UK quarterly employment update - Summer 2026

April to June 2026 – a backward glance

Development

Impact on employers

The following ERA changes came into force on 6 April 2026: the maximum protective award for a failure to comply with collective redundancy consultation obligations was increased from 90 days’ pay to 180 days’ pay for dismissals taking effect on or after 6 April; whistleblowing protection was extended to disclosures of sexual harassment; statutory paternity and unpaid parental leave became day one rights; the prohibition on taking paternity leave after a period of shared parental leave was removed; statutory sick pay (SSP) became available from the first day of illness and the lower earnings limit was removed; a duty to keep annual leave records and a requirement, initially on a voluntary basis, on large employers to publish gender equality action plans was introduced; and the trade union statutory recognition procedure was simplified. The new Fair Work Agency was established on 7 April 2026, bringing together existing enforcement bodies with some new powers (the new powers to enforce underpayments in respect of statutory holiday pay and SSP are not yet being implemented).

In response, employers have been updating family leave policies to reflect the new day one rights to paternity and unpaid parental leave; budgeting for increased SSP costs and reviewing sickness absence management and policies; undertaking an audit of workforce pay practices (including NMW, SSP and holiday pay) to identify and address any inadvertent compliance issues as the Fair Work Agency is established; reviewing collective redundancy consultation processes, given the planned increase to the maximum protective award period; formulating gender equality action plans; and assessing employee engagement and IR strategy. Employers should continue to risk assess the impact of other planned ERA changes and stay abreast of updates as further details emerge via consultations and commencement regulations. Read our tracker to stay updated.

ERA will also require employers to offer a guaranteed hours contract to qualifying workers on zero hours contracts (ZHCs) and those with a ‘low’ number of guaranteed hours, who work more than these hours. A new duty to provide reasonable notice of shifts for certain workers and of any changes in shift, together with a right to payment for cancelled, moved or curtailed shifts will also be introduced. These measures have not yet taken effect and a June 2026 consultation has been published, seeking input on details of the new rights, which may be implemented in 2027.

Key details remain under consultation, e.g. how the “right to guaranteed hours” should work; the definition of the low hours threshold and reference periods; and how the changes apply to agency workers. Affected employers should review the consultation to inform their planning for the significant changes on their way. During the second quarter, a number of other ERA consultations closed (including on the collective redundancy threshold trigger, on trade union workplace access, and on requesting flexible working). Read our tracker to stay updated on how the government responds and next steps.

Also in June 2026, a second consultation was published seeking views on whether existing employment rights for unpaid carers remain fit for purpose and whether improvements could be made. It also considers a proposed "Hugh's Law," which would establish a new statutory entitlement to paid leave for parents and caregivers following a child's diagnosis of a serious illness.

In addition to the proposed Hugh’s Law, it includes three new measures for unpaid carers: extending the current five-day unpaid carer's leave entitlement, introducing a statutory "right to return" after a longer period of unpaid leave (similar to maternity leave), and creating a new statutory paid carer's leave entitlement.

The March 2026 Statement of Changes introduced significant reforms to the Skilled Worker route, including new salary compliance rules requiring thresholds to be met in each pay period, alongside wider sponsor compliance changes. Further updates to sponsor guidance in April and May 2026, and a draft right to work Code of Practice, signal increasing complexity in right to work obligations. The government has also indicated a continued focus on tighter immigration control and enforcement in the King’s Speech.

Employers face increased compliance expectations, particularly in managing salary thresholds on a pay‑period basis and ensuring alignment between payroll, HR and immigration systems. Greater complexity in right to work checks increases the risk of inconsistent application and discrimination claims, requiring updated processes and training. More stringent Home Office scrutiny means sponsors should ensure robust governance, record‑keeping and compliance controls are in place.

In Holmes v Kirklees Council, a long-serving employee and union branch secretary was dismissed without notice in response to colleagues’ complaints over alleged bullying and violent behaviour. H claimed unsuccessfully that his dismissal was automatically unfair on protected trade union grounds. The EAT dismissed H’s appeal as his conduct, although occurring in a trade union context, was "wholly unreasonable and extraneous" to protected trade union activities and therefore genuinely separable from them.

This case offers helpful guidance to employers when faced with similar circumstances, given that the dividing line between protected trade union activities and separable misconduct is difficult to draw in practice. While the threshold is high, it illustrates that trade union officials are not immune from disciplinary action for serious misconduct such as threats of violence, provided the employer can demonstrate that the dismissal was motivated by the separable misconduct rather than the union activities themselves. However, employers should always proceed with caution and take advice when approaching these issues, given the risks involved.

July to September 2026 – short-range forecast

Development

Impact on employers

The government has stated that electronic and workplace balloting for industrial action ballots will be available from August 2026. It is also expected to repeal the 50% turnout threshold at the same time.

Repealing the 50% turnout threshold, coupled with the introduction of electronic balloting, will make it easier and cheaper for a trade union to secure a successful ballot for action.

The government has confirmed its commitment to introducing mandatory ethnicity and disability pay gap reporting for large employers (i.e. employers with 250 or more employees), together with a requirement to produce ethnicity and disability action plans. No timescale is yet confirmed for the new rules coming into force.

