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Labour’s Employment Law Changes: What You Need to Know and How to Prepare

Labour’s Employment Law Changes: What You Need to Know and How to Prepare Dynamic HR Services

There’s been quite a buzz about Labour’s proposed employment law changes, but the good news is they won’t be law until Autumn 2026 at least. That means we’ve got time to prepare, breathe, and get our ducks in a row. Here’s a breakdown of what’s coming and what you should be doing as a business owner to be ready when the time comes.

Day One Unfair Dismissal Rights

First up, Labour’s employment law changes include scrapping the current two-year qualifying period for unfair dismissal claims. Instead, from day one, employees will have these rights. However, they’re also introducing a statutory probation period during which you can dismiss new hires under a “lighter touch” process. This probation period is currently undergoing consultation; the current thinking is that it’ll be either 6 or 9 months but I suspect it’ll end up as 12 months.

This is great news in my opinion, but it does mean you’ll need to be more organised with your hiring and managing processes. No more dragging out onboarding or waiting to see if someone “settles in” over time. You’ll need to get your house in order faster and better than ever.

Statutory Sick Pay from Day One

Under Labour’s employment law changes, employees will be entitled to statutory sick pay from the very first day of illness. That’s right, no more three-day waiting period, and they’re removing the lower earnings limit too. The impact on employers should be fairly minimal since SSP is currently £116.75 a week, so not earth-shattering, but it’s something to plan for. There are rumblings that SSP may be paid based on a percentage of pay rather than a specified weekly amount instead – watch this space!

Flexible Working Rights

Now, this one’s a bit of a head-scratcher because, let’s be honest, flexible working rights are already effectively in place. But Labour’s employment law changes will formalise it further. Employers who deny flexible working requests will need to justify their decision against eight specific criteria. So, if you’re already accommodating flexible work where you can, there’s not much to worry about here.

The End of Exploitative Zero-Hour Contracts

Zero-hour contracts have their place when used properly, but Labour’s employment law changes aim to curb exploitation. Under these new rules, workers on zero or short-hours contracts will have to be offered a contract based on hours worked in a 12-week reference period. Businesses will also need to give notice of shift patterns and pay for short-notice cancellations.

In my opinion, zero-hour contracts can be great for flexibility on both sides, but there’s no denying that some employers have taken advantage. These changes aim to stop that, and if you’re using zero-hour contracts responsibly, you won’t need to panic.

Paternity, Parental and Bereavement Leave

Paternity Leave and Parental Leave will become day one rights – currently there’s a qualifying period of having to have been continuously employed for 26 weeks. Bereavement Leave will be extended to anyone who is bereaved, but the relationship with the deceased needs to be defined still. 

Enhanced protection for pregnancy and new mothers

The Bill contains proposals to strengthen protections for pregnant employees and returning mothers.

Collective Redundancy Consultation

Not a big change here but Labour want to introduce the rule of where 20 or more redundancies are proposed, the number of redundancies across the whole business will need to be considered i.e. individual shops/establishment not treated separately. Ultimately, this may mean business needing to collectively consult rather than holding individual consultation meetings. Basically more faff.

Written Statement of Particulars of Employment

These will need to include a written statement that the worker has the right to join a trade union. I won’t comment on this right now – I have strong negative feelings about unionised workplaces!

Ending Fire and Rehire

In a nutshell, it will be automatically unfair to dismiss an employee if they refuse a contract variation, where the main reason for dismissal is either that the employee refused to agree to a variation of contract, or so the employer can recruit another person (or rehire the employee) under new, less favourable terms doing essentially the same job. These practices are common in the likes of large supermarkets and bigger businesses. They are frowned upon so, I can get behind this change.  There will be limited exceptions where the employer is on the verge of collapse. 

What Didn’t Make the Cut

Lastly, something we can all celebrate – the “right to switch off” (aka, banning employers from contacting staff outside of working hours) didn’t make the cut. Instead, it will be covered by a code of conduct. Honestly, if you need to regularly chase your team outside of their working hours, you might want to look at what’s going wrong internally, but we don’t need more laws for that.

What You Need to Do Before 2026

So, we’ve got time. Labour’s employment law changes won’t be enforced until 2026, but that doesn’t mean we can sit back and relax. Here’s what you should be doing to get prepared:

  1. Amend Your Contracts Make sure your contracts reflect the new day-one rights, including the statutory probation period, once we know what that looks like. You can stick with your current probation period, but it looks like you’ll still have up to time to dismiss under the new rules.
  2. Tighten Up Your Recruitment Process You’ll need to be on top of your recruitment and onboarding game. Labour’s employment law changes mean you’ll have less time to work out if a new hire is the right fit, so start formalising your review process to spot any potential problems early on.
  3. Monitor and Review New Starters With a must shorter window to dismiss someone, make sure you’re formally reviewing all new starters within their first six months. Don’t wait until it’s too late to address any issues.
  4. Prepare Your Payroll for Sick Pay Changes With sick pay entitlement kicking in from day one, you’ll need to review your payroll processes to handle this shift.
  5. Update Paternity and Bereavement Policies Labour’s employment law changes mean you’ll need to review and update your policies around paternity and bereavement leave, making sure they’re in line with the new requirements.
  6. Formalise Your Flexible Working Process If you haven’t already, formalise your process for handling flexible working requests. Make sure you’ve got clear, justifiable reasons for turning down requests and that they align with one of the eight business reasons Labour will set out.

Take a Deep Breath…

It’s easy to feel overwhelmed by Labour’s employment law changes, but the truth is, they’re not as bad as we might have feared. Yes, they’ll require some preparation, but nothing a well-organised business can’t handle. So take a deep breath, start planning, and get your house in order ahead of 2026.

It’s worth noting that alongside these key changes, Labour has made over 30 other pledges related to employment law, but there’s currently no clear timetable for when they’ll be delivered. Whilst these additional reforms will come into play eventually, we don’t have any specifics on timing yet, so it’s something to keep an eye on as we move closer to 2026.

By staying on top of Labour’s employment law changes, you’ll be well-placed to navigate these shifts and keep your business running smoothly. Remember, it’s all about being organised, forward-thinking, and ready for the road ahead.

(More announcements and details will be coming so please come back for the latest updates).