Employment Rights Act Countdown: What Practices Should Fix By January

The Compliance Change That Is Not a Tax Change

Ask a UK practice owner what is on their compliance radar for the rest of 2026 and you will hear about quarterly updates, agent account security and Companies House reform. Almost nobody names employment law. Yet the Employment Rights Act 2025, which received Royal Assent on the 18th of December 2025, is being rolled out in phases through 2026 and 2027, and several of those phases have already taken effect.

This matters to accountants for a simple reason. You may not give employment law advice, but you almost certainly hold the data that proves compliance. Statutory sick pay, holiday pay, hours worked, shift patterns, start dates and leavers all sit in the payroll records your practice maintains. When enforcement tightens, the first place anyone looks is the payroll file.

What Has Already Happened in 2026

Several measures are live, and many clients will not have noticed them:

• April 6th 2026: statutory sick pay changed significantly. The lower earnings limit and the three day waiting period were removed, so more employees qualify and they qualify sooner.
• April 6th 2026: day one paternity leave and unpaid parental leave took effect, alongside a new bereaved partner's paternity leave right.
• April 6th 2026: the maximum protective award for failure to consult on collective redundancies doubled.
• April 6th 2026: employers must keep adequate records to show they have complied with holiday pay and entitlement rules, and retain them for six years.
• April 7th 2026: the Fair Work Agency was established, bringing enforcement of areas such as national minimum wage, statutory sick pay and holiday pay under one body.

The holiday pay record-keeping duty and the SSP change are the two that touch practices most directly. Both are quiet on the day they arrive and expensive if a client cannot evidence compliance two years later.

The Two Dates in the Next Six Weeks

Two deadlines are close enough to warrant a client email this month.

From the 1st of October 2026, the time limit for bringing most employment tribunal claims doubles from three months to six months. In practical terms, that means a longer window in which a disgruntled leaver can bring a claim, and a longer period over which your client needs to be able to produce clean records of pay, hours and process.

From the 30th of October 2026, employers face an obligation not to permit harassment of their employees by third parties, sitting alongside the strengthened duty to take all reasonable steps to prevent sexual harassment. The same month brings tighter rules on tipping, a duty to inform workers of their right to join a trade union, and strengthened union access rights. Hospitality clients in particular will be affected by more than one of these at once.

The January 2027 Cliff Edge, and Why It Started in June

From the 1st of January 2027, the qualifying period for ordinary unfair dismissal falls from two years to six months, and the statutory cap on compensatory awards is removed. Dismissal and rehire on worse terms becomes automatically unfair in most cases.

Here is the detail that catches employers out. The six month qualifying period applies to people already in employment on the 1st of January 2027, which means employees hired from around the end of June 2026 will already have reached six months of service by that date. In other words, the clock has been running since the summer. Any client who has recruited in the last few months has staff who will gain full unfair dismissal protection the moment the new rules commence.

Removing the compensation cap, currently the lower of a year's pay or roughly £118,000, changes the risk profile of a badly handled dismissal from a manageable number to an open ended one. Clients who have relied on the two year window as an informal probation policy need to hear this from someone, and you are usually the adviser they speak to most often.

What Is Coming in 2027

Further measures are scheduled for 2027 and will require system changes rather than policy tweaks:

• Guaranteed hours for zero hours and low hours workers, with a right to reasonable notice of shifts and payment for short notice cancellations. The government consulted on the detail between June and August 2026 and implementation is due in 2027.
• Regulation of umbrella companies, which will be brought within the definition of employment agencies for enforcement purposes.
• Reform of flexible working, new bereavement leave including pregnancy loss, and enhanced dismissal protection for pregnant women and new mothers.
• Mandatory action plans on gender equality and supporting employees through the menopause for larger employers.
• A new collective consultation threshold for redundancies and restrictions on the misuse of non-disclosure agreements.

Guaranteed hours is the one to watch commercially. Offering the right hours to the right worker depends on tracking actual hours across a reference period. That is a data problem before it is a legal problem, and data problems are yours.

Five Things Your Practice Can Do This Quarter

• Run a payroll data health check. Confirm that absence, holiday and hours data is captured properly for every payroll client, and that holiday pay records can be produced for six years. Fix the gaps before anyone asks.
• Flag the hours-heavy clients. Hospitality, retail, care and seasonal businesses will feel guaranteed hours and shift notice rules hardest. Build a list now so you are not triaging in a panic in 2027.
• Send a short, dated client note. Three dates, plain English, no legal advice: October 1st 2026, October 30th 2026, January 1st 2027. Being the firm that warned them is worth more than being the firm that explains it afterwards.
• Know where your scope ends. Update your engagement letters so it is clear what employment matters you do and do not advise on, and line up a referral relationship with an employment specialist. A named partner you trust converts risk into a service.
• Apply it to your own firm. Practices are employers too. If you are recruiting into a tight talent market, your new joiners reach six months of service quickly. Review probation processes, documentation and how dismissal decisions are recorded before January.

The Advisory Angle

There is an opportunity here, not just an obligation. Most small employers have no HR function and no employment adviser. They have an accountant. A one hour workforce cost review that models the effect of higher SSP take up, guaranteed hours and longer tribunal exposure on a client's 2027 budget is genuinely valuable work, and it is work that only makes sense if someone has the payroll data to hand.

Firms that treat the Employment Rights Act as somebody else's problem will hear about it from clients in January. Firms that treat it as a planning conversation will have that conversation in October, on their own terms, and charge for it.

Keeping the Records That Prove It

Every phase of this Act increases the value of complete, retrievable records and a clear audit trail of what was advised and when. That is true of payroll data, and it is equally true of the client communications, engagement terms and internal notes that sit around it. Practices that keep client records, tasks and correspondence in one place will find these deadlines routine. Practices relying on memory and inbox archaeology will not.

The tax deadlines will keep coming. This one is not a tax deadline, and that is exactly why it is worth an hour of your firm's attention this month.