2027 Employment Law Changes

As we move into the second half of 2026, we now look ahead to the 2027 employment law changes.

2027 Employment Law Changes: Rate Changes

The 2027 employment law changes will include the usual set of rate changes. These will take effect in April 2027, and will include the following:-

• The new rates for the National Living Wage and the National Minimum Wage that will apply from the 1st April 2027 will likely be announced on the eve of the 2026 Autumn Budget, which will be delivered at some point in October / November 2026. The new rates for the Real Living Wage and the London Living Wage will likely be announced just prior to Living Wage Week, which starts the week commencing 9th November 2026, with employers expected to implement the new rates by the 1st May 2027.
• Statutory Maternity Pay, Statutory Paternity Pay, Statutory Shared Parental Pay, Statutory Adoption Pay, Maternity Allowance, Statutory Neonatal Care Pay, and Statutory Parental Bereavement Pay (i.e. family friendly payments): It is anticipated that the new rates will be announced in around December 2026. They will likely come into effect on the 6th April 2027.
• Statutory Sick Pay: The new rate is normally announced at the same time as the new rates for family friendly payments (hence, around December 2026), and will come into force on the 6th April 2027.
• The statutory cap on a week's pay for the purposes of calculating the basic award and statutory redundancy pay: The new rate is likely to be announced in March 2027, and will come into effect on the 6th April 2027.
• The Vento Bands: The Presidents of the Employment Tribunals in England & Wales and Scotland are due to conduct the annual re-evaluation of the Vento bands in March 2027, with the changes coming into force on the 6th April 2027

Gender Pay Gap Reporting

At the same time as the 2027 employment law rate changes are taking effect, the usual gender pay gap reporting deadlines need to be met by those organisations with a headcount of 250 or more employees. Accordingly, the deadline for public sector employers to report their data will be the 30th March 2027, with a snapshot date of the 31st March 2026. And for private sector employers and voluntary organisations, the deadline will be the 4th April 2027, with a snapshot date of the 5th April 2026.

Employment Rights Act 2025

Outside of the April 2027 rate changes, the bulk of the main employment law changes will stem from the implementation of much of the remainder of the Employment Rights Act 2025. Some of the employment law changes brought in under the Employment Rights Act 2025 have already been implemented. More changes will be implemented between August - December 2026, with much of the remainder taking effect in 2027.

The 2027 employment law changes to be implemented under the Employment Rights Act 2025 are as follows:-

• Ban on Fire and Rehire: From 1 January 2027, dismissing employees in order to re-engage them on less favourable terms will be automatically unfair in most cases. A limited exception will apply where the employer is facing significant financial difficulty threatening business viability and a fair process has been followed.
• Dismissal and Re-engagement Code: A revised statutory Code of Practice on dismissal and re-engagement is expected to come into force in 2027 alongside the new fire and rehire regime.
• Unfair Dismissal Qualifying Period: From 1 January 2027, the qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months.
• Unfair Dismissal Compensation Cap: From 1 January 2027, the statutory cap on compensatory awards for ordinary unfair dismissal will be removed, with Section 124 of the Employment Rights Act 1996 repealed. Awards will continue to be based on actual financial loss and subject to the employee’s duty to mitigate.
• Zero-Hours and Low-Hours Contracts: Workers will gain the right to be offered a contract reflecting the hours they regularly work over a 12-week reference period, together with rights to reasonable notice of shifts and compensation for short-notice cancellations or changes. These protections are expected to extend to agency workers.
• Flexible Working: Employers will only be able to refuse a flexible working request where the refusal is objectively reasonable and based on one of the eight statutory business grounds. Employers must consult with the employee and provide a written explanation.
• Reasonable Steps to Prevent Sexual Harassment: Regulations are expected to specify steps that may be regarded as “reasonable” when determining whether an employer has taken all reasonable steps to prevent sexual harassment.
• Gender Pay Gap and Menopause Action Plans: From Spring 2027, large employers (250+ employees) will be required to publish action plans on addressing their gender pay gap and supporting employees experiencing the menopause.
• Protections for Pregnant Workers: Protection against dismissal will extend from the point the employer is notified of pregnancy until six months after the employee returns to work, with dismissal permitted only in limited circumstances.
• Statutory Bereavement Leave: A new day-one right to Statutory Bereavement Leave will be introduced for the loss of a dependant, providing a minimum of one week of leave.
• Collective Redundancy Consultations: A new organisation-wide threshold for collective redundancy consultation is expected to be introduced to prevent employers avoiding obligations by spreading redundancies across multiple sites.
• Umbrella Company Regulation: A regulatory framework for umbrella companies will be introduced to improve transparency around pay, deductions and employment status.
• Collective Grievances: Workers will gain a statutory route to raise collective grievances through a trade union or elected representative, with employers required to respond within a formal process.
• Electronic Voting for Recognition: Statutory recognition ballots are expected to move to electronic and workplace voting during 2027.
• Single Worker Status Review: The Government is expected to publish its framework for moving toward a single worker status model, although full implementation may follow in later legislation.
• Fair Pay Agreements (Social Care): The first sector-wide Fair Pay Agreement for adult social care is expected to take effect during 2027 following the establishment of the negotiating body in 2026.
• Non-Disclosure Agreements (NDAs): New rules are expected to render void any confidentiality clauses that seek to prevent workers from disclosing harassment or discrimination.
• Blacklisting and Industrial Relations Reform: Anti-blacklisting protections will be extended, including coverage of predictive technologies, alongside wider modernisation of the industrial relations framework.

For employers, the most significant 2027 employment law changes that arise out of the Employment Rights Act, are likely to be the new unfair dismissal rules, the fire and rehire restrictions, the zero-hours protections and the expanded collective rights.

