Employment law changes 2026-2027: what it means for shift operations

Employment law changes coming in 2026 and 2027 are expected to affect how shift-based organisations - particularly in industries like retail and hospitality - plan rotas, manage flexibility, and control labour costs.

These changes will be especially relevant for employers that rely on flexible working to respond to fluctuating demand and maintain service levels.

While much of the discussion has focused on zero-hours contracts, the practical impact is far broader - particularly for retail, hospitality, and multi-site operations that rely on variable hours and fast-changing demand.

If your business regularly adjusts shifts, adds overtime, makes late changes to planned cover, or relies on agency labour, these changes are likely to affect you - even if most of your workforce is on contracted hours.

Upcoming employment law changes in 2026 and 2027

The Employment Rights Act 2025 introduces a series of employment law changes that will be phased in from 2026 onwards. Key upcoming changes include:

• From April 2026, workers and employees are expected to receive day-one entitlement to Statutory Sick Pay, with the lower earnings threshold removed.
• From 2027, workers and employees on variable or highly flexible schedules may gain the right to guaranteed hours based on actual hours worked over a reference period.
• New protections are expected to require reasonable notice for shift scheduling, changes, and cancellations.
• Where notice is not reasonable, workers and employees may be entitled to compensation for cancelled or changed shifts.
• These protections are expected to apply to agency workers as well as directly employed staff.
• Employers will need to demonstrate compliance through accurate rota records, absence data, and documented decision-making.

Although only employees have a statutory right to request flexible working, reforms under the Employment Rights Act 2025 mean that workers with established, predictable patterns may still gain protections linked to how flexibility operates in practice, rather than how contracts are labelled.

The impact on frontline and operations teams

Flexibility versus predictability in shift-based work

In shift-based environments, flexibility has always helped absorb uncertainty. Changes in demand, sickness absence, weather, and last-minute cover are part of everyday operations.

Recent employment law changes are shifting the balance. The aim is to give workers and employees more predictability, without removing flexibility altogether.

Flexible working requests in variable-hours roles

Employees may increasingly choose to request flexible working where shift patterns are already variable or regularly adjusted. Employers must consider each statutory request individually and respond within the required time limit.

Workers don't have the same statutory right, but may still raise informal requests with their employer, particularly where working patterns have become regular over time.

Where an employer agrees to flexible arrangements, those arrangements may later be treated as part of the normal working pattern, rather than temporary flexibility.

This means employers will need to show that decisions are made in a reasonable way and backed up by clear evidence. This applies at a policy level, as well as in the day-to-day scheduling decisions made by operational managers.

Flexible working will still be possible, but it will need to be supported by clearer processes, better planning, and more consistent execution.

These changes are driven by the Employment Rights Act 2025, which became law in December 2025, with most reforms expected to take effect during 2026 and 2027. Several of these reforms have direct implications for shift-based and variable-hours models, particularly around sickness absence, scheduling, and guaranteed hours.

Execution risk for frontline teams

For employers, this shifts much of the risk from contracts to execution.

Where employers document flexible working poorly or apply it inconsistently, otherwise well-intended operational decisions can quickly translate into compliance risk or unplanned cost.

How rotas are built, how changes are communicated, and how patterns are recorded are likely to play a growing role in whether flexibility remains cost-effective - or creates exposure to unplanned spend.

The key changes to be aware of

Day-one sickness absence entitlements

From 2026, workers and employees are expected to get day-one entitlement to Statutory Sick Pay, with the lower earnings threshold removed. These changes to statutory sick pay are expected to affect both absence reporting behaviour and short-term staffing decisions.

Payroll and absence tracking implications

This may change how employers report sickness absence, making accurate, real-time absence tracking more important for payroll accuracy and fairness.

Alongside changes to sick pay and scheduling, employers should also expect increased scrutiny of how statutory flexible working requests are handled, particularly where working patterns are already variable or regularly adjusted at short notice.

Scheduling reforms from 2027

From 2027 onwards, further reforms are expected to directly affect scheduling and flexible staffing models. Further regulations are expected to clarify more detail on how these requirements will apply in practice, particularly around shift notice, cancellations, and guaranteed hours.

Guaranteed hours linked to actual working patterns

People working under highly flexible arrangements may have the right to be offered a contract. This would reflect the average hours they actually work over a reference period (expected to be around 12 weeks).

Over time, these patterns may become treated as part of the underlying job, rather than temporary cover or ad-hoc support.

This is particularly relevant where individuals are contracted to part-time hours or classified as low-hour workers, but regularly work above those levels over sustained periods.

For businesses that regularly rely on the same people to plug gaps or cover peaks, this may place pressure on existing flexibility unless they strengthen workforce planning and forecasting.

