Updated 19 October 2026: the February and April changes are now in force, and the October dates are confirmed. See our guides to the new tribunal time limits and the third-party harassment duty.
When founders are asked what truly keeps them awake at night, the answer is rarely “legal change”. More often, it is people: finding and retaining the right talent, managing absence, addressing conflict before it escalates, maintaining morale, and building a culture that customers can sense from their very first interaction with the business.
This is precisely why employment law deserves a place at the top of your 2026 priority list. Your employees are the heartbeat of your company. When employment practices are consistent, fair and well-managed, the business operates more smoothly. When they are not, even relatively minor issues can quickly become costly and disruptive.
The Employment Rights Act 2025, which received Royal Assent on 18 December 2025, introduces a substantial programme of reform. Importantly, these changes are not being implemented overnight. They will be phased in over approximately two years, with much of the practical impact taking effect during 2026 and 2027.
So, let's go through what is changing in 2026, what it means, and what we are focusing on with SME clients so that you can stay compliant without losing sight of building a resilient business with a supported, motivated team.
Three waves of change in 2026
In 2026, it is easiest to think of employment changes as arriving in three waves: February, April and October.
1) Industrial action and trade union changes
Since 18 February 2026, dismissal for taking part in industrial action has been automatically unfair, with no 12-week limit on claiming unfair dismissal in these circumstances.
On 18 February 2026, a number of provisions introduced by the Trade Union Act 2016 were repealed, alongside several key changes to the law on industrial action.
In summary, the reforms:
- Reduce the notice period for industrial action from 14 days to 10 days
- Require only a simple majority in favour for industrial action to be authorised
- Remove the requirement to appoint picket supervisors
- Extend the duration of industrial action mandates from 6 months to 12 months
- Simplify the requirements for industrial action and ballot notices
- Introduce changes to the rules governing political funds
These changes represent a notable shift in the legal framework surrounding trade unions and industrial action, and employers should ensure they understand the practical implications.
2) Absence, family leave, redundancy risk and enforcement
April is when many SMEs started to feel the practical impact. A number of significant employment law reforms came into force on 6 April 2026, most of them expanding employee rights and employer obligations:
- Statutory Sick Pay (SSP)
SSP is now payable from the first day of illness, rather than the fourth day.
- Paternity leave
Paternity leave is now a day-one right, replacing the previous requirement for 26 weeks’ service.
- Unpaid parental leave
Ordinary unpaid parental leave is now a day-one right.
- Collective redundancy consultation
The maximum protective award for failure to consult has doubled from 90 days’ pay to 180 days’ pay.
- Sexual harassment and whistleblowing
Sexual harassment is now a qualifying disclosure for whistleblowing, giving individuals stronger legal protection when raising concerns.
- Fair Work Agency
The Fair Work Agency was established on 7 April 2026, bringing together enforcement bodies and taking responsibility for enforcing key rights, including SSP and holiday pay.
- Gender equality and menopause action plans
Since April 2026, employers have been encouraged to introduce gender equality and menopause action plans on a voluntary basis. These plans are expected to become mandatory in 2027, making 2026 a key year for developing practical, effective approaches.
What this means for SMEs
April marked the point at which people policies moved from being theoretical documents to operational tools. Absence management, leave planning, and the way workplace concerns are handled will matter more than ever, and will be subject to closer scrutiny.
Policies should reflect how managers operate in practice, enabling issues to be addressed promptly and consistently as they arise. These changes mean employers need to review existing policies and ensure managers fully understand the expanded eligibility for rights from the very start of employment.
In the context of collective redundancy, the stakes are particularly high. The increase in the maximum protective award significantly raises the financial risk for employers who fail to follow the correct consultation process, reinforcing the importance of robust procedures and early legal input.
3) Harassment, tribunal time limits and trade unions
Further significant reforms take effect in October 2026, many of which strengthen employee protections and place additional obligations on employers. Tribunal time limits changed on 1 October 2026, and the harassment and trade union changes take effect on 30 October 2026. Two measures first expected in October have moved: fire and rehire protections are now due in January 2027, and the strengthened tipping law is expected by the end of 2026. Key changes include:
- Dismissal and rehire (now due January 2027)
“Dismissal and rehire” (often referred to as fire and rehire) will become automatically unfair in most cases.
- Third-party harassment
From 30 October 2026, employers must not permit their staff to be harassed by third parties, such as customers or clients, and can be liable unless they have taken all reasonable steps to prevent it. Our guide to the new third-party harassment duty sets out what to do before the date.
- Sexual harassment prevention duty
On 30 October 2026, the legal duty to prevent sexual harassment rises from taking “reasonable steps” to taking “all reasonable steps”.
