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Employment lawyer Laura Wharton on the changes coming to rules around short-term contracts, unfair dismissal and redundancies

Employment law is evolving and is continuing to place greater responsibilities on employers to demonstrate fairness, consistency, and sound management practices.

The Employment Rights Act (“ERA”) covers numerous areas of employment law and represents the most significant employment rights changes in this generation.

This article will explore whether short-term employment contracts will be the norm, how probationary periods should be managed more effectively and what the ERA means for businesses that may need to restructure in response to changing market conditions.

Short-term contracts – the new norm?

Flexibility has been an extremely valuable asset for many businesses. Funding, demand volumes and staffing shortages can make workforce planning increasingly difficult for the pharmacy sector.

Fixed-term contracts allow businesses to recruit for specific workflows, cover the leave of permanent staff or adapt to temporary increases in workload without increasing permanent staffing levels.

Despite the practicalities of fixed-term contracts, a heavy reliance on them does not come without risk as their flexibility does not replace employers’ obligations to treat staff fairly.

Whether short-term contracts become a more common feature of the employment landscape may depend, in part, on the impact of the reduced unfair dismissal qualifying period under the ERA, which is discussed further below.

Changes to unfair dismissal rules

Under the ERA, the qualifying period for ordinary Unfair Dismissal protection is changing from two years to just six months (taking effect on 1 January 2027).

At the same time, the statutory cap on unfair dismissal compensatory awards is being completely removed, meaning a successful claim could result in uncapped financial exposure.

Previously, the first two years of employment could be treated as a low-risk period (save for any events that would give rise to an alternative head of claim i.e. discrimination).

Currently, it is the industry standard that businesses invoke a 6-month probationary period. Going forward, such a period would afford employees unfair dismissal rights and could cause risk to the business with respect to termination of employment.

If businesses were to wait until the end of a six-month probation period to realise that an employee is not a good fit, it will be difficult to dismiss them. A proper process will have to be followed, and there remains a risk that an unfair dismissal claim would still materialise.

To protect businesses from risk going forward, it is recommended that the standard 6-month probation period is reconsidered. It is vital going forward that any probation period invoked is handled with proper care and process.

The new approach will need to be robust; however, such an approach gives companies a strict window to assess suitability and execute a safe dismissal. Of course, a dismissal will not be relevant to every new member of staff, however, the small window presented from 1 January 2027 allows little scope for error.

Since the changes come into effect on January 1, 2027, staff that join businesses from July 1, 2026 will have qualifying service by the implementation date and, accordingly, will have unfair dismissal protection.

In tandem with the extension to Employment Tribunal time limits – which are due to come into force on October 1, 2026 – employees will have six months to bring a claim against an employer rather than the previous three months. Practically, records should be held onto for longer than usual after an employee’s departure, in the event that a claim is brought against the business.

Line managers increasingly important

In an industry where line managers are often also skilled clinicians, it is important that management staff receive adequate training. As employment law expectations continue to evolve across 2026 and 2027, pharmacy owners will need to ensure that they are aware of the changes implemented by the ERA and that staff on the ground dealing with day-to-day management have their requisite toolkit.

Line managers, for example, will need to:

• Conduct probation reviews

• Document performance discussions

• Identify training needs as soon as practicable

• Address conduct concerns robustly

• Recognise capability issues before they escalate

• Maintain accurate and up to date employment records.

Well-trained managers who communicate, provide constructive feedback and maintain accurate record keeping will reduce risk for business and maintain employee engagement.

Workforce restructuring

Whether it be changes to funding, prescription service developments or increasing operating costs – pharmacies may need to reduce hours, restructure roles or even consider closing branches. Restructuring the workforce may become a commercial necessity; however, the ERA makes it more important than ever to ensure that any restructuring exercise is carefully planned and legally compliant.

The ERA does not prevent employers from making genuine redundancies where roles are no longer required because of economic, organisational or operational reasons Although, employers should be prepared to demonstrate that any redundancy process is genuine and supported by a business reason.

Where 20 or more redundancies are proposed within the relevant statutory period, collective consultation obligations can arise. Under the ERA, the financial consequences of failing to comply have increased significantly, with the maximum protective award doubling from 90 to 180 days’ pay per affected employee.

Furthermore, one of the most widely publicised reforms under the ERA concerns the practice of “fire and rehire”, where employees are dismissed and offered re-engagement on revised contractual terms after refusing proposed changes.

Such provisions are not expected to take effect until January 1, 2027. Once in force, dismissing an employee to impose changes to their contractual terms will generally be automatically unfair, unless the employer can satisfy a limited statutory exception, intended to apply only where the business is facing serious financial difficulties and the contractual changes are necessary to help preserve the business.

For pharmacy employers, this means that where changes to pay, hours or other contractual terms are being considered, early consultation and seeking employee agreement will become increasingly important.

Before embarking on any restructuring exercise, pharmacy employers should document the rationale for the proposed change, explored alternatives where possible, consult with employees meaningfully and obtained specialist employment law advice where significant contractual changes or larger-scale redundancies are being considered.

Laura Wharton is a partner in the JMW Employment team