Small employers have already had the National Living Wage rise, higher employer National Insurance and Making Tax Digital this year. The biggest parts of the Employment Rights Act come next.

Two changes take effect on 1st January 2027. Staff will be able to claim unfair dismissal after six months instead of two years, and the cap on what a tribunal can order you to pay is being removed.

And it’s only five months away.

What's already changed

The Act got Royal Assent in December 2025 and is being introduced in stages.

Since 6 April, statutory sick pay covers more staff. Paternity leave and unpaid parental leave became day-one rights, so a new starter gets them from their first shift instead of after a qualifying period. Protective awards for collective redundancy doubled.

The Fair Work Agency opened on 7 April. It's a new body with powers to investigate employers and enforce employment rights.

What's coming this autumn

From 1 October, the time limit for bringing a tribunal claim gets longer. An ex-employee will have more time to decide whether to make one.

On 30 October, you'll need to take all reasonable steps to prevent sexual harassment at work. That covers harassment by customers, contractors and members of the public, not just colleagues.

That date changed. It was 1 October until the government published a revised timetable on 16 July.

Why six months is the big one

Two years is a long time. Most problems with a hire surface well inside it, which is why plenty of small firms have never had an unfair dismissal claim.

Six months is barely past probation for a lot of roles.

The arithmetic will be what catches people out. To have six months' service on 1 January 2027, someone needs to have started by 1 July 2026. Anyone taken on recently already has the service. The clock doesn't reset in January.

Then there's the cap. At the moment a tribunal can only order you to pay up to a set limit. From January there's no limit, which changes what one badly handled dismissal could cost a small company.

Zero-hours contracts

These change later in 2027.

Where someone regularly works a settled pattern of hours, you'll have to offer them a contract that reflects it. There'll be rights to reasonable notice of shifts, and compensation if you cancel one at short notice.

The detail is still out for consultation.

What should you do now?

Hold probation reviews on their proper dates. A delayed review now carries a consequence that wasn’t there last year.

Write things down. Most dismissal claims are lost on records rather than facts, so keep notes from one-to-ones, a written note of concerns you raised, and evidence you gave someone a chance to put things right.

Check your contracts and staff handbook. The day-one rights changed in April and plenty of documents still describe the old position.

Update your harassment policy before 30 October, and make sure it covers third parties if your staff deal with the public.

And if there's someone you're unsure about, spend an hour speaking to an employment solicitor.

What will it cost?

Better records take management time and contract reviews cost money. From January, a dismissal that goes wrong has no upper limit, which could cost significantly more.

Build it into your first-quarter figures alongside everything else due that month.

This is general information rather than legal advice. Speak to an employment law specialist about your own situation.