Over the next 18 months, Labour is planning to bring a whole host of changes to employment law – the biggest since the Employment Rights Act 1996.
For Senior HR professionals, this doesn’t just mean a quick brush-up on incoming employment law; these aren’t minor changes to policies. These changes will require action from businesses in order to remain compliant and secure whilst hiring.
Senior HR leaders can’t sit back; they must carefully review budgets, adapt current people strategies, automate hiring processes and invest in innovative hiring solutions wherever possible.
In this article, talent experts and providers of autonomous hiring software, Talos360, will share what changes you can expect and how it will impact you as senior HR leaders.
Unfair dismissal rights from day one
Out of all Labour’s proposed changes to current employment law, the one that really caught the attention of HR leaders was the introduction of employees’ right to claim unfair dismissal from day one.
Perhaps the most important change to legislation of them all, this will bring increased job security for employees and heightened pressure to get hires right the first time for employers.
Currently, new hires can only claim unfair dismissal after two years of employment. With Labour’s proposed changes, employees will have the right to claim from their first day. This is obviously a massive shake-up to current practices, and while the proposed changes aren’t expected to land until 2027, it’s time for HR to prepare.
What can your employees expect once this legislation is passed:
- Day one rights for all employees
- An initial period of employment with a light-touch process of 3-9 months
- A notice period of up to three months for employers
- A change in what qualifies as dismissal, including qualifications, conduct, illegality or substantial reasons.
How will this impact HR leaders?
For HR leaders, this emphasises the importance of getting the right candidates in from day one, with senior HR leaders already shifting recruitment strategies to ensure a more efficient and accurate hiring process.
These changes aren’t expected to land until in early 2027, yet HR Directors are already changing tack, and turning to skills-based hiring approaches, data-driven assessments and stronger onboarding & probationary frameworks.
But changes to unfair dismissal rights don’t just impact recruitment; it raises the stakes of every hiring decision and a new hire’s initial experience. Internal HR teams will need to implement rigorous training for managers on capability, performance management, documentation, and onboarding support.
Fire & rehire ‘ban’
Another update HR must be aware of is the anticipated change to the code of practice on dismissal and engagement – commonly known as ‘Fire and Rehire’. What has often been used as a short-cut for cost-cutting or restructuring, the Fire and Rehire practice is soon to be a thing of the past.
Currently, the Fire and Rehire loophole is abused by employers in an effort to remove people from an organisation and rehire them on less favourable terms.
After recent updates, we expect to see a ban on Fire and Rehire practices as early as October 2026. HR leaders looking to remove staff from their organisation following October must explore all alternatives to dismissal and engage in meaningful conversations with staff before any decision is made.
How will this impact HR leaders?
Following the upcoming employment law changes, HR Directors and key decision-makers must be careful when considering changing staff and making redundancies. HR leaders looking to avoid any legal risk must ensure employee performance data is tracked and stored, preferably digitally, in a performance management system to justify any potential decisions.
Internal HR teams must prioritise communication, remain updated with existing codes of practice, and if any contractual changes are required, ensure to consult with employees and come to an agreement with every party involved.
Statutory Sick Pay
Statutory Sick Pay (SSP) is also set to see significant change following Labour’s proposed Employment Rights Bill. Under current legislation, SSP acts as a state benefit for employees, at the cost of the employer and is available to staff after four days of absence.
Once in effect, Labour’s proposed legislation will give employees the ability to claim SSP from day one, and remove the current waiting days – meaning absent staff will receive sick pay from day one, instead of day four.
In addition to these changes, the reformed SSP policies will be available to those earning below the lower earnings limit – yet the rate of pay will be consulted, especially for those earning below the earnings threshold.
The government’s latest proposal states employees will earn either 80% of their current earnings or the current rate of SSP, whichever is lower.
How will this impact HR leaders?
For senior HR leaders, the impact of this legislation is clear. Providing sick pay from day one and to low earners will be a notable increase in budgets and will require a review of workforce absentee management systems.
This will require senior leaders to work closely with other areas of the business, but most importantly, finance, to allocate budget to potential expenditure. For some businesses, investing in healthcare benefits, improving health insurance or medical plans and allowing for more flexible working practices might help to minimise the potential impact of the changes to SSP.
Zero-hour contracts
Under current legislation, employees with zero-hour contracts have no guaranteed working hours, yet are required to work when called upon. In an effort to make zero-hour contracts more favourable to employees, Labour’s proposed legislation will require employers to:
- Give workers the right to guaranteed work hours
- Give workers reasonable notice of shift changes and cancellations
- Provide an offer of work that reflects the worker’s reference hours
As of Autumn 2025, these changes are under consultation but are likely to remain the same and are expected to come into practice by 2027.
How does this impact HR leaders?
With over 3% of the UK workforce currently on zero-hour contracts, providing the right to regular hours and the appropriate notice of shift changes will cause a considerable shift in the way businesses operate.
HR leaders providing zero-hour contracts must evaluate workforce strategies and forecast potential financial implications of providing guaranteed hours. To soften financial pressure from offering guaranteed hours, internal HR teams may turn their focus to upskilling current staff and offering clear career progression.
For HR directors in sectors heavily reliant on flexible working arrangements, including logistics, hospitality and retail, Labour’s proposed changes to zero-hour contracts will require a closer look at new legislation when offering zero-hour contracts.
The government’s proposed changes to Employment Law aren’t expected to come into effect for another 18 months, but it’s the actions of internal HR teams now that will have the biggest impact.
Hiring right first time should always be the priority for internal HR teams, but more now than ever. It’s up to senior HR leaders to prepare for these changes, adapt their processes, review their people strategy and innovate wherever possible.
Talos360 – applicant tracking system,
Request your demo of Talos ATS