Employers should expect further developments in 2026 and plan ahead, e.g. advance work on data collection, assessment and understanding of pay gaps will be required. Much of the detail will come in supporting regulations, but will mirror the existing gender pay gap reporting requirements in a number of respects.

October 2026 to March 2027 – long-range forecast

Development

Impact on employers

Further ERA measures are scheduled for October 2026, including: trade union workplace access rights; a new employer duty to inform workers of their right to join a trade union; new rights and protections for trade union representatives; the requirement for employers to take “all” reasonable steps to prevent workplace sexual harassment and the introduction of employer liability for third-party harassment (all protected characteristics); and new worker protections during certain transfers from the public to the private sector. The time limit for making claims in ETs will be increased from three to six months no earlier than October 2026.

The new trade union right of access affects many employers and they should prepare, including training managers, assessing the likelihood of a request and identifying any key issues arising from having third parties on site (health and safety, confidentiality etc). Review anti-harassment risk assessments, policies, training, contractual clauses, reporting channels and mechanisms for investigating and handling reports, particularly where employees are involved with third parties (clients, contractors etc). For more information, read our tracker.

The government’s call for evidence to inform its review of the parental leave and pay system closed last summer. The review is expected to run for 18 months, potentially closing in December 2026.

Employers should be aware that further reform in this area is likely in the future, in addition to those family leave changes already in ERA.

The qualifying period for unfair dismissal will be reduced to six months, and the compensation cap removed, from 1 January 2027. However, as prior service will count, employees starting from 1 July 2026 will benefit.

These changes are significant and employers should review contractual probationary periods, executive severance strategy and the management of recruitment and dismissal procedures in readiness.

Further ERA measures are scheduled for 2027, including: a new type of automatically unfair dismissal in certain “fire and rehire/replace” situations (from January 2027); zero and low hour contract worker changes (see above); a new threshold for triggering collective redundancy consultation; mandatory gender equality action plans; enhanced dismissal protections for pregnant women and new mothers (and potentially others); changes to flexible working requests; new NDA restrictions; and trade union law reforms. For more information, read our tracker.

Some of these changes remain uncertain as they await the outcome of recent consultations or require further implementing regulations. In the meantime, employers should risk assess their impact and prepare to amend practices as appropriate, e.g. the fire and rehire changes are likely to impact contractual change more broadly, not just fire and rehire, and the NDA measures will, in effect, ban many NDAs relating to discrimination/harassment which is a significant change.

In For Women Scotland v The Scottish Ministers the SC held that the terms “sex”, “woman” and “man” in the EqA refer to biological sex, addressing the statutory interpretation of those terms for the purposes of the EqA. Following the judgment, the EHRC consulted on updates to its COP for services, public functions and associations (Services Code), which has been laid before Parliament and must be implemented by ministerial order. Importantly, the EHRC’s consultation on its Services Code did not include updates to the EHRC’s Employment Code of Practice, which contains statutory guidance for employers. Subsequent to the SC’s judgement, a HC decision in R (Good Law Project & ors) v EHRC and several ET decisions have also been determined.

The EHRC has confirmed that it will update the Employment Code separately and in due course, but has not given any specific timescales.

The decision of the SC has a number of potential practical implications for employers, including but not limited to the provision of single-sex facilities and services. Employers should seek legal advice regarding the impact of the SC’s judgment on their policies and practices particularly before making any changes to approach.

Decisions in two separate cases are expected following SC hearings in May 2026: Augustine v Data Cars Ltd and Rice v Wicked Vision Ltd. In the first, the CA held that a worker’s part-time status must be the “sole reason” for any less favourable treatment and the second considered whether employees can bring whistleblowing detriment claims where the alleged detriment is their dismissal.

Employers will want to monitor the cases closely in anticipation of potential new guidance from the SC on the treatment of part-time workers and on defending whistleblowing claims. Read our briefing for further information.

The appeal in the case of Stobart v Zen Internet will be heard by the CA. It considers the dismissal of a CEO who was subject to a shortened process with no prior warnings, including whether a warning is always required in a capability dismissal.

There is little modern case law on fair capability dismissals in relation to senior management. The removal of the unfair dismissal compensation cap, which is expected to impact senior exits, makes the CA’s decision in Zen particularly relevant.

Further immigration reform is expected, including expansion of right to work obligations beyond employees to workers and contractors, and changes to the settlement regime, potentially extending the qualifying period for settlement.

Employers should prepare for broader right to work duties across different working arrangements and consider the implications of potential settlement changes for workforce planning and retention of sponsored workers.

Last year the government published a working paper which explored options for reforming rules on non-compete clauses in employment contracts. A response is awaited. A response is also anticipated during this time period to the TUPE call for evidence, which may result in a strengthening of existing employee protections.

Consider reviewing employment contracts to assess current non-compete practices and risks in anticipation of potential reform in this area. The proposals could reshape employers’ approaches to the drafting of current restrictive covenants. Employers should stay updated on TUPE developments, given the government’s commitment to act.