UK quarterly employment update - Autumn 2026

July to September 2026 – a backward glance

Development

Impact on employers

Acas published a consultation on a revised Code of Practice on disciplinary and grievance procedures, which would replace the current Code that has been in place largely unchanged since 2009. While the core principles of fair disciplinary and grievance processes remain the same, the proposed changes place significantly greater emphasis on informal resolution, transparency and workplace dialogue, and extends the Code beyond employees to include workers. The draft Code also includes new or expanded sections on suspension, avoiding unlawful discrimination, training, mediation, and accompaniment requests. The consultation closes on 23 September 2026.

If Acas proceeds with the revised Code, it will be submitted for government approval and then laid before Parliament. Before any changes take effect, employers should review their existing policies and approach to informal resolution and assess whether existing employee relations frameworks, training and governance arrangements remain fit for purpose. Read our briefing for further information.

The Government launched a consultation on equal pay and pay discrimination reform, following its 2025 Call for Evidence on equality law. The proposals include greater pay transparency in recruitment, wider use of equal pay audits and job evaluation exercises, and the creation of a new Equal Pay Regulatory and Enforcement Unit. The consultation also explores extending stronger equal pay protections to race and disability pay discrimination and introducing measures to ensure pay equality in outsourced work arrangements. The consultation closes on 27 October 2026.

The timing of any changes is not yet clear, although the government has committed to an extended implementation period. Employers should start reviewing their recruitment processes, pay structures and pay governance now. Where work is outsourced, contractual arrangements may also need to be reviewed as the proposals develop. Read our briefing for further information.

Draft legislation was published proposing to strengthen the UK's modern slavery and supply chain transparency regime. The proposals would introduce enhanced reporting obligations and penalties aimed at increasing transparency within organisations' supply chains and strengthening compliance with modern slavery requirements. The changes form part of a broader focus on corporate accountability and ESG-related governance.

Employers with modern slavery reporting obligations should monitor the Bill closely. If implemented, organisations would need to adopt more formal and evidence-based processes for identifying, assessing and addressing modern slavery risks, together with more robust record-keeping and reporting processes. Modern slavery statements would be subject to mandatory content requirements, senior-level approval and an accuracy declaration. The prospect of significant new financial penalties and associated reputational risk reinforces the need to ensure that statements are accurate, evidence-based and defensible. Read our briefing for further information.

Electronic and workplace balloting for industrial action ballots came into force on 25 August 2026. The Government is also expected to repeal the 50% turnout threshold, although the commencement date has not yet been confirmed.

Repealing the 50% turnout threshold, coupled with the introduction of electronic balloting, is expected to make it easier for trade unions to secure a successful ballot for action.

The EAT has overturned the ET’s finding that NEXT Retail Ltd breached equal pay legislation by paying its shop-floor sales staff a lower rate of basic pay than its warehouse operatives carrying out roles assessed as being work of equal value. The EAT found that it was justifiable for NEXT to rely on market forces to distinguish between the pay for the different groups of employees where there was a valid rationale for the pay differences.

Increasing regulatory and stakeholder focus on equal pay, pay transparency and wider workforce fairness means employers are facing greater scrutiny of how pay decisions are made, documented and justified. Effective equal pay compliance requires a strategic approach to workforce governance, reward design and risk management. Read our briefing for further information.

The SC has clarified the causation test under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations in the case of Augustine v Data Cars Ltd. The CA held that a worker’s part-time status must be the “sole reason” for any less favourable treatment. Mr Augustine appealed and the SC unanimously allowed the appeal. The SC confirmed that a part-time worker does not have to show that their part-time status was the sole reason for the treatment they received. It is enough to show that working part-time was an effective cause in that treatment, even where other reasons also played a part.

The decision makes it easier for part-time workers to establish the necessary connection between their part-time status and less favourable treatment. Employers will be less able to defeat claims on causation grounds. Employers should therefore review workplace practices and decision-making processes to ensure that part-time staff are not inadvertently disadvantaged.

