Summer 2026 Employment Law Newsletter

We hope you are enjoying the summer. In this edition of our newsletter, we focus on a number of key developments affecting employers and HR professionals in 2026.

Legislative Developments

Unfair Dismissal Reform – Implementation Confirmed for January 2027

 Further clarity has now been provided on one of the most significant reforms under the Employment Rights Act 2025.

The Employment Rights Act 2025 (Commencement No. 4 and Transitional and Saving Provisions) Regulations 2026 confirm that key changes to unfair dismissal law will take effect from 1 January 2027.

Key changes from 1 January 2027:

• The qualifying period for unfair dismissal will reduce from two years to six months’ service
• The statutory cap on the compensatory award will be removed, meaning compensation will become uncapped
• Any future changes to the qualifying period will require primary legislation

The regulations clarify that:

• The reduced qualifying period will apply where the effective date of termination (EDT) falls on or after 1 January 2027
• This may include some dismissals taking place before that date where statutory notice extends the EDT into 2027
• However, the removal of the compensation cap will only apply where the actual termination date is on or after 1 January 2027

This reform represents a significant shift in litigation risk:

• A larger group of employees will gain unfair dismissal protection much earlier
• Financial exposure will increase, particularly for higher earners, due to uncapped compensation
• Combined with existing tribunal delays, employers may face longer and more costly disputes

Employers should begin preparing now by reviewing probation and performance management processes; dismissal procedures; and their overall approach to litigation risk.

Ongoing Employment Rights Act Reforms 

As highlighted in our previous newsletter, the Employment Rights Act 2025 continues to be implemented in stages throughout 2026 and 2027, including:

• Day-one rights for certain family leave entitlements
• Expansion of whistleblowing protection (including sexual harassment disclosures)
• Increased financial exposure in collective redundancy situations
• The upcoming duty to take all reasonable steps to prevent harassment (expected October 2026)

These reforms are expected to increase both the volume and complexity of employment claims, reinforcing the importance of proactive compliance.

In light of the above developments, employers should consider:

1. Whether early settlement is appropriate in light of tribunal delays
2. Ensuring managers are trained to address issues promptly
3. Strengthening internal processes and documentation
4. Maintaining clear records to support decision-making
5. Reviewing disciplinary and grievance procedures
6. Consider long-term skills development strategies
7. Update policies in line with recent and upcoming changes
8. Prepare for new statutory duties, including the duty to prevent harassment

Collective Redundancy Consultation - Protective Award

From 6 April 2026, the maximum protective award for failing to collectively consult before making redundancies increased from 90 to 180 days’ pay per affected employee.

Employers proposing 20 or more redundancies at one establishment within a 90-day period must comply with collective consultation requirements. Failure to do so could result in costly Employment Tribunal claims.

To reduce the risk of a claim, employers should:

1. Identify collective redundancy situations early.
2. Begin consultation in good time.
3. Consult with the appropriate employee or trade union representatives.
4. Keep clear records of the consultation process.
5. Take legal advice where necessary.

With potential liabilities now doubled, careful planning and compliance are more important than ever.

Employment Tribunal Delays

The Employment Tribunal system is currently under significant pressure, with record backlogs and increasing delays affecting how workplace disputes are managed.

Recent data indicates:

• The backlog of single claims is expected to exceed 60,000 cases
• Total outstanding claims across the system exceed 500,000
• Some hearings are now being listed several years in advance
• Wait times of 12 to 18 months (or longer) are becoming increasingly common

In addition, claims are becoming more complex, with a growing proportion involving discrimination and whistleblowing claims, which take longer to manage and hear.

The practical implications for employers are significant:

• Increased litigation costs, due to prolonged proceedings
• Evidential challenges, where witnesses leave the business or memories fade over time
• Greater pressure to settle disputes at an earlier stage
• Increased importance of early legal advice and robust internal processes

Employers should ensure that internal decision-making is well-documented, fair and evidence-based, given the likelihood of delayed tribunal scrutiny.

Extension of Employment Tribunal Time Limits

As part of the wider reforms under the Employment Rights Act 2025, Schedule 12 provides for the extension of the limitation period from three months to six months for a number of key claims, including unfair dismissal, discrimination, whistleblowing, TUPE-related claims and breaches of the Working Time Regulations. These changes are expected to come into force in October 2026.

However, a number of other claims were inadvertently omitted from Schedule 12. These include, for example, breach of contract claims brought in the employment tribunal in England and Wales. Two new statutory instruments addressing this gap by extending the six-month time limit to those additional claims, have now received Parliamentary approval.

The regulations were approved by the Commons Delegated Legislation Committee on 23 June 2026 and will come into force on 1 October 2026.

During the Lords debate, concerns were raised regarding the existing pressure on the tribunal system and whether it has sufficient capacity to manage an anticipated increase in claims. In response, the government confirmed that a number of measures are being implemented to support the system, including:

• The establishment of a dispute resolution task force comprising representatives from business, trade unions, the legal profession and the third sector, aimed at improving the efficiency and resilience of the tribunal system
• Continued recruitment of employment judges and non-legal members, alongside expanded use of remote hearings to increase tribunal capacity
• The introduction of the Fair Work Agency from 2027, which will have enforcement powers in relation to certain statutory rights (including holiday pay and statutory sick pay), with a view to resolving some disputes without the need for tribunal proceedings

For employers, the practical impact is that a wider range of claims will now be subject to a six-month limitation period. This is likely to increase both the volume of claims and the period of uncertainty following termination. Employees will have a longer window to bring claims, reinforcing the importance of early resolution, robust processes and thorough record-keeping.

Employers should utilise Acas Early Conciliation wherever possible, particularly as the period for early conciliation was extended from 6 weeks to 12 weeks, giving more time to resolve disputes before tribunal.

How Our Employment Team Can Help

We are able to assist employers with:

• Employment Tribunal litigation and strategy
• Early dispute resolution and ACAS conciliation
• Policy audits and redrafting
• Workforce restructuring and redundancy planning
• Training for HR and management teams

News in our Team 

Since our last newsletter, we are pleased to share several exciting developments:

☆  Steven Davies, Partner and Head of the Employment Team, has been elected Vice President Elect of the Cheshire & North Wales Law Society.

☆  The Employment Team has been appointed as solicitors to the Police Federation.

☆  Amy Forshaw, Associate Solicitor, has been named on the Pro Bono Recognition List 2026.

☆  We have been reappointed as contributors to People Management, the UK’s leading HR publication read by professionals nationwide.

☆  Please see below recent articles written by Steven Davies, Partner and Head of the Employment Team, Amy Forshaw, Associate Solicitor, and Daisy Burton, Trainee Solicitor, which may be of interest:

https://www.peoplemanagement.co.uk/article/1951563/managing-end-two-year-unfair-dismissal-rule-guidance-employers 

https://www.peoplemanagement.co.uk/article/1953709/workplace-menopause-support-steps

https://www.peoplemanagement.co.uk/article/1956422/implications-employment-status-reform-businesses

If you would like advice on any of the developments discussed in this update, please contact a member of our Employment Team.