‘Next Steps’ Document

The following measures were not included within the employment law changes arising out of the Employment Rights Act 2025. However, the Government confirmed in its ‘Next Steps’ document (published alongside the original Employment Rights Bill) that these potential employment law changes will be addressed at a future point:-

• A Legal Right to Switch Off / Disconnect: A proposed right to disconnect from work communications and obligations outside normal working hours, aimed at protecting employee wellbeing and improving work-life balance. This is expected to be implemented via a statutory Code of Practice rather than primary legislation.
• Equality (Race and Disability) Bill: A separate Bill is expected to introduce reforms including: (i) extending equal pay rights to ethnic minorities and disabled workers; and (ii) introducing ethnicity and disability pay gap reporting for employers with 250 or more employees.
• National Minimum Wage (NMW) Bands: The government remains committed in principle to moving towards a “genuine living wage” and narrowing age-based minimum wage bands. Progress began with the abolition of the 21–22-year-old rate in April 2024. However, the plan to align the 18–20 rate with the adult National Living Wage has now slowed, with ministers confirming that there is no fixed timetable for ending the lower youth rate. The key concern is that rapid equalisation could make employers less willing to hire younger and less experienced workers at a time when youth unemployment is already high. Business groups have also warned that sharp wage increases, alongside other employment costs, may lead employers to freeze entry-level recruitment or reduce expansion. As a result, the Low Pay Commission has been given flexibility to decide the pace and timing of any transition, taking youth employment conditions into account. Alongside this slower approach, the government is using targeted support, including a Youth Jobs Grant offering employers up to £3,000 for hiring eligible 18–24-year-olds on Universal Credit.
• Carers’ and Parental Leave Reviews: The Government has confirmed that carers’ leave and parental leave will be subject to further review as part of its longer-term employment law reform programme.

Further 2027 Employment Law Changes

Additional employment law changes include the following:-

• Fair Work Agency Holiday Pay Enforcement: The Fair Work Agency is expected to take on a wider enforcement role during 2027, including stronger powers over holiday pay compliance from April 2027. The regime is likely to mirror aspects of National Minimum Wage enforcement, with powers to investigate underpayments, calculate arrears, require repayment and impose financial penalties. It may also include a public naming regime for holiday pay breaches, increasing reputational as well as financial risk
• The Terrorism (Protection of Premises) Act 2025, known as Martyn’s Law. This is expected to take effect in spring 2027. It will require those responsible for qualifying public premises and events to take proportionate steps to reduce the risk of terrorist attacks and improve preparedness. Duties will depend on the size and nature of the venue, but may include terrorism risk assessments, staff training, emergency procedures and security planning. The law will affect many employers operating public-facing premises, including hospitality, retail, entertainment, education, healthcare and event venues.
• Pension Schemes Act 2026: Phased Implementation: The Pension Schemes Act 2026 received Royal Assent on 29 April 2026. It forms part of the wider programme of employment law changes. The Government’s objective in bringing forward the legislation is to support the consolidation of pension assets by encouraging the creation of larger pension investment vehicles, including the proposed merger of tens of billions of pounds of assets from local government pension schemes and defined contribution schemes into larger pension “megafunds”, with a view to increasing investment in UK businesses, infrastructure, and long-term growth. The reforms are being introduced in phases rather than all at once. LGPS pooling and governance changes take effect from 30 June 2026, including requirements around asset pooling, senior LGPS officers and independent persons. The Value for Money framework and guided retirement duties will follow through regulations and consultations, with first VFM assessments expected from 2028. Larger DC schemes are expected to meet a £25 billion scale requirement by 2030, while some transitional routes may run longer. Automatic consolidation of small dormant pension pots is also expected later in the implementation timetable.

Other Potential Employment Law Changes

The following are further employment law changes that may potentially be enacted. Some of these employment law changes however may not be enacted in time to form part of the 2027 employment law changes, but instead of later employment law changes beyond the 2027 employment law changes:-

• Non-Compete Clauses Reform: In response to its 2020 consultation on non-compete clauses, the previous Government announced on 10 May 2023 that it intended to legislate for a statutory three-month limit on post-termination non-compete clauses. That proposal was not implemented before the change of Government. The current Government has since reopened the issue. On 26 November 2025, the Department for Business and Trade published a working paper setting out options for reform, with responses closing on 18 February 2026. The options include a statutory time limit, different limits depending on company size, an outright ban, a ban below a salary threshold, and a combined model. No final reform has yet been confirmed, so this remains a potential future employment law change rather than a fixed 2027 measure.
• Artificial Intelligence (AI) Regulation: The Government’s AI policy has continued to develop through the AI Opportunities Action Plan and the separate copyright and AI workstream. The copyright consultation launched in December 2024 closed in February 2025, and the Government published a report and impact assessment in March 2026. It confirmed that the earlier preferred option of a broad copyright exception with an opt-out for rights holders is no longer its preferred approach. Instead, the Government is gathering further evidence and focusing on issues such as digital replicas, AI-generated content labelling, creator control, transparency, licensing and a proposed Creative Content Exchange. There is still no single comprehensive UK AI employment law regime, but employers should expect continued regulation, guidance and sector-specific developments affecting AI use at work.

As stated, some of the above employment law changes may not be enacted in time to form part of the 2027 employment law changes, but instead of later employment law changes beyond the 2027 employment law changes.

Further 2027 Employment Law Changes May Be Announced

Further employment law changes may yet be announced, and any further proposed employment law changes will be detailed in future updates to this article. Nevertheless, already, these employment law changes make up some of the most substantial employment law changes of recent years.