Employment Law Horizon: Key Changes Employers Need to Watch

Employment Law Changes Are Still Moving Forward

After all the publicity and to-ing and fro-ing in Parliament about passing the Employment Rights Act back in December 2025, many will feel that, so far, in 2026 it has all gone quiet.

What has been happening is that there have been a number of public consultations on how to implement the significant changes that are due to take place later this year and well into 2027. In this article, we’ll catch up on some of them and see the progress.

Unfair Dismissal Rights From January 2027

Before we do so, just a quick reminder that with the two-year qualification for unfair dismissal being reduced to six months on 1st January 2027, an employee who starts work on or before 2nd July 2026 will gain full unfair dismissal rights on that January date.

1. Collective Consultation and Redundancy Thresholds

When an organisation considers they may need to make 20 or more redundancies within a 90-day period at one establishment, they are required to embark on collectively consulting representatives of the affected workforce.

The process itself is very prescriptive and takes a significant administrative effort. Following the collapse of Woolworths a number of years ago, the term “one establishment” was held by the European Court of Justice to mean the entity to which the employees made redundant were assigned to carry out their duties and not the employer’s entities as a whole.

For the administrators of Woolworths and then Ethel Austin, who were shutting down most and eventually all shops, this was particularly important as many had less than 20 employees and so were out of the collective consultation requirement.

The Removal of the “One Establishment” Provision

The government is now removing the “one establishment” provision from collective consultation and will be setting a new organisational wide threshold instead.

The government has been doing its own consultation as to whether this should be a single fixed number in the range of 250 – 1000, whether the affected employees should be a certain percentage of the workforce or even whether the fixed number should be tiered, depending upon the overall size of the employer.

With the Consultation now closed, we have to wait to see what the government decide

2. Flexible Working Requests and Employer Duties

Since 2024, those employers who have received a flexible working request and are minded to reject it, have been required to consult with the applicant before any final decision is made.

However, the government’s view is that this has not been enough. Given the subjective nature of what consultation is, the government intends to set out a fixed process.

The Proposed Reasonableness Test for Flexible Working

The biggest change, however, will be in 2027 and a proposed “reasonableness test”.

The government proposes that an employer must accept a flexible working request if it is “reasonable and feasible”, and will state that an employer can only reject the request if they have satisfied a test of reasonableness.

What is planned is that ACAS will consider drawing up a code of practice, which would include specific guidance for employers about what reasonableness will consist of, specifically for flexible working requests. As this will be subject to further consultation, we are unlikely to hear about the details until much later this year.

Learn more about the employment rights bill in our technical zone.

3. Duty to Inform Workers of Their Right to Join a Trade Union

In October 2026, an employer will be required to give a written statement to their workers informing them of the right to join a trade union. The government entered into consultation as to exactly what form the statement should take, what it should include, the manner in which it should be delivered and the frequency it should be reissued.

It is instructive that what should be a fairly simple consultation, which closed in December 2025, about such a narrow point has yet to be resolved by the government.

4. Zero-Hours Contracts and Agency Workers

After the consultation was completed, we now have progress. The government is going to put the following before Parliament:

Guaranteed Hours for Agency Workers

It will be the responsibility of the end-client/hirer to make the offer of guaranteed hours to the agency workers.

Reasonable Notice of Shifts

For agency workers, both the agency and the end hirer will be responsible for providing reasonable notice of shifts. However, they are not going to dictate how agencies should be notified of changes by end hirers.

Short Cancellation Payments

Agencies will be responsible for paying a short cancellation payment to workers.

Recouping Costs

Agencies will be able to recoup the short cancellation cost from end hirers where they have pre-existing agreements before February 2026. Agencies that enter into new agreements with end hirers after this date will need to have the contractual right to recoup, where the end hirer has cancelled late, built into their commercial contracts.

The government has now opened a consultation on what the detail should look like.  The consultation document can be found here, and it closes on 25 August 2026.

Transfer Fees and Extended Hire Periods

Interestingly, the consultation also included the question as to whether end hirers should be required to pay a transfer fee to agencies if they have to offer guaranteed hours to an agency worker.

Unsurprisingly, the end hirers in the consultation overwhelmingly voted to remove this, arguing that it places a double burden on them in both having to make the offer and then paying a transfer fee on top.

Also, unsurprisingly, the agencies voted to keep this as it is a valuable source of income for them.

The government decided that, as the provisions for transfer fees and extended hire periods are already governed by the Conduct Regulations 2003, and that the financial viability of many agencies would be affected if transfer fees were abolished, they would keep things as they were.

This double burden will therefore be on the end-client/hirer.

What Employers Should Do Next

We have yet to see what the government proposes for reference periods and how to calculate guaranteed hours.

We are keeping a close eye on upcoming legislative developments and will update you with timely updates and actionable insights as soon as new information becomes available.

If you would like to discuss any of the topics covered in this article or how impending changes might affect you, please get in touch with the Chartergates team today.

Disclaimer

Chartergate Legal Services Ltd has drafted this update to provide you with a general overview of the relevant law and developments at the date of sending only. This update is provided as a general overview and should be taken as such. It is not a substitute for professional advice that is specific to your circumstances and should not be relied upon as such.