HOT TOPIC| MARCH 2026 Employment Law in 2026
Here is the Hot Topic for March 2026 and an accompanying seminar will be held on 12 March 2026.
1. Introduction
2026 is set to be a landmark year for UK employment law. The Employment Rights Act 2025 (ERA25) will introduce significant, complex changes that will redefine the employer-employee relationship and demand a complete overhaul of existing HR policies, procedures and employment contracts.
This article is accompanied by our free, 2-hour online employment law seminar designed specifically for business owners, HR professionals and senior leaders who need practical, actionable guidance to ensure legal compliance and mitigate future risk. Join us for our event, by registering here.
In this Hot Topic, we explore:
· Reforms to UK employment law coming into effect in 2026
· Increase to statutory payments
· A round up of UK case law
· A preview of 2027.
2. Employment Law across the UK
The complexity of the Employment Rights Act 2025 (ERA25) lies in the fact that while it is UK-wide legislation, its implementation is far from uniform because employment law is a devolved matter in Northern Ireland, and because Scotland and Wales maintain specific powers over public services and fair work practices. This means implementation will be staggered.
Consequently, the "go-live" dates for specific reforms will likely be staggered and for employers operating across borders, it is critical that this is recognised and factored into business planning.
The UK government has signalled an extensive period of consultation for the most significant changes (see our latest newsletter section ‘Consultation and Guidance’), such as the change to unfair dismissal rights, fire and rehire practices. This creates a multi-speed regulatory environment where different nations may move at different paces to integrate these reforms into their existing legal frameworks.
For businesses with a national footprint, this requires a modular approach to HR policy: rather than a single "big bang" update to employee handbooks in 2026, employers will need to track a rolling calendar of enforcement that respects the distinct legal landscapes of the four nations.
Additionally, for Northern Ireland, they introduced the Good Jobs Bill, the purpose of which is to improve employment rights and promoting good work. Unlike the UK’s Employment Rights Bill, which is now law, the Good Jobs Bill is yet to be legislated.
Throughout this Hot Topic, where necessary, we indicate, where known, the geographical area for which it will apply to (England – E, Northern Ireland – NI, Scotland – S, Wales – W).
For further clarity, you can access our Knowledge Base article ‘The Employment Rights Act 2025: Implementation across the UK’.
Other useful sources for each of the four nations:
Northern Ireland
· The Northern Ireland Assembly
Scotland
· Scottish Government – see also their ‘Work and Skills’ page.
· Disability information Scotland
Wales
· Wales Government – see also their ‘Employment and work’ page.
3.Employment Rights Act 2025
According to the most recent timeline, published by the Government, the timeline below indicates what is expected in, and when. You can keep up to date with these reforms by visiting our ERA hub on the Knowledge Base, available via the home page.
Measures that will take effect on 18 February 2026 (E, S, W)
· the repeal of the great majority of the Trade Union Act 2016, thereby simplifying requirements on trade unions, including in relation to industrial action and political funds
· removing the 10-year ballot requirement for trade union political funds
· simplifying industrial action notices and industrial action ballot notices
· protections against dismissal for taking industrial action
Measures taking effect 1 April 2026
· the repeal of the levy that trade unions and employer associations pay to the Certification Officer (E, S, W)
Measures taking effect 6 April 2026
· the collective redundancy protective award to be doubled
· ‘Day 1’ Paternity Leave and Unpaid Parental Leave (E, S, W)
· whistleblowing – strengthening protections for workers who ‘blow the whistle’ on sexual harassment
· Bereaved Partners’ Paternity Leave – (non-MWP measure) will enable bereaved fathers and partners to take up to 52 weeks of paternity leave if the mother or primary adopter dies within the first year of the child’s life
· Statutory Sick Pay (SSP) – removing the Lower Earnings Limit (LEL) and waiting period (E, NI, S, W)
· action plans on gender equality and supporting employees through the menopause (voluntary)
· menopause guidance
· simplifying trade union recognition process (E, S, W)
Measures taking effect 7 April 2026
· the establishment of the Fair Work Agency (E, S, W)
Measures that will take effect in August 2026
· electronic and workplace balloting for Statutory Trade Union Ballots (E, S, W)
Measures taking effect October 2026
· bringing forward regulations to establish the Fair Pay Agreement Adult Social Care Negotiating Body (E)
