Labour’s employment law changes: What do HR leaders need to know?

Summary

Labour plans major changes to UK employment law over the next 18 months — the most significant reforms since the Employment Rights Act 1996. Key proposals include unfair dismissal rights from day one, a ban on fire & rehire, statutory sick pay from day one (with expanded eligibility), and strengthened protections for zero-hour contracts. These changes will increase job security for workers and raise compliance, budgetary and operational stakes for employers. HR leaders are urged to act now: review budgets, tighten hiring and onboarding, improve performance recording and engage finance and leadership on workforce strategy.

Key Points

Unfair dismissal: employees could claim from day one; an initial light-touch period of 3–9 months is expected, employers may face notice periods of up to three months and the definition of dismissal will broaden.
Fire & rehire: practices widely used for cost-cutting are likely to be banned, with an expected implementation from October 2026 — employers must explore alternatives and consult meaningfully.
Statutory Sick Pay (SSP): proposed entitlement from day one, extended to lower earners; proposed pay set as 80% of earnings or current SSP rate, whichever is lower — significant budget impact for employers.
Zero-hour contracts: proposals would give workers guaranteed hours, reasonable notice of shift changes/cancellations and offers reflecting reference hours; changes likely to be in force by 2027.
Practical HR actions: shift to skills-based and data-driven hiring, strengthen onboarding and probation, train managers on performance management and documentation, digitise performance records and coordinate closely with finance on cost implications.

Content Summary

The article outlines Labour’s proposed reforms and explains how each will affect HR operations. The most disruptive is the removal of the two-year qualifying period for unfair dismissal claims — hires will need to be right first time and managers must be better trained to manage performance from day one. A ban on fire & rehire will force employers to negotiate and consider alternatives to dismissal. SSP from day one and expanded eligibility will raise payroll costs and require tighter absence management and possible benefits redesign. Changes to zero-hour contracts will reduce workforce flexibility in sectors like retail, hospitality and logistics, requiring workforce forecasting and upskilling strategies. Although the laws are not expected to be fully in force until 2026–2027, the piece stresses that senior HR leaders should prepare now.

Context and Relevance

These proposals represent the largest shift in employment law in decades and sit within broader trends: stronger worker protections, increasing pressure on employers to offer secure and fair terms, and rising scrutiny of flexible working models. For HR leaders, the reforms touch recruitment, retention, people costs and operational models — especially in high-flex sectors. Preparing now reduces legal risk, avoids rushed contractual changes and helps control future budget impacts.

Why should I read this?

Look — if you run HR you don’t have time to read every law change line-by-line. This does the heavy lifting: it flags what will actually hit your payroll, hiring and manager training. Read it so you can start budgeting, tightening hiring and onboarding, and getting your performance records shipshape before the storm hits.