It’s been quite a year for employers – and there’s more to come!
With the October 2026 Budget announcements, significant employment law changes introduced throughout the year and further developments planned for 2027, there’s certainly plenty for businesses to think about.
For SMEs in particular, keeping up with employment law, rising costs and the everyday challenges of managing people can sometimes feel like another full-time job.
And that’s before you’ve got on with actually running your business!
So, I thought it would be useful to pull together some of the key developments, what’s coming next and, importantly, a few practical things employers can start doing now.
Because whilst employment law can sometimes feel complicated, good HR doesn’t need to be.
What did the October Budget mean for employers?
There were several announcements worth noting, but a few stood out to me from a business and people perspective.
National Living Wage is increasing again
From 1 April 2027, the National Living Wage for workers aged 21 and over will increase to £13.21 per hour, with increases to £11.27 for 18–20-year-olds and £8.31 for younger workers and eligible apprentices.
For employers, it’s not just about adjusting the hourly rates of those earning the minimum wage.
What happens to the pay gap between those employees and more experienced colleagues? Or supervisors and team leaders who have additional responsibilities?
It’s worth considering your overall pay structure, recruitment budgets and future workforce costs rather than simply making the minimum adjustments required.
Some support for smaller businesses
The Budget also included changes to business rates relief for qualifying retail, hospitality and leisure businesses in England.
From April 2027, the rateable value threshold for 100% Small Business Rate Relief for qualifying properties will increase from £12,000 to £18,000.
It won’t apply to every SME, of course, but for eligible businesses it could make a difference.
There are also changes to tax-free business mileage rates. The 55p per mile rate for the first 10,000 qualifying business miles is being made permanent, while the rate above 10,000 miles will increase from 25p to 35p from April 2027.
If your employees use their own vehicles for work, it may be worth reviewing your expenses arrangements, remembering that the HMRC tax-free allowance isn’t necessarily the amount an employer is obliged to reimburse.
A few things to keep an eye on
The government has also announced plans to reform non-compete clauses in employment contracts, with further consultation and detail expected in 2027.
There are also longer-term plans to extend parental financial support to more eligible parents, including self-employed fathers and partners, from April 2029.
These aren’t all immediate changes, but they’re worth being aware of.
Employment law – what’s already changed in 2026?
Away from the Budget, we’ve already seen some significant employment law developments this year.
In April, changes to Statutory Sick Pay removed the previous waiting days and lower earnings limit.
Paternity Leave and Unpaid Parental Leave also became day-one employment rights, although eligibility for statutory payments remains a separate consideration.
And from 1 October 2026, the time limit for bringing most Employment Tribunal claims increased from three months to six months.
That last change is particularly relevant from an employee relations perspective.
It reinforces the importance of keeping good records of conversations, decisions, performance concerns, absence discussions and grievances.
Not because every issue will end up in a Tribunal, but because good documentation helps businesses make fair, consistent decisions and demonstrate how they’ve reached them.
And, let’s face it, trying to remember the detail of a conversation six months later isn’t always easy!
What’s coming next?
There are several changes approaching, but two stand out to me for employers.
30 October 2026 – Preventing sexual harassment
From 30 October, employers will be required to take all reasonable steps to prevent sexual harassment, alongside strengthened responsibilities concerning harassment by third parties, such as customers and clients.
This is about much more than having a policy tucked away in an employee handbook.
It’s about understanding the risks in your workplace, making sure people know how to raise concerns, providing appropriate training and ensuring managers understand their responsibilities.
Having a policy is one thing. Making sure it works in practice is another.
1 January 2027 – Unfair dismissal rights
This is probably one of the most significant changes for many SMEs.
From 1 January 2027, the qualifying period for ordinary unfair dismissal will reduce from two years to six months, applying to dismissals from that date. The statutory cap on compensatory awards will also be removed.
You may remember earlier discussions about unfair dismissal becoming a day-one right, but that isn’t the final position.
For me, this makes effective probation and performance management particularly important.
If you have a six-month probation period, are managers setting clear expectations from day one?
Are they providing regular feedback and dealing with concerns when they arise?
