tipping law, and the “reduction of unfair dismissal qualifying period to 6 months, for dismissals from 1 January 2027”, alongside “uncapping compensatory awards”.

The unfair dismissal change is the headline. Section 25 of the Employment Rights Act 2025 amends the Employment Rights Act 1996 so that “two years” becomes “six months” for the qualifying period, and removes section 124, which set the limit on the compensatory award. The commencement regulations bring the remainder of section 25 into force on 1 January 2027 and include transitional provisions that turn on whether the effective date of termination falls before, or on or after, that date.

What does that mean in plain English? Under the old rules, most employees needed two years’ service before they could claim ordinary unfair dismissal. From 1 January 2027, that drops to six months. Someone you took on in June 2026, for example, will already have more than six months’ service by the time the change arrives. And because the cap on the compensatory award is being removed, an unfair dismissal claim could cost considerably more than it would have done before.

Fire and rehire protections are listed for March 2027, having moved back from January. The timeline doesn’t go into detail, so if you’re considering changing anyone’s terms and conditions in 2027, get advice on the final rules before you start.

What comes after January 2027

The timeline now gives a month for most of the remaining 2027 measures. For small employers, the relevant items are:

enhanced dismissal protections for pregnant women and new mothers (October 2027)
flexible working changes (October 2027)
bereavement leave including pregnancy loss (April 2027)
the right to guaranteed hours and the right to reasonable notice and short notice payments (no date yet)
a change to the collective consultation threshold for collective redundancies (April 2027)
regulations to prevent the misuse of non-disclosure agreements in cases of workplace harassment or discrimination (September 2027)
mandatory action plans on gender equality and supporting employees through the menopause (March 2027 for public authorities, April 2027 for private and voluntary sector employers)

Two flags here. First, the guaranteed hours measures (the ones aimed at zero hours and low hours contracts) carry a note that timings “will be updated following the consultation process”. Second, a month on the timeline isn’t a fixed date, and the government says “all future dates remain subject to parliamentary processes and may change”. I’d plan for them, but I wouldn’t rewrite your contracts around them until the detail is published.

If you employ a lot of casual staff on zero hours contracts, which is common in event security and contract cleaning, guaranteed hours is the one to watch. It could change how you offer shifts and how much notice you give when a shift is cancelled.

What small employers should update now

You don’t need to wait until December. Here’s the checklist I’d work through with any client this quarter:

Review your probation period. With unfair dismissal protection arriving at six months, probation and the first months of employment become the window where you assess fit properly. Make sure reviews actually happen and are written down.
Update your employment contracts and written statements. Check probation clauses, notice periods, and any wording that refers to “two years’ service”. Our guide to employment contracts in the UK covers the basics.
Refresh your staff handbook. Disciplinary, capability, grievance, sickness absence, family leave, and harassment policies all need checking against the changes already in force.
Write or update your sexual harassment risk assessment and policy, including how third-party harassment on client sites is reported and handled.
Check your sickness absence and SSP procedures reflect the April 2026 changes.
Train your managers. Most unfair dismissal problems I see in audits start with a supervisor who didn’t follow the process, didn’t keep notes, or made a decision in a rush.
Tighten your record keeping. With a six-month tribunal time limit, keep investigation notes, meeting records, and signed documents somewhere you can actually find them.
Diarise a review once the regulations on guaranteed hours, flexible working, and bereavement leave are published.

If you hold ISO 9001 or ISO 45001 certification, these changes may also feed into your management system. If you keep a legal register (or list of compliance obligations), update it, because your auditor may well ask how you identified and responded to the changes. A short entry showing you reviewed the Act, what you changed, and when is the kind of evidence that goes down well.

A word on probation and onboarding

The six-month rule doesn’t stop you dismissing someone who isn’t right for the role. It means you need a fair reason and a fair process once they’ve passed six months. That shifts the focus to the first few months.

Good onboarding helps here. Clear expectations, regular check-ins, documented feedback, and a proper end-of-probation meeting give both sides a fair chance. Our first 90 days onboarding checklist is a good place to start, and our post on employment law basics covers the wider legal picture.

Please treat this article as general guidance, not legal advice. For decisions about specific employees or contract changes, speak to an employment solicitor or contact Acas.

FAQs

When does the six-month unfair dismissal qualifying period start?

The government’s timeline says the reduction to six months applies “for dismissals from 1 January 2027”. The commencement regulations bring the change into force on 1 January 2027, with transitional rules based on the effective date of termination.

Is the cap on unfair dismissal compensation being removed?

Yes. Section 25 of the Employment Rights Act 2025 omits section 124 of the Employment Rights Act 1996, which set the limit on the compensatory award. The government lists “uncapping compensatory awards” under January 2027.

Have the zero hours changes started yet?

No. The right to guaranteed hours and the right to reasonable notice and short notice payments don’t have a date yet. The timeline says timings will be updated following the consultation process. Check the gov.uk timeline for the latest position.

How long do employees have to bring a tribunal claim now?

From 1 October 2026, the time limit for bringing an Employment Tribunal claim increased from three to six months. (For breach of employment contract claims in Scotland, the timeline says the change takes place on 9 November 2026.)

Do I need to change my employment contracts?

Probably, at least in part. Check probation clauses, any references to two years’ service, and your policies on sickness, family leave, and harassment. Wait for the published regulations before rewriting anything linked to the later 2027 changes.

Get your contracts and policies ready for 2027

If you’d like a second pair of eyes on your contracts, handbook, or legal register before the January changes, I’m happy to help. CAW Consultancy works with SMEs across security, construction, cleaning, and facilities management to keep their HR and compliance documents in step with the law and with their ISO management systems.

Call us on 01257 824481, email Craig@cawconsultancy.co.uk, or visit www.cawconsultancy.co.uk. If you’d rather manage your policies, training records, and reviews in one place, take a look at Compliance Master.

How we can help

When your contracts and policies change, your team needs to hear about it in a way that sticks. Screen My Staff writes toolbox talks, induction packs, and e-learning around your own policies and sites, with sign-off records, so you can show who was briefed and when.

Ask about bespoke training

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About the author

Craig Willetts, lead auditor with over 20 years’ experience across 20+ ISO standards and UK security schemes. I founded CAW Consultancy to help UK businesses get ready for ISO certification and accreditation, in plain English and without the jargon. My team prepares you for your audit, and your chosen certification body carries it out. Connect with me on LinkedIn or visit CAW Consultancy.