- Employment tribunal time limits
Since 1 October 2026, the time limit for bringing most employment tribunal claims has been six months, up from three. Our guide to the new tribunal time limits explains which claims are covered.
- Tipping policies (hospitality and service sectors, now expected by the end of 2026)
Businesses will be required to consult with workers or their representatives before introducing a tipping policy. These policies should be reviewed and updated at least every three years.
- Trade union rights
From 30 October 2026, unions can request access to workplaces, including where they are not recognised, and union representatives gain new rights. A separate duty to tell workers of their right to join a trade union is now due in January 2027.
- Industrial action protections
From 30 October 2026, workers taking part in industrial action are protected not only from unfair dismissal, but also from detriment, meaning they must not be treated less favourably for participating.
- Public sector outsourcing
New measures will apply to public sector outsourcing to prevent disparities in terms and conditions between former public sector employees and private sector workers working alongside them. These changes aim to address “two-tier” workforces.
What this means for SMEs
October is the time when it pays to be ahead of the curve, particularly for businesses in retail, hospitality, leisure, healthcare, professional services, or any other customer-facing sector where third-party behaviour can quickly become an issue.
In addition, further changes to the law on non-disclosure agreements (NDAs) are expected. While NDAs are already limited in their ability to prevent disclosures of wrongdoing, proposed reforms would go further by rendering unenforceable any clauses that seek to prevent workers from alleging or disclosing work-related harassment or discrimination, including how such issues were handled by the employer. These changes are not yet in force, and the government expects to make the regulations in 2027.
What we are prioritising for our clients
Our approach at Lawyerly is built around clarity, practicality and the protection of workplace culture. With these changes, we are prioritising these 5 actions:
1) Update “people essentials” for April’s changes
SSP from day one and expanded eligibility can increase cost exposure in high-absence environments. More commonly, however, the real risk is inconsistency: different managers taking different approaches, conversations not being recorded, and return-to-work processes being informal.
What we are doing with clients
We are working with clients to review and update absence and sickness policies, including fit note management and return-to-work processes. We are also refining manager guidance to promote consistency, with clear direction on appropriate conversations, escalation points, and robust decision-making records. In parallel, we are supporting clients in reviewing and preparing their payroll and HR systems so they are ready for the changes to Statutory Sick Pay that took effect in April.
2) Build leave planning into operations, not just HR administration
Day-one paternity and parental leave rights are positive for families and retention. For small teams, however, planning is also required.
What we are doing with clients
To support clients in preparing for these changes, we are updating contracts and handbooks to reflect revised eligibility and notice requirements, helping managers plan and manage requests in a fair and predictable way, and introducing simple internal templates to ensure requests are handled consistently across the business.
3) Treat “speaking up” as a strength, not a threat
Since April 2026, whistleblowing legislation has explicitly included disclosures relating to sexual harassment. This change heightens the importance of calm, consistent and well-documented handling of concerns from the outset.
How we are assisting clients
To support clients in preparing for this change, we are implementing clear, straightforward reporting routes, including confidential options, providing managers with practical guidance on how to respond appropriately without creating retaliation risk, and ensuring that investigation processes are proportionate, fair and legally defensible.
4) Harassment prevention and third-party behaviour
From 30 October 2026, employers may be liable for third-party harassment, unless they can show they took all reasonable steps to prevent it. We are helping our clients understand what reasonable steps look like in practice:
- Clear behaviour standards for customers and clients (signage, booking terms, service rules).
- Manager scripts for intervening and escalating issues.
- Training staff on reporting and recording incidents.
- Banning repeat offenders where appropriate.
- Most importantly: following your own process consistently.
Our guide to the new third-party harassment duty covers the policy, reporting and contract points in more detail.
5) Reduce dispute risk with better record-keeping
Now that tribunal time limits are six months, more disputes will remain live for longer, and early conciliation through Acas can extend that further.
Summary checklist
We would strongly urge you to have the basics in place: a clear and consistent paper trail for performance discussions, absence management, grievances and disciplinary outcomes. Getting the basics right reduces risk, supports fair decision-making and puts you in a far stronger position if issues escalate.
If you have not done so already, do these five things:
- Sickness absence: Check that sickness absence processes reflect April’s changes (policy and manager guidance).
- Family leave: Refresh family leave policies to reflect day-one rights.
- Reporting and investigations: Put in place a clear reporting route and a basic investigation playbook.
- Contractual planning: Identify any roles where terms may need to change in late 2026 or early 2027 and plan carefully in light of the dismissal and rehire reforms now due in January 2027.
- Client harassment: Before 30 October, update your harassment policy to cover customers and clients, and decide who makes the call when a client crosses the line.
