Employment Law – Looking Ahead

To help you navigate employment law reforms during the next quarter and beyond, we have updated our Employer Guide to the Employment Rights Act 2025.

Our updated Employer Guide can be viewed online here or downloaded here.

Coming in on 1 January 2027

Qualifying Period for Unfair Dismissal and Removal of Compensatory Cap

From 1 January 2027, the existing two-year qualifying period for unfair dismissal claims will be reduced to six months, applying where the effective date of termination ("EDT") is on or after that date. The compensatory award cap for unfair dismissal claims will also be abolished in its entirety for dismissals with an EDT on or after 1 January 2027.

Employers should note that, under existing legislation, where an employer dismisses without notice (other than for gross misconduct), the EDT is extended by the statutory minimum notice. However, whilst the EDT is extended for the purposes of calculating the qualifying period, it is not extended for the purposes of deciding whether the compensatory cap should be removed.

Example: An employee starts on 2 July 2026 and is dismissed for performance reasons on 25 December 2026 with a payment in lieu of notice (PILON). As they are not given notice, their one-week statutory notice period is added to their EDT, giving a "notional EDT" of 1 January 2027. They qualify for unfair dismissal protection because they have 6 months' service as at the "notional EDT" of 1 January. However, as their actual EDT is 25 December 2026, they do not qualify for uncapped compensation.

Ahead of these changes, employers should implement robust recruitment procedures, review notice periods and formalise probation management (with training for managers, clear role expectations and formal review points). Employers might also wish to adjust the length of probation periods (for example, to four months, with the option to extend to five months), to ensure probationary dismissals fall clear of the six-month unfair dismissal threshold. Given the removal of the compensatory cap, employers might consider how they can reduce the potential compensation that can be claimed by high earners, as explained in our recent article here.

Other Qualifying Period Changes

To coincide with the reduction in the qualifying period for unfair dismissal:

• the qualifying period for a written statement explaining the reasons for dismissal will be reduced from two years to six months, and
• the minimum service requirement for unfair dismissal claims relating to the existence of, or failure to disclose, spent convictions will be removed.

Employers should ensure their policies and templates are up to date ahead of the changes, that managers are aware of this new legal requirement, and that data retention and privacy systems are updated.

Coming in on 1 January 2027

Written Statement of Right to Join a Trade Union

Having been pushed back from 30 October 2026, employers will be required, from 1 January 2027, to give workers a written statement advising them of their right to join a trade union. For new workers, the statement must be provided at the same time as their section 1 statement. For existing workers, it can be delivered directly by 5 April 2027 or made continuously available (for example, by putting it online) but with annual reminders.

Employers should review the Consultation outcome which explains the duty. The government will (by way of regulations) provide a standardised statement for employers to issue, so employers should keep a watching brief for this. Ensure that HR and managers are briefed to comply with the changes.

Coming in on 9 November 2026

Time Limits for Contract of Employment Claims in Scotland

The time limit for bringing contract of employment claims in Scotland increases from three months to six months where the effective date of termination, or, where there is none, the employee's last working day, falls on or after 9 November 2026. These provisions have already been in place in England and Wales since 1 October 2026.

Coming in on 1 January 2027

Allocating Tips, Gratuities and Service Charges to Workers

These reforms were originally expected to come into force in October 2026 but were postponed. They are now expected to come into force on 1 January 2027.

Under these reforms, before producing the first version of a written tips policy, an employer must consult with a recognised trade union or worker representatives (or, where there are none, with workers directly). Employers must review (and consult on) a tips policy at least once every three years. An anonymised summary of the views expressed in the consultation must be made available to all workers at the relevant place of business.

Employers should keep a watching brief for the outcome of the consultation on the Draft Statutory Code of Practice here. Employers should review their current tips policies and consultation processes, identify appropriate worker or union representatives, and consider the timing of policy reviews if policies are already in place.

Postponed to later in 2027

Changing Terms and Conditions of Employment and Automatically Unfair Dismissal

The fire and rehire reforms under the ERA 2025 were, until 22 October 2026, expected to take effect on 1 January 2027. However, the government confirmed on 22 October 2026 that these will now take effect in March 2027. For more information on these reforms, see our article here.

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Open Consultations:

• Consultation on the revised code of practice on dismissal and re-engagement – closes 17 December 2026
• Acas consultation on the Draft Code of Practice on Flexible Working – closes 17 December 2026
• Government consultation on employment status reform and protections for the self-employed – closes 8 January 2027
• Government consultation on reform of whistleblowing framework – closes 8 January 2027

Outcomes from concluded consultations may also be published this quarter. These will be available via the Government's Make Work Pay page.

30 December 2026

The Immigration Salary List: The Immigration Salary List is due to close on 31 December 2026 for the majority of listed SOC codes, with extended provisions remaining in place for care worker codes 6135 and 6136 until 22 July 2028, subject to the eligibility restrictions.

The Temporary Shortage List: The current Immigration Rules outline that an application which will rely on the current Temporary Shortage List must utilise a Certificate of Sponsorship issued before 31 December 2026.

Considering the above, if your business has staff sponsored in roles falling under SOC codes listed on either of the above lists, you may wish to consider progressing those applications as soon as possible and ensuring applicable Certificates of Sponsorship are assigned no later than 30 December 2026.

1 January 2027

Graduate Visas: For applications submitted under the Graduate route on or after 1 January 2027, the maximum period of stay available under the Graduate visa route will be shortened from 24 months to 18 months, consistent with the commitments set out in the Government's White Paper. This change will apply to all successful Graduate route applications submitted on or after that date, save for PhD graduates, who will continue to benefit from their existing three-year leave entitlement.