UK employment law changes in Jan 2027: What you need to know

As part of its plan to improve pay, working conditions and job security, the UK Government published the Employment Rights Act 2025, introducing a staggered rollout of reforms strengthening workplace protections. As a result, several employment law changes are coming into force in 2027 which will significantly affect employers and their people, including the unfair dismissal qualifying period being cut from two years to six months. In this article, we look at:

• What is changing? 
• How will these employment law changes affect your organisation or career? 
• How can you prepare for the impact of this legislation? 

This guide is for hiring managers looking to remain compliant and candidates looking to understand how their employment rights are affected by the Employment Rights Act 2025. 

Key changes at a glance

• The unfair dismissal qualifying period has been cut from two years to six months, effective from 1 January 2027
• Employees will have the right to written reasons for dismissal as of 1 January 2027
• The cap on compensation for unfair dismissal is being removed from 1 January 2027
• Fire and rehire restrictions will come into force on 1 January 2027
• Employers will have a duty to inform workers of their right to join a trade union from 1 January 2027

"As the founder of a business, I know that legislative changes can seem complicated and, at times, overwhelming, but they can also present opportunities. The Employment Rights Act 2025 will give employers the chance to get their recruitment processes in order and ensure they get the right talent first time and that's where our expertise can help." 

Charlie Rawstron, Co-Founder, 3Search

FAQs for hiring managers

What UK employment law changes come into force in January 2027?

There are five employment law changes coming into force on 1st January, 2027 under the Employment Rights Act 2025: 

1. Unfair dismissal protection after six months instead of two years: This will apply to anyone dismissed on or after 1 January 2027 – so anyone who started with you on or before 1 July 2026 will be covered by the new rule.
2. Unfair dismissal compensation cap removed: While compensation is currently capped at either 52 weeks' gross pay or £123,543 (whichever’s the lowest), there will be no cap from 1 January 2027. You can still lower an award of compensation if the employee contributed to their own dismissal (contributory fault) or failed to take reasonable steps to look for a new job.
3. Fire and rehire restrictions: As of 1 January 2027, if you try to force a restricted variation – a major, unwanted contract cut, such as lowering pay, cutting hours or changing shifts – and dismiss the person for refusing to accept it, this is legally automatically unfair. The only narrow exception is where you can prove there was a serious financial difficulty threatening the business, and no other reasonable way to avoid it.
4. Right to written reasons for dismissal: The right to legally request a written reason for dismissal falls from two years to six months on 1 January 2027.
5. Duty to inform workers of right to join a trade union: You’ll need to provide all your people with a government-prescribed written statement informing them that they can join a trade union, although the full details are still to be announced.

To see, at a glance, when all the changes are coming into force, take a look at our key dates table below.

When does the six-month unfair dismissal rule start?

The six-month unfair dismissal rule applies to dismissals taking effect on or after 1st January 2027, so it will cover anyone who started with you from 1st July 2026. Dismissals effective before 1st January 2027 will remain under the old rules.

However, remember that a person’s statutory minimum notice period of one week (applicable after one month of service) will be added to their length of service, which could push an end-of-year dismissal into January. That means that a dismissal handled poorly in late 2026 may fall under the new rules. If you’re not sure whether you’ve made the right hire, don’t try to beat the deadline - get legal advice.

Does the new rule apply to people we've already hired?

Yes, the six-month unfair dismissal rule is based on the person’s length of service at the dismissal date, so anyone with at least six months' service on 1st January 2027 is covered straight away. For absolute clarity, someone who started in June 2026 will have accumulated six months' continuous service in December, so they'll be protected in January.

Is there still a cap on unfair dismissal compensation?

No, there is no cap on unfair dismissal compensation from 1st January 2027. The cap on compensation, which is currently whatever’s the lowest out of 52 weeks' gross pay or £123,543, will be removed from this date. This will mostly affect your more senior and highly paid hires, so please get in touch with our executive team if you’d like to talk this through in more detail.

