Your Handbook Was Written for a World That Ends in January

Employment law changes 2027: what SMEs must do now

There is a second job inside your business that nobody applied for and nobody is paid to do. It is the late-night one where you check if the thing you are about to do is legal. With employment law changes 2027 on the horizon, that checking job has grown. The contract clause you liked in 2023. The question you planned to ask. The handbook you downloaded. All now need a fresh look.

Nobody started a business to do that job. For years you could muddle through because employment law moved slowly enough that a document from three years ago was roughly right.

That stopped being true about twelve months ago.

What has actually changed since last autumn

Not a list to frighten you. A list to make a point.

• Statutory sick pay from day one, lower earnings limit removed.
• Protective award for failing to consult on redundancies up to 180 days’ gross pay per person.
• Flexible working responses due inside two months.
• Reporting sexual harassment can qualify as whistleblowing.
• The Fair Work Agency arrived and secured its first conviction and first enforcement order inside three months.

Then this autumn:

• Tribunal claim windows doubled from three to six months on 1 October.
• Right to work checks expanded on 1 October to cover workers, individual subcontractors and people booked through online platforms.
• On 30 October, the harassment duty rose to all reasonable steps, a new third-party harassment duty now covers any protected characteristic, and trade union changes landed.

And on 1 January 2027, the big one.

That is one year. If you have kept on top of every single one of those, in writing, in your own documents, while also running the actual business, you are doing better than most HR departments.

Expert view

• “Following a fair procedure is as important as the reason for dismissal.” Source: Acas Code of Practice on Disciplinary and Grievance Procedures (https://www.acas.org.uk/disciplinary-grievance-code-of-practice)
• “Good people management reduces disputes and costs.” Source: CIPD guidance on managing conflict (https://www.cipd.org/uk/knowledge/factsheets/managing-conflict/)

The number that explains why this matters now

I am careful with statistics and I check them before I use them. These are from the Ministry of Justice’s tribunal figures, published in June for the quarter to March 2026.

• Single claims are up 39% year on year.
• There were 64,000 single claims still open at the end of March, a caseload 55% higher than the year before.
• Across that year the system received 50,000 single claims and disposed of 26,000. It is taking in claims at roughly twice the rate it can clear them.
• The government’s impact assessment for the Employment Rights Act estimates a further 17% increase in volumes. It calls that illustrative and subject to change, so read it as a direction, not a forecast.

Put those together with the tribunal window doubling on 1 October and you get the real shape of it. More claims, a longer queue, and twice as long for somebody to decide to join it.

Nobody is coming for you specifically. But the odds on a small business getting through the next three years without one awkward exit have shortened, and the cost of that exit is set almost entirely by what you wrote down at the time.

For source reading: Ministry of Justice tribunal statistics (https://www.gov.uk/government/collections/tribunal-statistics)

Employment law changes 2027: the January switch and the maths

From 1 January 2027:

• Unfair dismissal protection starts at six months of continuous service instead of two years.
• The compensation cap on the unfair dismissal award is removed.
• Fire and rehire becomes automatically unfair.

Most coverage stops there. The bit that matters is who it catches.

It applies to anyone with six months’ service on that date. Which means everybody hired on or before 1 July 2026 already has it banked. They are on your payroll now, and most of them are working to a contract written for a world that ends in January.

There is a second trap. Qualifying service runs to the date the statutory minimum notice would have expired, even if you pay in lieu. So dismissing somebody at five months and three weeks still lands them over the six month line. If a manager is thinking about acting on a poor fit, five months is already too late to be comfortable.

And because the trigger is the effective date of termination, a decision made in late December whose notice runs into January falls under the new regime. Managers who think they are beating the deadline may not be.

Quick actions for October–December

• Audit starters since 1 July 2026.
• Review probation dates and diarise decisions two weeks earlier.
• Refresh dismissal and performance routes to reflect Acas guidance.
• Confirm who is authorised to dismiss and brief them on the January switch.

What needs to be in writing for 2026 and employment law changes 2027

This is the practical bit, and it is shorter than people fear.

1) Contract of employment that reflects current law

Not a template with another company’s name still in it. The written statement of particulars has to be given on or before day one, and it has to be right. Notice, hours, pay, place of work, holiday, sickness, probation, and from 30 October the statement about the right to join a trade union.

• See: Acas written statement guidance (https://www.acas.org.uk/written-statement-of-employment-particulars)

2) A handbook people have actually read

A handbook is not there to impress. It is there so that when something goes wrong, everybody already knew what was supposed to happen. A short one people read beats a fifty-page one nobody opens. The long unread one is worse because it gives you the comfortable feeling of having handled something you have not.

3) Core policies, written for your business

• Disciplinary and grievance procedures are the first stop in a tribunal. An unreasonable failure to follow the Acas Code can add up to 25% to an award.

• Anti-harassment must now reflect the higher standard and cover third parties, not colleagues alone.

• Then absence, equal opportunities, health and safety, data protection, and any sector specifics you need.

• Read: Acas Code of Practice (https://www.acas.org.uk/disciplinary-grievance-code-of-practice)

4) A short record of decisions

Not a grand filing system. Notes made at the time. The reason in one honest sentence. What you considered and rejected. That last bit is the one almost everybody leaves out and it is the bit that saves you.

