Luxury businesses are facing a significant shift in employment regulation as the UK’s Employment Rights Act is implemented across 2026 and 2027. The reforms represent the biggest overhaul of employment law in a generation and will affect everything from recruitment and flexible working to workplace culture, employee relations and legal risk. For luxury clients, the reforms arrive against a backdrop of ongoing labour shortages, increasing customer expectations and heightened scrutiny of corporate culture.
As implementation progresses, employers will be expected to demonstrate stronger governance, more robust decision-making and improved workforce oversight. For luxury businesses, where reputation, customer experience and talent retention are critical competitive advantages, compliance is becoming an increasingly strategic issue.
Key changes
One of the most important changes is the introduction of a six-month qualifying period for unfair dismissal claims from 1 January 2027. Employers will need to strengthen recruitment, onboarding and performance management processes accordingly. The removal of compensation caps for unfair dismissal claims could also increase financial exposure, particularly for businesses employing senior executives and other high earners.
The risk of workplace disputes may also rise. From 1 October 2026, employment tribunal time limits will double from three to six months. This is expected to increase claim volumes and place greater emphasis on document...
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