· Re-introducing the procurement two-tier code for public services
· tightening tipping law
· the duty to inform workers of their right to join a trade union (E, S, W)
· strengthening trade unions’ right of access (E, S, W)
· requiring employers to take ‘all reasonable steps’ to prevent sexual harassment of their employees (E, S, W)
· introducing an obligation on employers not to permit the harassment of their employees by third parties
· introducing a power to enable regulations to specify steps that are to be regarded as ‘reasonable’, to determine whether an employer has taken all reasonable steps to prevent sexual harassment
· unfair practices in the trade union recognition process (E, S, W)
· new rights and protections for trade union representatives (E, S, W)
· extending protections against detriments for taking industrial action (E, S, W)
Measures taking effect no earlier than October 2026
· employment tribunal time limits extending from 3 to 6 months
Measures taking effect December 2026
· commencement of the Mandatory Seafarers’ Charter
Measures taking effect January 2027
· reduction of unfair dismissal qualifying period to 6 months (E, S, W)
· removal of the compensatory award cap in successful unfair dismissal claims
· fire and rehire protections
Measures taking effect 2027
· action plans on gender equality and supporting employees through the menopause (mandatory)
· enhanced dismissal protections for pregnant women and new mothers
· specifying steps that are to be regarded as ‘reasonable’, to determine whether an employer has taken all reasonable steps to prevent sexual harassment (E, S, W)
· extending blacklisting protections (E, S, W)
· industrial relations framework (E, S, W)
· regulation of umbrella companies
· collective redundancy – collective consultation threshold
· extended obligations when refusing flexible working requests
· new statutory bereavement leave including pregnancy loss
· introduction of the right to guaranteed hours and the right to reasonable notice and short notice payments
· electronic and workplace balloting for recognition and derecognition ballots (E, S, W)
4. Statutory payments 2026-2027
Each April, the Government increases its statutory payments. We set out below the new rates of pay:
1 April 2026 – Increases to the National Minimum/Living Wage
New rates are:
· 21 years and above = £12.71 per hour
· 18 to 20 years = £10.85 per hour
· Under 18 years and apprentice = £8.00 per hour.
· Provision of living accommodation = £11.10 per day.
1 April 2026 – Increases to minimum pay rates for apprentices
New rates:
· Under 19:
o £8.00
· Age 19 - 20:
o First year - £8.00
o Second year onwards £10.85
· Age 21 and above:
o £12.71
5 April 2026 – Increases to statutory family rates
The new flat rate for statutory adoption, maternity, parental bereavement, paternity, shared parental pay is £194.32 per week.
6 April 2026 – Increase to maternity allowance
The rate of maternity allowance increases to £194.32.
6 April 2026 – Increase to SSP
The rate of statutory sick pay increases to £123.25 per week, this is in addition to the reform on how it is to be calculated and paid under the ERA25 (see previous section).
A handy one page overview of all key statutory payments, including additional items to those listed here, can be found on our key payment summary guide, available on the Knowledge Base here.
5. Payroll developments
Social Security (Contributions) (Rates, Limits and Thresholds Amendments, National Insurance Funds Payments and Extension of Veteran’s Relief) Regulations 2026
These Regulations take effect 6 April 2026 and set the latest UK National Insurance rates, thresholds and limits for the 2026/28 tax year. They will:
· increase the small profits threshold which is the threshold over which Class 2 National Insurance contributions (NICs) are treated as paid from £6,845, to £7,105.
· increase the rate of voluntary Class 3 NICs, from £17.75 to £18.40
· maintain at the same level as the previous year, the weekly earnings limits and thresholds, which are used for determining liability to Class 1 NICs and entitlement to associated state benefits, except for the lower earnings limit, which is increased from £125 to £129
· extend zero-rate contributions for armed forces veterans to the 2026–27 and 2027–28 tax years.
Finance Bill 2025/26 amends part 2 of the Income Tax (Earnings and Pensions) Act 2023
This Act will make recruitment agencies accountable for Pay As You Earn (PAYE) on payments made on or after 6 April 2026 to workers supplied through umbrella companies (or the end client, where there is no agency).
It will make the agency and umbrella company jointly and severally liable and allowing HMRC to pursue either or both.
If there is more than one agency in the supply chain, the rules will apply to the agency that has the direct contract with the end client to supply the worker. Where there is no agency, or whether the agency holds a material interest in the umbrella company, the liability will fall directly on the end client.
