A London (Firms) Employment: Employer Overview

The UK employment law landscape has undergone one of its most transformative periods in recent decades, with 2024–2026 defined by sweeping legislative reforms, shifting judicial trends and evolving workplace expectations. The coming year is likely to be equally active, with major reforms on the horizon and significant secondary legislation still to shape how new rights will operate in practice.

Recent Trends and Developments in UK Employment Law

A defining feature of recent years has been the movement towards proactive employer duties, particularly around workplace culture and preventing harassment. Since October 2024, employers have been subject to a new duty to take reasonable steps to prevent sexual harassment from occurring “in the course of employment”. The Equality and Human Rights Commission’s technical guidance and accompanying eight‑step compliance framework have driven organisations to adopt more structured preventative measures, including risk assessments, improved reporting channels and enhanced training. This shift from reactive response to organisational accountability reflects a broader regulatory trend expected to intensify as further reforms take effect in 2026.

Changing workplace norms have also influenced how organisations address misconduct and allegations of wrongdoing. Standards of acceptable workplace behaviour have evolved considerably in both regulated and unregulated sectors. As a result, employers are investing significantly more time and resources in carrying out well-documented, in-depth internal investigations to establish facts, followed by disciplinary action where this is deemed appropriate. Coupled with generational shifts in employee expectations, this has contributed to a rise in employment disputes and litigation, requiring employers to strengthen HR processes.

Another development in recent years has been increased regulatory scrutiny of dismissal and re-engagement (“fire and rehire”) practices to implement contractual changes. The statutory Code of Practice on Dismissal and Re-engagement, in force since July 2024, sets out procedural expectations for employers contemplating these approaches. From 20 January 2025, Employment Tribunals have been empowered to adjust compensation awards by up to 25% for unreasonable non‑compliance with the Code. Further statutory limits on fire and rehire practices are expected in 2027.

Examples of significant developments in case law over recent years have been in the fields of whistle-blowing and discrimination, particularly on grounds of religion or belief. There have been a number of cases involving conflicts arising out of views expressed by employees which may be deemed unacceptable by others. Employers have struggled to grapple with this issue, and this trend is expected to continue.

Key Legislative and Regulatory Changes Over the Past Year

Employment Rights Act 2025

The most significant reforms throughout the past year are contained in the Employment Rights Act 2025 (ERA 2025), which received Royal Assent on 18 December 2025 and is seen as the most sweeping overhaul of UK employment law in over a generation. Many of its provisions are being phased in throughout 2026 and 2027, with extensive consultations underway to determine how various elements — such as fire and rehire, flexible working and enhanced protections for pregnant workers — will operate in practice.

Key reforms in the ERA 2025 include:

• unfair dismissal protection being made available from six months’ service and removal of the cap on the compensatory award for unfair dismissal, significantly increasing potential financial exposure for employers;
• day‑one rights to statutory sick pay and paternity leave, alongside expanded parental leave entitlements;
• stricter limitations on fire and rehire processes;
• longer time limits for bringing Employment Tribunal claims;
• stronger protections from harassment, including employer liability for third-party harassment;
• reforms supporting low-hours and zero‑hours workers; and
• significant changes to existing industrial action and trade union laws.

Non-disclosure agreements (NDAs)

The use of NDAs has been in the spotlight in recent years and 2025 saw the implementation of additional legislation on this with further reform on the way. Since 1 October 2025, NDAs are unenforceable against victims of crime where they restrict disclosures to certain groups of people for specified purposes. However, further amendments to this are expected.

In the higher education sector, legislation effective from August 2025 prohibits higher education providers in England from using NDAs with staff, students, members or visiting speakers in relation to sexual abuse, harassment, sexual misconduct or other forms of bullying or harassment.

The ERA 2025 also contains broader restrictions on the use of NDAs, although the implementation timeline is unclear at the time of writing.

Tribunal system and ACAS

With continuing pressure on the Employment Tribunal system and ACAS, including rising claim volumes and significant backlogs, the maximum period for ACAS Early Conciliation was extended from six to 12 weeks on 1 December 2025. This aims to facilitate earlier resolution and ease pressure on Tribunal listings.

Expansion of family-friendly rights

The UK has also seen – and is due to see more of – an expansion of family‑friendly rights. Key developments include the introduction of neonatal care leave and pay (effective from April 2025) and removal of minimum service requirements for paternity leave where a mother dies in childbirth or within one year of the child’s birth or adoption (in force from 29 December 2025).

Predictions and Insights for the Year Ahead

The year ahead is set to be dominated by the phased implementation of the ERA 2025, but other developments are also expected.

In November 2025, the government published a Working Paper proposing options for reforming non-compete clauses in employment contracts, including statutory limits on duration, an outright ban or a ban below certain salary thresholds. The consultation closed in February 2026, and further action is expected following the review of responses.

Significant case law developments are also anticipated, particularly in the following areas:

• Whistle-blowing – specifically, whether the dismissal of an employee for making a protected disclosure can itself constitute a “detriment”.
• Provision of single‑sex facilities by employers following the Supreme Court’s determination that “man” and “woman” in the Equality Act 2010 refers to biological sex.
• Freedom of expression and religion and belief discrimination as employers and courts continue to grapple with the balance between employees’ right to freedom of expression and employers’ obligations to prevent discrimination and harassment linked to that expression.

Overall, employers should expect:

• to undertake audits of their employment and engagement practices and to make adjustments to their policies and procedures as required in order to implement the provisions of the ERA 2025 as they come into force;
• consultations and secondary legislation to define how a number of the reforms within the ERA 2025 will operate in practice;
• heightened employer accountability as the trend towards proactive duties, particularly in relation to harassment, wellbeing and transparency continue;
• higher employment costs driven by wage increases, enhanced family-friendly rights and day-one access to statutory sick pay becoming operational; and
• a continued increase in litigation and Tribunal activity stemming from cultural shifts, expanded rights and greater scrutiny of employer actions.

Conclusion

UK employment law is entering a period of profound transformation. The ERA 2025 and associated reforms, together with the other developments identified above, represent a paradigm shift towards enhanced worker protections, greater employer accountability and a more regulated employment environment. Although many details remain subject to consultation, employers should begin preparing now by reviewing policies, assessing workforce models and strengthening HR infrastructure. The next 12 months will demand agility, awareness and strategic planning, but will also offer opportunities to modernise workplace practices, enhance culture and strengthen long‑term resilience.