Compensation for short-notice shift changes

New protections are expected to require reasonable notice for shift scheduling, changes and cancellations. Where notice isn’t considered reasonable, workers and employees may be entitled to compensation, proportionate to how late the change is made.

For example, cancelling a shift with only a few hours’ notice may trigger compensation obligations under the new framework.

This can be especially complex where rotas are built around specific days or recurring patterns.

Clear processes to let workers and employees know about changes, cancellations, or amended start times will therefore become increasingly important.

These protections are expected to apply to directly employed staff and to agency workers, meaning last-minute operational decisions could carry immediate financial consequences.

Any compensation paid for late cancellations or changes will also need to be assessed alongside national minimum wage requirements, especially where payments interact with actual hours worked.

Wider workforce reporting and action plan requirements

In parallel with changes affecting scheduling and flexible work, employers should also be aware of wider workforce reforms under the Employment Rights Act 2025.

From 2027, larger employers are expected to be required to produce action plans addressing issues such as the gender pay gap and menopause support.

These requirements are expected to apply to organisations with 250 or more employees, aligning with existing gender pay gap reporting thresholds, although final details will be confirmed through further regulations.

Why “worker vs employee” status matters more now

Narrowing employment status distinctions

The legal distinction between workers and employees is narrowing, with workers gaining more rights from 2026 onwards. These reforms are intended to strengthen protections for individuals whose working reality doesn’t match their contractual label.

Classification risk in multi-site organisations

In large, multi-site organisations, inconsistent classification across locations can result in:

• Uneven entitlements for people doing similar work
• Increased employee relations issues
• Higher risk of disputes, where rotas show regular, predictable patterns over time

Where working patterns suggest an ongoing, predictable relationship, misclassification may also increase exposure to claims such as unfair dismissal, particularly as worker protections expand.

The Employment Rights Act 2025 is also expected to introduce changes to unfair dismissal claims, including reducing the qualifying period from two years to six months. This may increase the importance of early employment decisions and working patterns, particularly where regular shift patterns emerge early on.

In practice, the law is moving toward recognising reality over labels.

When flexibility exists without zero-hours contracts

From 2027, workers on zero-hours or other highly variable schedules may get the right to be offered guaranteed working hours, based on the hours they actually work over a defined reference period.

Many organisations don’t rely on zero-hours contracts in name, but still operate highly flexible scheduling models. Regular overtime, seasonal uplift, recurring cover shifts, and frequent last-minute changes can all create predictable working patterns that attract new protections.

Even where contracts appear fixed, individuals may still work flexibly in practice due to repeated operational adjustments.

Informal patterns and contractual reality

In many cases, these patterns develop informally over time, meaning flexible working arrangements can exist in practice even where contracts appear fixed on paper. Where expectations aren’t reflected in a written statement, informal patterns may carry more legal weight than intended.

This can include patterns such as recurring overtime, regular cover shifts, or informal arrangements like compressed hours, even where contracts remain unchanged.

In other words, compliance will increasingly depend on what people actually work, not how their contract is described.

What workforce and operations teams can do now

Adopting good practice around rota planning, record-keeping, and change management can help organisations balance compliance with operational flexibility.

Strong workforce management processes can help organisations move from reactive scheduling to more predictable, compliant decision-making.

Creating clear action plans can help translate legal requirements into practical steps for frontline teams.

Using data to reduce reactive scheduling

While many details will be confirmed through further regulations, there are practical steps organisations can take today:

• Review where flexible hours are being used most heavily
• Identify roles or sites with consistent overtime or regular cover patterns
• Assess how often shifts are cancelled or changed at short notice
• Ensure rota history and absence data are accurate and accessible
• Strengthen forecasting to reduce reactive scheduling decisions

There are also other potential benefits to this approach, including improved predictability, reduced last-minute changes, and better workforce engagement.

As flexibility becomes more regulated, maintaining clear visibility into rota patterns, changes, and actual hours worked is central to legal compliance, not just operational efficiency.

FAQs

When do the Employment Rights Act 2025 changes take effect?

The Employment Rights Act 2025 became law in December 2025, with most practical changes expected to take effect during 2026 and 2027. Some reforms will be phased in, with further detail confirmed through secondary legislation.

Do these employment law changes apply if businesses don’t use zero-hours contracts?

Yes. Many of the new protections focus on actual working patterns, rather than contract labels. Employers may be affected even if they do not use zero-hours contracts, where rotas show regular or predictable hours over time.

Who is affected by guaranteed hours reforms?

Guaranteed hours protections are expected to apply to workers and employees on variable or highly flexible schedules, including those who consistently work similar hours over a reference period, regardless of whether they are on zero-hours contracts.

What should shift-based employers do now to prepare?

Employers can prepare by reviewing rota history, monitoring short-notice changes, improving absence tracking, and strengthening forecasting to reduce reactive scheduling decisions.