How should we use probation periods now?

The probation period is now your main window for judging a new hire’s fit before full protection applies. You might find it helpful giving new hires a three to four-month notice period with a short extension where necessary, along with structured reviews and clear, written objectives for the role, making sure you raise any concerns with the person early on. But remember, extending the person’s probation doesn't stop them reaching the six-month threshold.

What's changing on fire and rehire?

Dismissing someone to force through a cut to pay, hours, leave or pension will usually be considered automatically unfair, from day one.

The only narrow exception is when the business is facing an existential or near-insolvency crisis, where you’ll need to demonstrate to courts and tribunals that there was a serious financial difficulty threatening the business. Please note that normal commercial pressures, like declining profit margins or cost-cutting to increase profitability, will not qualify.

The exact detail of this new rule depends on regulations still to be published, so keep an eye on the government’s timeline update to see how you’re affected.

Do we need to tell new starters about trade unions?

Yes, from 1st January 2027, you’ll have a duty to inform your people of their right to join a trade union. The details are yet to be announced, so you might find it helpful to add this to your onboarding packs to ensure all your new starters are aware and save yourself the work later on.

Which employee rights already apply from day one?

Discrimination protection and automatically unfair dismissal apply as soon as a person starts with you. They don't need to work for you for any minimum length of time to gain these rights.

Discrimination protection means you can’t discriminate against any employee from day one, or during the recruitment process, based on protected characteristics like age, disability, race, sex, religion or sexual orientation.

With automatically unfair dismissal, if you fire a worker for a reason the law deems automatically unfair, they do not need two years of service. Examples include dismissing someone for whistleblowing (making a protected disclosure about wrongdoing in the organisation), raising health and safety concerns or joining a trade union.

Although it’s easier to dismiss short-service employees for performance or fit, these hires have never been 'risk free' for employers. You face severe legal and financial risks if the dismissal is deemed related to discrimination or unfair dismissal.

Should we change how we hire because of the 2027 UK employment law changes?

Yes, you should change how you hire because of 2027 UK employment law changes. With protection starting at six months due to the Employment Rights Act 2025, it’s more important than ever that you get your hires right first time. That means structured interviews, in-depth assessments, accurate references, market insight and choosing the right type of contract. If you need support putting together the right hiring process, get in touch with our team.

What other employment law changes are coming in 2027?

The other employment law changes coming into force in 2027 include: 

• Guaranteed hours
• Flexible working changes
• Bereavement leave (including pregnancy loss)
• Stronger protection for pregnant women and new mothers
• Gender and menopause action plans
• Non-disclosure agreement (NDA) restrictions
• Umbrella company regulation

With dates still to be confirmed, check the GOV.UK website for a comprehensive list of legislative changes.

FAQs for candidates

When will I be protected from unfair dismissal under the new rules?

Once you have six months’ service you will be protected from unfair dismissal under the new rules, if you’re dismissed on or after 1st January 2027.

Because the law looks at your total service on the day you’re dismissed, the exact date you become protected depends on when you started your job. If you were hired on or before 1 July 2026, you’ll cross the six-month mark before the new year. Because you already have six months of service, you’ll instantly be protected on 1 January 2027. If you were hired after 1 July 2026, you won’t be immediately protected on 1 January 2027. Instead, your protection will kick in when you complete six months in 2027.

I've already started a new job. Does the change apply to me?

Yes, the 2027 UK employment law changes will apply to you in your new job. What matters is your length of service on the date of dismissal, not your start date. For example, if you started your job in mid-2026, you did not have unfair dismissal protection on day one. However, if you’ve already hit the six-month milestone on 1st January 2027, you’ll instantly gain the right to claim ordinary unfair dismissal.

Is it less risky to change jobs in 2027?