In Geeks Ltd v Watts, the CA considered whether a training cost clawback provision in an employment contract was an unenforceable restraint of trade. The court held that the repayment clause in question was unreasonable because the repayment sum was not an accurate reflection of actual costs, the clause applied in almost all termination scenarios, and the employee was paid little more than the National Minimum Wage — leaving him in a position comparable to an unpaid intern during the training period. However, the court accepted that employers can, in principle, recover genuine training costs provided the clause goes no further than necessary to protect their legitimate interests.

Employers with training repayment provisions should review them to ensure costs are genuine and proportionate, repayment reduces over time, and triggers for repayment are appropriately limited.

The FCA's new non-financial misconduct rule and final guidance came into force on 1 September 2026. For non-bank firms, the scope of the Conduct Rules has now been extended to capture certain non-financial misconduct connected with the performance of an individual's role. The regime brings serious, work-related non-financial misconduct firmly within the regulatory framework across a wider range of FCA-regulated firms.

Managers are expected to take reasonable steps to prevent and address non-financial misconduct. Accountability depends on what a manager knew, or could reasonably have known, and whether they had authority to intervene. Employers, particularly regulated firms, should review and update their policies, training, investigation processes and fitness and propriety assessments to ensure they can identify, assess and respond consistently to serious misconduct, including where conduct outside the workplace may be relevant. Read our briefing for further information.

The UK Government’s call for evidence on the TUPE Regulations closed on 1 July 2026 and invited employers and other stakeholders to share their experiences and insights on how TUPE operates in practice, with a view to identifying areas that work well and those that may need reform. This sits within the wider Make Work Pay agenda, aimed at strengthening workplace rights while keeping the labour market workable for employers.

Employers should be aware that the Government has indicated that the evidence gathered will inform the development of policy options for TUPE reform. Further consultation on potential changes is anticipated. Legislative reform may therefore follow, although no specific proposals have yet been published. Read our briefing for further information.

The Fair Work Agency (FWA) has published its first naming round since becoming operational, publicly identifying hundreds of employers that failed to pay the National Minimum Wage (NMW). The FWA has indicated that naming rounds will be published more regularly as part of its wider enforcement strategy.

Employers should review payroll practices and NMW compliance, particularly in relation to salary sacrifice arrangements, deductions, working time calculations, uniforms and training time. While the recent naming round focused on NMW underpayments, employers should expect the Fair Work Agency to take an increasing role in enforcing a wider range of employment rights. Read our common pitfalls briefing and new state enforcement powers briefing for further information.

October to December 2026 – short-range forecast

Development

Impact on employers

The UK government is significantly expanding the scope of the Right to Work (RTW) regime with effect from 1 October 2026. For the first time, the regime will extend beyond traditional employees and capture a wider range of working arrangements, including certain workers, individual subcontractors and individuals working within gig economy arrangements.

The changes also introduce the new concept of extended liability, meaning that responsibility for illegal working may, in some circumstances, reach beyond the direct “employer” and reach upstream through a chain of contracts.

Organisations that use non-traditional workforce models should begin reviewing their labour arrangements now. With civil penalties of up to £60,000 per illegal worker and increased Home Office enforcement activity, waiting until October 2026 may leave insufficient time to implement the necessary compliance measures. Read our briefing for further information.

From 1 October 2026, the time limit for making most claims in employment tribunals will be increased from three to six months (for breach of employment contract claims in Scotland, this change will take place on 9 November 2026).

Review litigation strategies and processes. A doubling of most tribunal time limits may lead to an increase in tribunal claims and extend the period during which workplace disputes remain live, particularly when combined with changes to unfair dismissal. However, the longer time period may also provide additional opportunity for disputes to be resolved through internal processes or settlement before proceedings are issued. For more information, read our tracker.

