Employment Law Updates
- Employment Rights Act 2025: Key Implementation Dates Employers Need to Know (Updated)
The Government has published an updated implementation timetable for the remaining Employment Rights Act 2025 reforms, giving employers greater clarity on when key employment law changes will take effect.
Key updates include:
- 1 October 2026: Employment Tribunal claim time limits will increase from three to six months, giving employees more time to bring most workplace claims.
- 30 October 2026: The first phase of trade union reforms will come into force, including strengthened rights for trade unions, greater workplace access, enhanced protections for union representatives and changes to recognition procedures.
- 30 October 2026: Employers will be required to take all reasonable steps to prevent sexual harassment, including harassment by third parties in the course of employment.
- Some measures have been delayed, including further reforms relating to tipping, which are now expected by the end of 2026 rather than October.
The updated roadmap forms part of the Government’s wider Plan to Make Work Pay. Employers should review the forthcoming changes and begin updating policies, procedures and manager training to ensure they are prepared.
Unsure how these changes will affect your business? Kestrel HR can help you prepare for the new employment law requirements, update your documentation, train your managers and stay compliant. Get in touch to find out how we can support your organisation.
- UK Labour Market Update – July 2026
UK Labour Market Remains Resilient Despite Signs of Hiring Slowdown
The Office for National Statistics (ONS) published its latest labour market update on 21 July 2026, showing that the UK labour market remains relatively stable but continues to cool.
Key figures
- Employment rate: 75.1% (March to May 2026), up 0.1 percentage points on the previous quarter but down 0.1 percentage points compared with a year earlier.
- Unemployment rate: 4.9%, down 0.1 percentage points on the quarter but up 0.2 percentage points year-on-year.
- Economic inactivity rate: 20.9%, a slight decrease both quarterly and annually.
- Pay-rolled employees: The number of pay-rolled employees fell by 90,000 (0.3%) over the year to May 2026, indicating continued caution in employer recruitment.
- Job vacancies: Vacancies decreased by 7,000 on the quarter to 712,000, continuing the gradual easing in labour demand.
- Average earnings: Regular pay (excluding bonuses) increased by 3.4% annually, while total pay (including bonuses) rose by 4.3%, suggesting wage growth continues to moderate.
What this means for employers
While employment remains resilient, the decline in payrolled employees, falling vacancies and unemployment remaining above last year’s level suggest employers are continuing to take a measured approach to recruitment. Although hiring pressures may be easing in some sectors, skills shortages are still likely to affect specialist and hard-to-fill roles.
For HR teams, the focus is likely to remain on:
- Retaining key talent.
- Strategic workforce planning.
- Upskilling and developing existing employees.
- Managing employment costs while maintaining employee engagement and productivity.
The latest figures reinforce the importance of balancing workforce growth with productivity, skills development and employee retention as organisations continue to navigate economic uncertainty alongside significant employment law reforms.
Need support with recruitment, workforce planning or employee retention? Get in touch with the Kestrel HR team to discuss how we can help your organisation respond to the latest labour market trends.
- Unfair Dismissal Reform: Why Employers Need to Act Now
Significant changes to unfair dismissal rights are on the horizon, and employers should already be preparing. From 1st January 2027, employees are expected to gain unfair dismissal protection after just six months’ service, replacing the current two-year qualifying period.
Importantly, the changes are expected to apply to employees hired from 1st July 2026. This means individuals recruited from that date could already have six months’ service by the time the new rules take effect.
For employers, the implications go beyond dismissal procedures. Recruitment decisions, probation processes, performance management, manager training and record keeping will all come under greater scrutiny. Taking steps now to review policies, strengthen documentation and train managers can help reduce risk and ensure your business is prepared for the new employment law landscape.
- Mileage Rate Increase: What the Shift from 45p to 55p Means for employees and employers.
Yesterday, for the first time since April 2011, the government announced an increase in the approved mileage rate, raising it from 45p to 55p per mile. This long-awaited change will be welcomed by thousands of people who regularly use their own vehicles for work and claim back costs through expenses or tax relief.
For context, the previous 45p rate had remained frozen for 15 years, despite significant increases in the cost of motoring. When that rate was introduced in 2011, petrol prices averaged around 133p per litre. Today, drivers are paying closer to 155–159p per litre, underlining just how outdated the old allowance had become. The costs of maintenance and insurance have increased significantly too, which, in fairness, is probably a stronger argument for the 45p rate needing an increase in 2026.