Plain-English checklist

• Contracts issued on or before day one, correct to current law.
• Handbooks under 25 pages where possible, with a staff briefing logged.
• Disciplinary, grievance, anti-harassment, absence and equal opportunities in place.
• Health and safety and data protection aligned to your set-up.
• Decision notes stored in one place.

What goes wrong without it is rarely dramatic

It is small, and it is expensive.

• Someone leaves and takes a client list. There is nothing in writing to stop them.
• Someone is off sick for five weeks and nobody can say what they are entitled to, so it gets settled with a guess and a grudge.
• Someone works a bank holiday and three colleagues discover they have been treated differently for two years.
• A probation period quietly expires because nobody diarised it, and a person you were unsure about is now permanent.

None of that reaches a tribunal most of the time. All of it costs money, time and goodwill. And all of it is prevented by paperwork that takes a fortnight to put right and then lasts for years.

DIY or done-with-you: the honest maths

I am not going to pretend you cannot do this alone. You can. People do.

Here is what it costs. A contract and a handbook written properly from scratch is a serious piece of work. Doing it well means reading the current position on notice, holiday, sickness, probation, harassment and data protection, then writing it in language your team will understand. Call it several evenings if you are quick and you know where to look.

Then it has to stay right. Every change in the list above needed somebody to check whether it touched the documents. Some did, some did not, and knowing which is the actual skill.

The failure mode is not that you write something wrong. It is that you write something good in 2026 and never look at it again, and in 2029 it quietly stops being true, and nobody notices until the day it matters.

The real comparison is not “a few evenings versus paying someone”. It is a few evenings, plus remembering to do it again every time the law moves, versus a fortnight where someone else does it and then keeps watching.

How we help before January 2027

That is exactly what Ready for 2027 is.

• A contract of employment written to current UK law.
• A branded employee handbook in plain English, written for your business rather than adapted from someone else’s.
• Eight core policies included as standard.
• Two hours of my time to get it in place, not a zip file in your inbox.
• An HR Advice Line for the day something actually happens.
• A 2027 check-up, where we go back through everything against the January changes once they land.

It closes on 31 October, and the reason is delivery rather than pressure. Everyone who signs up gets it built and in place before 1 January, and that takes the time it takes. Past a point in the autumn I cannot promise that, so I would rather close it than promise it.

It is built for businesses without an HR team, for first-time employers, and for anyone who has taken someone on since July, which by now is a lot of people.

• Ready for 2027 package: https://kateunderwoodhr.co.uk/offers/ready-for-2027
• Free HR Health Check: https://kateunderwoodhr.co.uk/hr-health-check
• Manager skills training, Cake, Coffee and Compliance: https://kateunderwoodhr.co.uk/managers
• Outsourced HR support: https://kateunderwoodhr.co.uk/services/outsourced-hr
• HR Protect plan for micro teams: https://kateunderwoodhr.co.uk/services/hr-protect
• Breathe HR setup and support: https://kateunderwoodhr.co.uk/breathe-hr

Right to work checks and third parties

One October change causes head-scratching. Right to work checks now extend to workers and individuals engaged through platforms. If in doubt, read the employer guide and keep copies in line with the rules.

• Home Office employer guide to right to work checks (https://www.gov.uk/government/publications/right-to-work-checks-employers-guide)

FAQs

• What are the key UK employment law changes in 2027?

  • Unfair dismissal protection starts at six months, the compensation cap on the unfair dismissal award is removed, and fire and rehire is automatically unfair.

• Does the six-month unfair dismissal rule apply to current staff?

  • Yes. Anyone with six months’ service on 1 January 2027 qualifies, including staff hired on or before 1 July 2026.

• How long do I have to respond to flexible working requests?

  • Two months. Build a simple workflow so you keep to the deadline.

• Do I need to complete right to work checks for contractors?

  • Where you engage an individual directly as a worker or contractor, checks apply. Follow the Home Office guide.

• What policies do I need in place before January 2027?

  • Contracts and handbooks updated to current law, disciplinary and grievance, anti-harassment covering third parties, absence, equal opportunities, health and safety, and data protection.

• Is fire and rehire banned?

  • It becomes automatically unfair from 1 January 2027. Get advice before attempting any contractual change exercise.

As we wrap up

The businesses that find this autumn difficult will not be the ones that did not care. They will be the ones who meant to get to it.

Your handbook was written for a world that ends in January. That is not a criticism, it is just the date. There are ten weeks to do something about it calmly, and considerably longer to do it in a hurry afterwards.

If you want help, start with the free HR Health Check. Five minutes, a red, amber and green picture, and an honest answer about your weak point. If it is managers, Cake, Coffee and Compliance is the better chat. If it is documents, Ready for 2027 gets it done on time.

Until next time, keep buzzing and take care of your people. Kettle on, standards up.

Sources cited

• Acas Code of Practice: https://www.acas.org.uk/disciplinary-grievance-code-of-practice
• MoJ tribunal statistics collection: https://www.gov.uk/government/collections/tribunal-statistics
• Home Office right to work checks: https://www.gov.uk/government/publications/right-to-work-checks-employers-guide
• CIPD managing conflict: https://www.cipd.org/uk/knowledge/factsheets/managing-conflict/