Further ERA measures are scheduled for 30 October 2026, including: trade union workplace access rights; a new employer duty to inform workers of their right to join a trade union; enhanced 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 (across all protected characteristics); and new worker protections during certain transfers from the public to the private sector.

The new trade union right of access affects many employers and they should prepare now, including by training managers, assessing the likelihood of an access request and identifying any key issues arising from third parties attending the workplace (health and safety, security, confidentiality etc). Review anti-harassment risk assessments, policies, training, contractual clauses, reporting channels and mechanisms for investigating and handling reports, particularly where employees interact with third parties (clients, customers, contractors, suppliers etc). Employers should continue to risk assess the impact of other planned ERA reforms and stay abreast of further developments as additional guidance and commencement regulations are published. 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 with a roadmap for potential reform.

Employers should be aware that the review may lead to further reform of the parental leave and pay framework, in addition to those family leave changes already being introduced under the ERA. No specific reform proposals have yet been published.

January 2027 to June 2027 – long-range forecast

Development

Impact on employers

The qualifying period for unfair dismissal will be reduced to six months, and the compensatory cap for ordinary unfair dismissal claims removed, from 1 January 2027. Employees who have accrued six months' continuous service by that date will immediately benefit from the new qualifying period, meaning that employees engaged on or before 1 July 2026 will benefit from commencement.

These changes are significant and employers should review recruitment processes, probation management procedures, contractual probationary periods, executive severance strategy and dismissal procedures in readiness. Changes to employment terms and conditions will also become more restrictive (read more on our tracker).

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 hours contract worker changes; a new threshold for triggering collective redundancy consultation; mandatory gender equality action plans; enhanced dismissal protections for pregnant women and new mothers (and potentially other categories of workers); changes to flexible working requests; new NDA restrictions; and trade union law reforms.

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 potential 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 dismissal and re-engagement exercises, while the NDA reforms are expected to significantly restrict the use of confidentiality provisions relating to discrimination, harassment and other specified workplace misconduct. For more information, read our tracker.

The decision is expected in the case of Rice v Wicked Vision Ltd following a SC hearing in May 2026. The case considered whether employees can bring whistleblowing detriment claims where the alleged detriment is their dismissal, and the extent to which such claims can be pursued against co-workers and/or employers.

Employers will want to monitor the case closely, as it could have significant implications for the scope of whistleblowing detriment 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 formal warnings, and raises broader questions about the procedural requirements for a fair capability dismissal, particularly in relation to senior executives.

There is limited recent case law on fair capability dismissals in relation to senior management. The removal of the unfair dismissal compensatory award cap from January 2027 makes the CA’s decision in Zen particularly relevant to employers managing senior exits.

The 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, where they regularly work more than those hours over a reference period. 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 consultation published in June 2026 sought views 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 operate in practice; the definition of the low hours threshold, the length of reference periods; and how the changes apply to agency workers. Affected employers should review the consultation proposals to inform their planning for the potentially significant changes on their way. Read our tracker to stay updated on how the Government responds and next steps.

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, although the Government’s impact assessment published in March 2026 stated that it intended “for the mandatory disability and ethnicity pay gap reporting regime to be operational and in place by 2029” and “in 2026 to 2027, the government will launch guidance and practical tools to help employers improve the self-declaration rates from their employees on ethnicity and disability status”.

Employers should expect further developments and plan ahead, e.g. advance work on data collection, assessment and understanding of pay gaps will be required. While many aspects are expected to mirror gender pay gap reporting, ethnicity and disability reporting is likely to present additional challenges around data collection, classification and interpretation. Read our briefing for further information.

Last year the government published a working paper which explored options for reforming rules on non-compete clauses in employment contracts. The paper sought views on a range of potential reforms, and the Government’s response is awaited.

Employers should monitor developments and consider reviewing employment contracts and restrictive covenant strategies in anticipation of potential reform in this area. The proposals could require employers to revisit their approach to non-compete clauses and place greater emphasis on other contractual protections, depending on the form of any future reforms.