What’s Changing with the New Employment Bill and Why It Matters
With the Government’s Employment Rights Bill set to take effect in stages through 2026 and 2027, HR teams across the UK are facing a major compliance challenge. This new employment bill will have an impact on most businesses.
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A recent WorkNest poll of 300+ employers found:
- Only 16% feel “very confident” their HR processes would stand up to legal scrutiny.
- Nearly 1 in 5 are “not very confident” or “not confident at all.”
- The majority (64%) feel only “fairly confident.”
Let’s break down 3 of the key reforms proposed and see what they may mean for your business.
1. Day-One Protection from Unfair Dismissal
Current Rule: Employees need 2 years’ service to claim unfair dismissal. Probation periods aren’t legally defined.
New Rule (2027): Employees will gain the right not to be unfairly dismissed from day one.
What Employers Must Know
A lighter dismissal process will apply during an “initial period” (likely 9 months), including a meeting with the employee.
This process is valid only if:
- Termination occurs within 3 months after the initial period (with notice served during it).
- The reason is capability, conduct, illegality, or some other substantial reason (not redundancy).
- No unfair dismissal claim if the employee hasn’t started work, unless the reason is automatically unfair, political, or linked to a spent conviction.
- Written reasons for dismissal must be provided if requested after the initial period.
2. Fire and Rehire - Major Restrictions Ahead
Current Rule: Fire and rehire is lawful but risky, especially post-July 2024 Code of Practice.
New Rule (October 2026): Dismissals to force changes to key terms (e.g. pay, hours, pensions, shifts, time off) will be automatically unfair if:
- The employee refuses the change.
- The employer plans to hire someone else on the new terms.
Additional Protections
The ban extends to flexibility clauses and “fire and replace” tactics (e.g. replacing employees with contractors or agency workers). Exceptions apply only in cases of financial collapse.
Dismissals outside these categories will be judged on:
- Reason for the change
- Consultation efforts
- Compensation offered
3. Zero-Hour Contracts & Guaranteed Hours
Current Rule: Zero-hour contracts are legal but can’t restrict secondary employment.
New Rule (2027): Employers must offer guaranteed hours to qualifying workers after each reference period (likely 12 weeks).
Who Qualifies?
- Workers on zero-hour or low-hours contracts (definition pending).
- Offer must reflect actual hours worked.
- Can be fixed-term if justified by temporary needs.
Exceptions
- If the worker resigns, is fairly dismissed, or the contract ends before acceptance.
- Collective agreements can override the duty to offer guaranteed hours.
Agency Workers
- End hirers must make the offer.
- Pay must match or exceed previous agency terms.
- Accepting the offer changes status to worker (not employee).
Shift Notice and Compensation Rights
Current Rule: No legal requirement for shift notice.
New Rule (2027): Workers must receive reasonable notice of:
- Scheduled shifts (time, day, hours)
- Changes or cancellations
Compensation
- Workers are entitled to proportionate payment for short-notice cancellations.
- Applies if the worker reasonably believed they’d be needed.
- Definition of “short notice” and payment terms will be set in regulations.
Agency Workers
- Both agency and hirer must give notice.
- Agency pays compensation (can recover from hirer).
- Collective agreements can override these provisions.
Timeline of New Employment Bill Changes
| Reform Area | Effective Date |
| Fire and Rehire Restrictions | October 2026 |
| Day-One Unfair Dismissal Rights | 2027 |
| Guaranteed Hours Offer | 2027 (consultation in Autumn 2025) |
| Shift Notice & Compensation | 2027 (consultation in Autumn 2025) |
What Should Employers Do Now?
The new employment bill changes are complex and far-reaching. This article only deals with three of the proposals that have been put forward. To stay compliant and protect your business, consider proactive legal support.
Winston Solicitors has launched myHR, a retained HR and employment law service offering expert legal advice from regulated solicitors. It’s a commercially-focused, people-first solution with predictable monthly costs.
Call 0113 320 5000 or email employment@winstonsolicitors.co.uk to learn more.
