Changes In Employment Law Fast Approaching

Fashion businesses depend on flexibility, whether recruiting for peak trading periods, reorganising stores or using casual staff to respond to demand. The Employment Rights Act 2025 introduces some of the most significant employment reforms in a generation and will require businesses to plan earlier and pay greater attention to process.

Recruitment and probation will become more important

From 1 January 2027, the qualifying period for ordinary unfair dismissal will fall from two years to six months. The statutory cap on compensation will also be removed.

Employers can still dismiss for potentially fair reasons such as misconduct, capability or redundancy, but must also act reasonably and follow a fair process. That can take time.

Recent fashion-sector cases involving Burberry and H&M illustrate the point.

In Simpson v Burberry Ltd, an investigation into alleged misuse of the employee discount policy was followed by disciplinary proceedings and an appeal. The Tribunal found the dismissal fair. In Urzedowicz v H&M, a detailed appeal corrected an error in the original dismissal decision, with the Tribunal ultimately finding that H&M had acted reasonably. These cases demonstrate the importance of a structured process and an effective appeal.

Fashion businesses often recruit at pace. From 2027, they will have less time to decide whether a new recruit is right for the business. Performance or conduct concerns should therefore be identified early and probation reviews conducted on time. Otherwise, resolving concerns later may require a much more protracted process.

Contractual changes will require more planning

Employers have sometimes responded to an inability to agree contractual changes by dismissing employees and offering re-engagement on new terms – commonly called “fire and rehire”. From January 2027, new protections will make this substantially more difficult.

The risks are not simply legal. In 2021, Clarks faced a high-profile dispute over proposed changes to terms and conditions. More than 100 workers took industrial action and agreement was reached following an eight-week strike and Acas involvement.

A retailer seeking to change weekend working, or a brand looking to revise contractual bonus arrangements following a downturn, should therefore allow more time to consider its options and consult employees.

Preventing workplace harassment

From 30 October 2026, employers will be required to take all reasonable steps to prevent sexual harassment. New protection against third-party harassment will also take effect.

Events at Harrods provide a stark reminder of the human, reputational, and financial consequences when serious historic workplace allegations emerge. Following allegations of sexual abuse by former owner Mohamed Al Fayed, Harrods established a redress scheme. Its results for the year to February 2025 included a £62.3 million provision for redress and related costs, and it reported a £34.3 million pre-tax loss, compared with a £111.5 million profit the previous year.

Those circumstances pre-date the new legislation but underline why prevention matters. Fashion businesses should assess harassment risks across stores, offices, events, and interactions with customers and other third parties, train managers and ensure employees know how to report concerns.

Restructuring may become more complex

Collective redundancy rules are due to change during 2027. Currently, collective consultation is generally required where 20 or more redundancies are proposed at a single establishment within 90 days.

The Woolworths case illustrates why this matters for retailers. When Woolworths collapsed, thousands of employees were made redundant, but individual stores could constitute separate “establishments”. This meant collective consultation requirements were not triggered at stores with fewer than 20 redundancies.

The reforms are intended to make redundancies across a business more relevant to whether collective consultation is required, although final details are awaited. Fashion retailers planning closures or reorganisations across several stores may therefore need to start consultation earlier.

New rules for flexible staffing

The reforms to zero-hours and similar arrangements could particularly affect fashion retailers. Qualifying workers will gain rights to guaranteed hours reflecting the hours they regularly work, alongside greater protection where shifts are changed or cancelled at short notice.

This matters where staffing requirements increase sharply during Christmas, Black Friday, and sales periods. Flexible staffing will remain possible, but businesses should review whether contracts reflect how people actually work and whether better forecasting and rota planning will be needed.

What should fashion businesses do now?

Businesses should start preparing by reviewing recruitment and probation processes; allowing more time for contractual changes and restructures; reviewing harassment risk assessments and training; and assessing their use of flexible workers.

The key theme is planning. Fashion businesses will retain the ability to respond to changing markets, but employment decisions will increasingly require more consultation, documentation and forward planning.

Key implementation dates

October 2026: Employment Tribunal time limits increase from three to six months. From 30 October 2026, enhanced harassment duties take effect.

January 2027: The unfair dismissal qualifying period reduces to six months, the compensation cap is removed and new protections concerning dismissal and re-engagement take effect.

During 2027: Further collective redundancy reforms and guaranteed-hours and predictable-working rights are expected.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.