Yes, thanks to the changes, it’s less risky to change jobs in 2027 as you'll be protected after six months, not two years. But making a good move will still depend on finding the right role, as well as the employer and the market. Get in touch with one of our consultants to discuss the current state of the market or take a look at our latest jobs here.

Will probation periods change?

There's no new legal probation period, but you should expect employers to run probation more formally, as they‘ll be keen to make sure you’re the right hire. Because the company has a tighter deadline to assess your performance, it’s important for you to clarify exactly how you’ll be measured. So when you’re at the offer stage, ask the hiring manager about the objectives of the role and the review schedule.

Can my employer change my pay or hours without my agreement?

No, from 1st January 2027, dismissing you to force a cut to pay, hours, leave or pension will usually be automatically unfair, whatever your length of service.

An employer can’t alter the core terms of your employment contract without your explicit agreement. The only scenario where an employer can legally use dismissal to force a contract variation is if the business is facing imminent collapse or insolvency, and the contract change is unavoidable to keep the company afloat.

What rights do I have from my first day?

The two main rights you’ll have from the moment you join will be protection from discrimination and protection from automatically unfair dismissal. Discrimination protection covers protected characteristics like age, disability, race, sex, religion and sexual orientation, applying from the recruitment process onwards. With automatically unfair dismissal, if you're dismissed for a reason the law deems automatically unfair, you do not need two years of service. Examples of unfair dismissal include being fired for whistleblowing, raising health and safety concerns or joining a trade union.

From January 2027, you’ll also have the right to be told you can join a union, although the full details haven't yet been announced.

What if I'm dismissed before 1st January 2027?

If you’re dismissed before 1st January 2027 then the old employment rules apply, meaning you generally need two years of continuous service to bring an ordinary unfair dismissal claim, and any compensation you’re awarded will be subject to the existing cap of one year’s gross pay or £123,543, whichever’s the lowest. Please note that if you have any workplace issue, dispute or dismissal that happened on or after 1st October 2026, the window of time you have to start legal action has doubled from three months to six months. If you need more advice, reach out to Acas to discuss your specific situation.

Key dates for employment law changes in 2027

What to do if you're hiring now?

If you’re a hiring company looking to manage the impact of these changes on your business, here are our five key tips.

1. Review probation periods: Shortening contractual probations to three or four months will give you a buffer zone to either extend the employee’s probation or part ways before the six-month legal deadline makes the dismissal process more complex.
2. Train managers: You’ll need to rigorously train your managers to quickly spot and address performance, attendance and conduct issues with a new hire. This will mean conducting structured, formal check-ins rather than letting problems linger.
3. Document early: Keep a written record of a new hire’s performance and conduct from day one. To justify an early termination if a hire isn't working out, you’ll need to formally record and sign off every target they've missed, every training session and every piece of corrective feedback.
4. Audit fixed-term contracts ending in 2027: If a fixed-term contract crosses the six-month threshold and ends after 1 January 2027, the worker will automatically have full unfair dismissal protections. You’ll need to audit these agreements now to ensure you have a legally sound, procedurally fair reason for not renewing them.
5. Plan your 2027 hiring approach with 3Search: The changes coming into force with the Employment Rights Act 2025 will mean you need to work harder than ever to get your recruitment right. You'll need a comprehensive interview process, robust practical assessments and job descriptions that align with your business needs to make sure you select the right person at the outset.

Partner with 3Search for your 2027 GTM recuritment plans

At 3Search, we're experts in recruiting marketing, sales, and RevOps roles across the knowledge-intensive, consumer and technology industries – all of which will be touched by these legislative changes. If you’re a hiring company looking to remain compliant with the Employment Rights Act 2025 and you’d like more advice on getting your hiring process right, speak to a 3Search consultant about your 2027 hiring plan. If you’re a candidate looking to understand how these changes affect your rights as an employee, follow 3Search on LinkedIn to stay up to date with any further changes.

This article offers general information, not legal advice. Correct as of 2nd November, 2026. Always take advice on individual cases.