Employment Law Changes: What Scottish Employers Need to Know in 2026
2026 is a significant year for employment law. The Employment Rights Act 2025, which became law in December 2025, has been described as the biggest upgrade to workers’ rights in a generation, and its changes are being rolled out in phases across 2026 and into 2027. For small and growing businesses, that means a number of updates to get on top of, and some important changes still to come.
Employment law in Scotland is, in this area, largely the same as the rest of the UK, so these reforms apply to Scottish employers too. This article gives a plain-English overview of the main changes and what they mean for smaller businesses. It is general guidance rather than legal advice, and because implementation dates and detail are still being confirmed through government consultation, you should always check the current position or take advice before acting.
Key changes arriving in 2026
Several important reforms take effect during 2026. The ones most likely to affect small and growing businesses include:
Statutory Sick Pay from day one. From April 2026, SSP changes remove the previous lower earnings limit and the waiting days, meaning eligible employees can receive sick pay from the first day of illness. This is a change worth checking your payroll and absence processes are ready for.
A new Fair Work Agency. A single body has been established to enforce employment rights, with powers to investigate employers, issue penalties and take action on behalf of workers. This raises the importance of getting your practices right.
Doubled collective redundancy award. The maximum protective award for failing to properly consult on collective redundancies has doubled, from 90 days’ to 180 days’ pay per affected employee, increasing the cost of getting collective redundancy consultation wrong.
Stronger whistleblowing and harassment protections. Reporting sexual harassment now counts as a protected disclosure, and duties on employers to prevent harassment, including from third parties such as customers, are being strengthened.
Trade union and industrial action reforms. A number of changes simplify union recognition and alter the rules around industrial action.
Exact dates and details for some of these are still being confirmed, and several are subject to ongoing consultation, so it is worth checking the current position rather than relying on a fixed timeline.
The big change coming in 2027, and how to prepare
The single most significant change for most employers is still to come. From January 2027, the qualifying period for ordinary unfair dismissal is expected to reduce from two years to six months. At the same time, the cap on unfair dismissal compensation is due to be removed.
In practical terms, this means employees will be able to bring an unfair dismissal claim far earlier in their employment than they can now, and the potential financial exposure from getting a dismissal wrong is set to increase. Whilst originally floated as a full “day one” right, the qualifying period was ultimately set at six months following changes during the Act’s passage.
What smaller businesses should be doing now
Tightening up recruitment, probation and early performance management, so any concerns are identified and handled properly and early.
Making sure dismissal decisions, even for shorter-serving employees, follow a fair and well-documented process.
Reviewing contracts, policies and procedures to make sure they reflect the new rules as they come into force.
Checking payroll and absence systems are ready for the SSP changes.
None of this needs to be alarming, but it does reward being proactive. The businesses that handle this well will be the ones that prepare early rather than reacting once the changes are already in force.
Getting ready for the changes
There is a lot changing, and the detail is still developing, which is exactly why many small businesses find it helpful to have expert HR support to guide them through it. We help businesses understand what applies to them, review and update their contracts, policies and procedures, and make sure they are ready for each change as it arrives, without getting lost in the detail.
If you would like help making sure your business is prepared for the 2026 and 2027 employment law changes, we are always happy to have a conversation. Getting ahead of these reforms now is far easier than scrambling to catch up later.