Or does the first proper review happen just before the employee reaches six months’ service?
Probation shouldn’t be six months of silence followed by a verdict!
Of course, good probation management isn’t simply about avoiding claims. It’s about helping new employees settle in, understand what’s expected of them and have the best opportunity to succeed.
And we shouldn’t forget that discrimination protections and certain automatically unfair dismissal protections already apply regardless of length of service.
Further changes are planned during 2027, including strengthened fire-and-rehire protections, bereavement leave and changes to flexible working. Some implementation details remain subject to consultation.
Having policies in place is one thing. Making sure they work is another.
Over the last few years, I’ve worked with businesses to develop and implement HR policies, procedures and practical tools to help them manage their people.
And one thing I’ve always felt strongly about is that policies and procedures shouldn’t simply be taken off the shelf and introduced without considering the business they’re intended for.
Of course, they need to comply with employment legislation, but they also need to reflect the size, structure, culture and way the business operates.
What works well in a large organisation won’t necessarily be appropriate for a small business.
It’s about finding the right balance between meeting legal requirements and having practical, straightforward processes that people can actually understand and use.
I also try to build in forthcoming employment law changes wherever it makes sense to do so.
When developing or reviewing policies, if we know legislation is changing, it can be sensible to prepare for those changes ahead of the implementation date rather than having to revisit everything a few months later.
But that doesn’t mean automatically introducing every new provision early.
It’s important to consider the needs of the business, the practical implications and whether doing so could create unintended consequences, additional obligations or enhanced employee entitlements beyond what’s required.
Sometimes implementing a change early makes perfect sense. Other times, the better approach is to prepare for it and introduce it when the legislation comes into force.
It’s about future-proofing where we reasonably can, without unnecessarily complicating things or creating problems for the business.
And of course, it doesn’t stop once the policies are in place.
Employment legislation changes, businesses evolve and the way we work changes too.
A policy that was right for your business two years ago might not reflect current legislation or how your business operates today.
That’s why I’d encourage employers to review their policies and procedures regularly, rather than waiting until something goes wrong.
And importantly, make sure managers understand them, employees know what to expect and they’re being applied consistently.
Because there’s little point having a beautifully written policy if nobody understands it or knows how to use it!
Five things I’d encourage employers to do now
With so much happening, it’s easy to feel that everything needs reviewing at once.
I wouldn’t suggest trying to tackle everything in one go.
Instead, start with the areas that will make the biggest difference to your business.
1. Review your workforce costs
Understand the impact of the National Living Wage increases, including existing pay differentials, recruitment budgets and salary structures.
2. Get probation management right
Make sure expectations are clear, reviews happen regularly and performance concerns are addressed early rather than left until the end of probation.
3. Review your policies and procedures regularly
Don’t just check whether you have the right policies. Consider when they were last reviewed, whether they reflect current employment legislation and whether managers are applying them consistently.
A simple review schedule can help prevent things becoming outdated.
4. Support your managers
Managers don’t need to become employment law experts, but they do need to feel confident having conversations, addressing issues fairly and recognising when they need advice.
5. Have a plan
Understand what’s coming, prioritise what matters most for your business and work through the changes in a manageable way.
Good HR doesn’t need to be complicated
I often think we can make managing people more complicated than it needs to be.
Of course, employment legislation matters, and there will always be situations where specialist advice is essential.
But so much of good people management comes down to getting the basics right.
Clear expectations. Good communication. Fair and consistent decisions. Having conversations early rather than avoiding them. And making sure managers have the confidence and support to do their jobs well.
The aim isn’t simply to keep your business compliant. It’s to create an environment where your people can perform at their best and your business can thrive.
With further changes on the horizon, now is a good opportunity to take stock, review what you’re already doing and identify where improvements might be needed.
You don’t need to do everything tomorrow. But taking a few practical steps now could make a real difference in the months ahead.
Because good HR doesn’t have to be complicated. It just needs to work for your people and your business.
Emma Bisseker | Reach Peak Performance
This article reflects the position as at 28 October 2026 and provides general information rather than legal advice. Future implementation details may change.