Employment Rights Changes: what to prepare before January 2027

What changes in January 2027?

The latest government timetable lists three main changes for 1^st January 2027: a shorter qualifying period for ordinary unfair dismissal protection and removal of the compensatory award cap; a duty to inform workers about their right to join a trade union; and stronger tipping requirements.

These changes are confirmed in the government’s current timetable, although further regulations and guidance may shape exactly how employers must put them into practice.For a small employer, a useful first step is to decide who will oversee each area and set aside time to review the relevant documents and processes.

Unfair dismissal protection

From 1^st January 2027, employees will generally qualify for ordinary unfair dismissal protection after six months’ service, rather than two years. This will apply to dismissals taking place from that date. The cap on compensatory awards for unfair dismissal will also be removed.

This does not prevent an employer from dismissing someone for a fair reason. However, employers will still need to follow a fair process, and the potential consequences of getting that process wrong will become more significant.

For small businesses, this makes it particularly important to use probation periods effectively. Rather than waiting until the end of probation to raise concerns:

• set clear expectations when someone joins;
• arrange regular review points;
• address performance or conduct issues promptly;
• explain what improvement is needed;
• offer appropriate support; and
• keep a clear written record of discussions and decisions.

Probation should be treated as an active management period, not simply a date in the calendar. Managers should also avoid assuming that someone has no employment rights because they are still within probation.

Prepare to provide trade union information

From 1^st January 2027, employers will have a new duty to provide workers with written information about their right to join a trade union. The duty will apply even where the business does not recognise a union.

The final format and delivery requirements should be checked against the latest regulations and government guidance. In the meantime, employers can begin by reviewing:

• the information given to new workers;
• onboarding checklists;
• statements of employment particulars;
• staff handbooks; and
• the way important employment information is shared with existing workers.

It is sensible to identify where the statement will sit within your onboarding process but avoid finalising the wording until the official requirements are clear.

Check your tipping policy if your business handles tips

For cafés, restaurants, salons and other businesses handling qualifying tips, January brings another policy check.

From 1^st January, employers will need to consult workers or their representatives when developing or reviewing a tipping policy. They will also need to share an anonymised summary of consultation feedback and update the policy at least every three years.

These changes build on existing tipping obligations. If you already have a policy, review how you will involve staff when it is next developed or reviewed and check the final guidance for any transitional requirements.

Check that your business has kept up with the 2026 changes

Preparing for January is also a good opportunity to check that changes introduced during 2026 have been reflected in your everyday processes.

A policy may have been updated, but it is equally important to check that payroll systems, managers and staff communications have kept pace.

Sick pay and family leave

Changes introduced on 6^th April 2026 removed the lower earnings limit and waiting period for Statutory Sick Pay. Paternity leave and unpaid parental leave also became day-one rights.

Employers should check that:

• payroll systems apply the updated Statutory Sick Pay rules;
• absence guidance reflects the changes;
• paternity and parental leave policies are current;
• managers know where to find the correct information; and
• outdated templates have been removed.

Remember that eligibility for leave and eligibility for statutory pay are not always the same. Both should be checked when handling an employee’s request.

Harassment prevention and reporting

From 30^th October 2026, employers must take all reasonable steps to prevent sexual harassment of their employees. Employers must also not permit employees to be harassed by third parties, such as customers, clients, contractors or suppliers.

These requirements make it important to look beyond the wording of a harassment policy. Employers should consider the risks employees could face in their particular workplace and the practical steps that could reduce them.

For example:

• Would an employee know how to report inappropriate behaviour?
• Would their manager know how to respond?
• Are there particular risks when staff work alone or deal directly with customers?
• Is training relevant to the situations employees may genuinely encounter?
• Are complaints recorded and followed up consistently?

A clear reporting route, suitable training and prompt action can help turn a written policy into protection that works in practice.

Whistleblowing protection was also strengthened in April 2026 for qualifying disclosures concerning sexual harassment.

Holiday records

Since April 2026, employers have been required to keep records demonstrating compliance with annual leave and holiday pay requirements, retaining them for at least six years.

Check where yours are kept, whether they are complete and who can retrieve them. If records sit across spreadsheets, emails and payroll software, it might be time to make the process easier to manage.

Your employment checklist before January 2027

Give your business a manageable list of actions:

1. Review probation arrangements: Check the wording of your contracts, the timing of reviews and how concerns are addressed.
2. Brief managers: Make sure anyone managing staff understands the value of timely feedback, appropriate support and clear records.
3. Check dismissal procedures: Confirm who should be involved and when professional advice should be sought.
4. Prepare for the trade union information duty: Review onboarding and staff communication arrangements, then check the final guidance.
5. Review tipping processes: If your business handles qualifying tips, plan how workers will be consulted.
6. Check earlier changes: Review sick pay, family leave, harassment prevention and holiday-record processes.
7. Update practical tools: Replace old forms, templates, checklists and payroll instructions.
8. Communicate the changes: Tell managers and employees what has changed and where current guidance can be found.
9. Recheck the timetable: Confirm the latest dates and requirements before January.

Updating a handbook is only part of the job. The people responsible for putting the policies into practice also need enough time, guidance and access to the latest documents.

What employment law changes come later in 2027?

The Employment Rights Act is being introduced in stages, with further changes currently scheduled throughout 2027.

• March 2027: new fire and rehire protections;
• March and April 2027: mandatory gender equality and menopause action plans for organisations within scope;
• April 2027: bereavement leave, including pregnancy loss, and changes to collective redundancy rules;
• September 2027: restrictions on the misuse of non-disclosure agreements in harassment and discrimination cases;
• October 2027: enhanced dismissal protections for pregnant women and new mothers, together with further flexible working changes; and
• December 2027: regulation of umbrella companies.

The implementation dates for guaranteed-hours rights, reasonable shift notice and payments for shifts cancelled or changed at short notice have not yet been confirmed.

Employers should keep relevant changes on their planning calendar but check the final legislation and guidance before updating contracts or policies.

Make time for the preparation

A little preparation now can help your business meet its obligations and give managers more confidence in handling everyday employment issues. It is a practical job to get done before the new year gets busy.

Add employers’ liability insurance to your checklist

While you’re checking employment policies and preparing for January, it’s worth reviewing your insurance too.

Employers’ Liability Insurance is already a legal requirement for most businesses with employees, subject to certain exemptions. It can cover compensation and associated legal costs if an employee makes a claim for a work-related injury or illness.

If you’ve taken on more staff or changed the work your team does, check that your cover reflects those changes. It’s another straightforward job to add to your review while you have the paperwork out.

Protectivity offers Employers’ Liability Insurance alongside a wide range of business insurance policies, with options to suit different activities and business needs.

Explore our business insurance policies online and find cover that fits the way you work.

*Disclaimer – Insurance policies differ between providers and are subject to their terms, limits, excesses and exclusions. This article provides general information and is not personal insurance or legal advice.

Make sure you have the correct level of insurance for your requirements and always review policy documentation. Information is factually accurate at the time of publishing but may have become out of date.