The new 55p rate applies to the first 10,000 business miles travelled in a tax year and is designed to better reflect the true cost of running a vehicle. This includes not just fuel, but also maintenance, insurance, servicing, and depreciation. For individuals who claim mileage directly, such as the self-employed, contractors, or employees whose employers reimburse below HMRC’s approved rate, this uplift could make a meaningful financial difference.
To put it into perspective, someone travelling 10,000 business miles a year could now claim £5,500 in allowable expenses, compared to £4,500 under the old rate. That’s an additional £1,000, money that goes some way towards offsetting rising day-to-day costs.
Although this change primarily affects individuals making their own claims, there is also a potential knock-on impact for employers. Many organisations base their mileage reimbursement policies on HMRC’s approved rates. While not compulsory, some may choose to increase their own mileage payments in line with the new 55p figure, offering additional support to employees who rely on their cars for work.
That said, not all businesses will adjust their rates immediately, or at all. Employees who receive less than the approved amount can still claim tax relief on the difference, making it important to understand what you are entitled to and how to claim it.
As always, accurate record-keeping is essential. Keeping a clear log of business journeys, including dates, distances, and purposes, ensures claims are compliant and maximised.
After more than a decade without change, the move to 55p per mile represents a significant and overdue update. For many, it will provide practical relief at a time when motoring costs remain high and every penny counts.
- National Minimum Wage and Statutory Rates Increase
Annual increases to statutory employment rates took effect from April 2026. National Living Wage and National Minimum Wage rates increased, while SSP rose to £123.25 per week and statutory family-related payments increased to £194.32 per week. Tribunal compensation limits and the statutory cap on a week’s pay for redundancy calculations also increased.
Stay compliant and plan with confidence using our newly released Statutory Rates 2026/27 factsheet. Covering everything from National Minimum Wage and National Insurance to Statutory Sick Pay, family‑related payments, redundancy, and tribunal awards, this essential guide brings together all the key updates effective from April 2026 in one easy‑to‑read summary.
- Statutory Sick Pay Becomes a Day-One Right
From 6 April 2026, Statutory Sick Pay (SSP) became significantly more accessible. The three-day waiting period was abolished, meaning eligible employees can receive SSP from the first qualifying day of sickness absence. The Lower Earnings Limit was also removed, extending eligibility to many lower-paid employees who were previously excluded, provided they meet the remaining qualifying conditions. SSP is now paid at 80% of average weekly earnings or the statutory weekly rate (£123.25), whichever is lower. Introduced under the Employment Rights Act 2025, the reforms strengthen financial protection during periods of illness. Employers should ensure their sickness absence policies, payroll systems and workforce communications reflect the updated rules.
- Fair Work Agency Begins Employment Rights Enforcement
The Fair Work Agency (FWA) began operating in 2026 as the UK’s new employment rights enforcement body, bringing together several existing enforcement functions into a single organisation. Established under the Employment Rights Act 2025, the agency aims to simplify the enforcement of employment rights while making it easier for both employers and workers to access guidance and support.
The FWA is responsible for enforcing key workplace rights, including Statutory Sick Pay (SSP), National Minimum Wage, holiday pay and other statutory employment protections. It also has enhanced powers to investigate suspected breaches, recover unpaid sums on behalf of workers and take enforcement action where employers fail to comply with employment law.
Although the agency is intended to streamline enforcement, employers should ensure their policies, payroll processes and record-keeping are up to date, as increased enforcement activity is expected over the coming years.
Need more information? Our Fair Work Agency Factsheet explains what the new agency means for employers, outlines its enforcement powers and highlights the practical steps organisations should take to remain compliant.
- 2026 Employment Rights Bill Updates: What HR Teams and Employers Need to Know
A wide range of employment law reforms are taking effect during 2026 under the Employment Rights Act 2025, with significant implications for employers, HR teams and workplace policies.
The changes include day-one Statutory Sick Pay (SSP) from 6 April 2026, the removal of the SSP Lower Earnings Limit, and SSP being payable at 80% of average weekly earnings or the statutory weekly rate, whichever is lower. Day-one rights are also being introduced for paternity leave and parental leave, alongside new bereaved partner paternity leave provisions.
Other key updates include reforms to trade union recognition and industrial action rules, an increase in the maximum collective redundancy protective award from 90 to 180 days’ pay, and the creation of the Fair Work Agency to bring together several employment rights enforcement functions.
From 1 October 2026, further measures will strengthen protections around fire and rehire, workplace harassment, tribunal time limits and tipping practices.
Employers should review sickness absence procedures, family leave policies, redundancy consultation processes, harassment prevention measures and payroll systems to ensure compliance with the new rules.
For a full breakdown of the 2026 employment law changes and practical employer actions, read our 2026 Employment Bill Updates Factsheet.