Increases to van benefit and car and van fuel benefit
Effective 6 April 2026, the Van Benefit and Car and Van Fuel Benefit Order 2025 introduce the following new rates:
£4,170 for the van benefit charge
£29,200 for the car fuel benefit charge multiplier
£978 for the Van Fuel Benefit Charge.
UK Bank holidays for the 1 April 2026 – 31 March 2027 holiday year
The number of public bank holidays in England for the holiday year 1 April 2026 – 31 March 2027(see the Government's publication) is ten (eleven in Scotland, twelve in Northern Ireland). If you operate your holiday year in line with this tax year, then this could have implications for your business.
It is critical that you examine your contract of employments to understand what your legal obligation is for the coming holiday year and plan accordingly.
So why does this matter? Well, it may not; but you will need to check the wording within the contract of employment to check whether you are contractually obliged to give these additional days paid leave. Failing to give workers their full entitlement to paid annual leave risks unpaid wages and breach of contract claims.
The specific phrasing in an employment contract is crucial. For instance, if a contract states, "Your entitlement to paid annual leave is 20 days, plus bank holidays," without specifying a fixed number of bank holidays, the employer is legally obligated to grant every bank holiday that occurs within that holiday year.
Contracts stating "28 days including bank holidays" offer more flexibility. This capped total allows you to include any additional or "anomaly" bank holidays within the existing 28-day limit, meaning no extra paid leave is required beyond the agreed total as set out in the contract of employment.
Mandatory payrolling of benefits
The original implementation date to mandate the reporting of taxable benefits in kind to HMRC and paying class 1A national insurance contributions via payroll is delayed a year, to April 2027. At which time, it means P11D andP11D(b) (except for limited exceptions) will no longer be required.
Employers are best to start preparing now for this change and can do so by payrolling some or all of their benefits from April 2026 on a voluntary basis as a way of testing their systems.
6.Employment Tribunal Rulings
What is Religion and Belief Discrimination?
Case Summary of Ngole v Touchstone Leeds
This case highlights the legal risks of withdrawing job offers based on a candidate's personal religious or philosophical beliefs discovered during background checks.
Key Summary:
The incident: A mental health charity withdrew a job offer from a qualified social worker after discovering his Christian beliefs regarding marriage and gender through an online search. The charity discovered online reports about his successful legal battle against Sheffield University, which the court ruled in favour of Mr. Ngole's and of his right to express his religious beliefs. Despite the candidate's assurances that he would not discriminate against LGBTQ+ clients, the charity was not convinced and withdrew the offer due to fears of "reputational damage" and client reactions.
The legal ruling: The Employment Appeal Tribunal (EAT) found that the initial tribunal failed to properly justify the charity's actions. The court emphasised a critical distinction: employers can sometimes object to the way a person expresses a belief if it causes harm, but they cannot discriminate against the belief itself.
Core principle: Managers must ensure that concerns about a candidate's background are not used as a "smoke screen" for discriminating against their protected beliefs and a proportionality-based test of justification must be considered, if action, such as a job withdrawal is to be taken.
Actionable advice:
Focus on conduct, not belief: A candidate holding controversial views is not, by itself, a lawful reason to withdraw an offer if they can perform the role professionally and without discriminating.
Proportionality is required: Any decision to withdraw an offer must pass a strict "proportionality-based test of justification," proving that the action was a necessary and balanced response to a specific risk.
Document assurances: If a candidate provides assurances that their personal views will not affect their professional conduct, these must be seriously considered rather than dismissed as a "risk".
Employers must distinguish between a candidate holding a protected belief and the manifestation of that belief: this must be in a way that might be "objectionable". Dismissing or withdrawing an offer just because an employee holds a belief to which the employer or a third-party object constitutes unlawful direct discrimination.
The proportionality requirement (Bank Mellat Test) is critical: any restriction on the manifestation of a belief must be objectively justified. This requires demonstrating that:
The objective is sufficiently important.
The measure is rationally connected to that objective.
A less intrusive measure could not have been used.
A fair balance has been struck between the individual's rights and the employer's objectives.
The "right of reply": Withdrawing a job offer based on discovered beliefs without giving the candidate an opportunity to provide assurances or explain themselves is likely to be deemed disproportionate and discriminatory.
Neurodiversity and the duty to make reasonable adjustments
Case Summary of BM Kelly v Leonardo UK Ltd
This case is a landmark ruling from the Employment Appeal Tribunal (EAT), where at its core, it clarifies how employers must handle neurodiversity and the ‘duty to make reasonable adjustments’ under the Equality Act 2010.
