Employment law changes tech businesses need to know about

A significant number of employment law reforms are coming into effect in 2026 and 2027 following the introduction of the Employment Rights Act 2025 at the end of last year.

We set out below some of the key employment changes businesses should be aware of over the next 12 months. Some of these changes have already come into effect.

April 2026

1. The maximum potential protective award that may be made against employers for failing to collectively consult in redundancy situations involving 20 or more employees at a “single establishment” has doubled from 90 to 180 days’ pay per affected employee.

2. Paternity leave and unpaid parental leave have both become day‑one rights for employees, though the position on pay during such leave remains the same, with parental leave continuing to be unpaid, and paternity leave remaining subject to a requirement to have 26 weeks’ continuous service.

3. The current “waiting period” for Statutory Sick Pay (SSP) has been removed and SSP is now payable from day one of sickness absence.  The rate of SSP has changed to be the lower of 80% of average weekly earnings or the applicable annual fixed rate of SSP.

4. In respect of whistleblowing, sexual harassment has become one of the specific heads of wrongdoing about which a disclosure may be a protected disclosure for the purposes of whistleblowing legislation.

5. New obligations requiring employers to maintain records demonstrating compliance with various provisions of the Working Time Regulations 1998 regarding annual leave entitlements and pay came into effect.  Employers must keep records related to specific matters, including entitlement to annual leave, pay for annual leave and payments in lieu of holiday outstanding on termination of employment.  Such records may be created and maintained in any format the employer reasonably deems fit and must be retained for six years from the date they are made. Failure to comply constitutes a criminal offence punishable by a fine.

What employers should do now

Review and update, as required, sickness absence, parental leave, paternity leave, whistleblowing and anti‑harassment policies to reflect the changes outlined above.

Whistleblowing policies should be updated to make clear that disclosures relating to sexual harassment qualify for protection. If you do not have whistleblowing or anti-harassment policies in place, we would recommend introducing these.

Check and where required adjust reporting and payroll processes to ensure they can comply with the changes to payment of SSP and systems are updated to avoid calculation errors.

Where wider redundancies are envisaged which reach the trigger point, ensure that sufficient time is built into any redundancy programme to allow for the minimum required consultation periods (being 30 days for 20 or more redundancies and 45 days for 100 or more redundancies) to be properly adhered to.

Review, audit and, if necessary, update existing annual leave and holiday pay record-keeping systems to ensure they are sufficient to evidence compliance with the relevant law in accordance with the new record-keeping obligations.

October 2026

1. Employers will be placed under an enhanced duty to take all reasonable steps to prevent sexual harassment of their employees in the course of employment. Unhelpfully, regulations covering “reasonable steps” are not currently expected to come into force until some point in 2027 or 2028.

2. Employers will also be required to take all reasonable steps to prevent third party harassment of their staff. This is not just limited to sexual harassment but applies to harassment on the basis of any protected characteristic.
    
3. The time limit for bringing Employment Tribunal claims is set to be increased from three to six months. This was expected to come into effect in October 2026, but the Government’s implementation timetable has recently been updated to specify that this change will take effect “no earlier than October 2026”.

4. Employers will be required to notify workers that they have the right to join a trade union. We are still waiting for confirmation on the specific form and content of this notification and how and when it should be provided. For new workers, it is expected that this notification will need to be given as part of the written statement of employment particulars when they start work.

What employers should do now

Review and update harassment policies in advance to reflect the enhanced duties and the wider remit covering third parties. If you do not currently have an anti-harassment policy in place, we would recommend that one be introduced.

Because of the enhanced harassment duties, it will be even more important for employers to take steps to prevent harassment from occurring, including through the provision of appropriate training for employees, carrying out appropriate risk assessments, having clear policies and ensuring that staff know how to report concerns and the potential consequences of inappropriate behaviour.

Terms of business with third parties should be reviewed and consideration given to including wording regarding harassment of employees and making clear that this will not be tolerated.

Managers should be given training which includes training on how to deal with complaints received about harassment by third parties.

January 2027

1. “Fire and rehire” practices, which is the practice of dismissing and reengaging employees on new terms, will be further restricted. Dismissals linked to an employee’s refusal to agree to “restricted variations” (including changes to pay, hours and time off) will become automatically unfair. This will be the case unless the business can demonstrate that it faces serious “financial difficulties”. This is a very high bar. In essence, a business will need to demonstrate that the changes were unavoidable and without them the business would not be able to continue operating as a going concern.  

2. The qualifying period of service required for employees to be able to bring an unfair dismissal claim will reduce from two years to six months. This is forward-looking, and any employee who has six months’ service as at 1 January 2027 will meet the qualifying service requirement and be able to bring such a claim. Additionally, the current cap on compensation for unfair dismissal claims (being £123,543) will be removed entirely.  

What employers should do now

Employers should consider whether they need to take any action in relation to staff terms and conditions. If there is a need to make changes to employees’ terms and conditions which would constitute a “restricted variation”, we would suggest that this is done in advance of the further restrictions on “fire and rehire” coming into force. Whilst dismissing an employee for refusing to agree to a change to their terms of employment is generally considered a last resort and subject to compliance with a code of practice and existing unfair dismissal protection, it will almost certainly be more difficult to dismiss and re-engage on new terms with effect from January next year in the event employees do not agree to the changes.

In preparation for the reduction in the qualifying period for unfair dismissal, employers should look to tighten up recruitment procedures and introduce clear probation management, which addresses underperformers in good time before they reach the six-month qualifying period.

Current probation periods for new joiners should be reviewed. We would suggest an initial probation period of three months, with the possibility of that being extended by up to a further two months. This is to ensure that there is sufficient time to consider dismissal in appropriate circumstances before employees reach the six-month qualifying period.

If you have new staff who are underperforming or who are not at the level required, we recommend taking steps to deal with underperformance now and considering dismissal sufficiently in advance of 1 January next year.

If you have any questions regarding this blog, please contact Andy Norris in our Employment team.

Further information

Andy is an experienced employment lawyer and advises both senior employees and partners and employer clients on the full range of contentious and non-contentious employment matters.