Key Summary:
The incident: The claimant, Ms. Kelly, was a software engineer who had been diagnosed with autism and ADHD. During a redundancy consultation process, she was required to undergo a skills assessment. During the process, she argued that the standard assessment format which required quick, verbal responses and navigating social nuances put her at a substantial disadvantage due to her health conditions. She requested specific adjustments that included written questions in advance, being given more time, but these were not implement.
The legal ruling: The original Employment Tribunal dismissed her claim, suggesting the adjustments were not reasonable or that the disadvantage was not significant enough. The case progressed to the EAT, who overturned the original ET in her favour. The EAT disagreed with the initial ruling, by finding that her employer had failed to properly consider how her health conditions affected her performance in a high-pressure, competitive assessment environment.
Core principle: The ruling reinforces that a ‘disadvantage’ does not have to be insurmountable to trigger a legal duty; it just needs to be ‘more than minor or trivial’. If a recruitment or redundancy process makes it harder for an employee with neurodivergent health conditions to showcase their skills compared to someone who does not have neurodivergent health conditions, then the employer must act.
Actionable advice:
Redundancy and Recruitment: This case illustrates that it isn’t always the fairest way to choose who stays and who goes from implementing standardised tests. This case proves the opposite in that applying the same rule to everyone can be discriminatory. Employers must be prepared to customise their selection criteria for neurodivergent employees.
Proactive inquiries: This case also emphasises that employers cannot wait for an employee to suggest the perfect solution. If an employer knows (or ought to know) about a disability, they have a proactive duty to explore what adjustments might work.
7. Other legal developments
The Bereaved Partner’s Paternity Leave Regulations 2026
A new form of bereavement leave is being introduced from 6 April 2026 which will give employees who are fathers or partners a period of up to 52 weeks of unpaid leave where their child’s primary carer dies. To qualify, the employee is either the child’s father, a civil partner of the child’s mother/adopter, or married to the child’s mother/adopter, and has main responsibility for the upbringing of the child.
Employees are entitled to leave, regardless of their length of service and it must generally be taken within 52 weeks of the child’s birth, date of placement for adoption, or date entering Great Britain in an overseas adoption.
We have updated our templates on the Knowledge Base to reflect this new law:
· Employee Micro Handbook for April 2026
· Employee Handbook for April 2026
· Policy_Family Friendly April 2026
Whilst we wait the legislation to come into effect, the existing templates for these documents remain available. From the 6 April however, they will be archived and replaced with the above.
8. What’s on the horizon?
UK employment legislation will continue to change, as the Employment Rights Act 2025 is being phased in over a period. Looking ahead to 2027, and according to the latest Government timeline, as of today, the current schedule for the remaining reforms under this Act are as follows:
· The unfair dismissal qualifying period reducing to 6 months (E, S, W)
· the removal of the compensatory cap in successful unfair dismissal cases
· restrictions on fire and rehire introduced
· changes to the threshold for collective redundancy consultation
· extended duties in managing flexible working
· new statutory bereavement leave for all employees, that includes in the event of pregnancy loss
· introduction of the right to guaranteed hours (E, S, W)
· a new right reasonable notice and short notice payments in the changing or cancelling of shifts (E, S, W).
9. Knowledge Base Templates
As a Knowledge Base member, you have access to our updated template contracts, policies, handbooks, letters and forms. In addition, you can access accompanying articles that explains how best to apply the law.
While we await the official start of the new legislation, our current templates remain available. As implementation dates approach, we will release updated versions, temporarily offering both the old and new documents. Once a law officially takes effect, the outdated version will be archived. This overlap ensures you have the documentation needed to prepare your business well in advance of the 'go live' date.
Available as of today, the following is available:
· Employee Micro Handbook for April 2026
· Employee Handbook for April 2026
· GUIDANCE_ABS04 Sick Pay (how to calculate using the new SSP rules)
· GUIDANCE_TRU01 Trade Union Reforms (summary of all the TU reforms)
· POLICY_Absence due to illness or injury from April 2026
· POLICY_Family Friendly April 2026
Make sure you look out for our email update at the end of each month in which we share with you what has been added, amended and removed from the Knowledge Base. This ensures you have the latest information.
We continue to develop new guidance, policies, contracts and handbooks as we monitor the ERA25.
10. Future Webinars
Please check out our Events Page, where you will find the latest webinars added for the next few months ahead.