Employment Update May 2026

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New UK Prime Minister - What will it mean?

Following Sir Keir Starmer's resignation, the UK is expected to have a new Prime Minister in Andy Burnham MP in the coming days. So, what would this mean for employment and business immigration?

So far, Andy Burnham MP has not commented on the employment law reforms already underway under the Employment Rights Act 2025. However, he has indicated that he will generally stick to the Labour manifesto from 2024. Given most of the employment reforms represent manifesto commitments, it would be surprising if the Government were to row back on them. Draft regulations have already been laid bringing in the much-publicised reforms to unfair dismissal – the reduction in the service requirement to six months and the removal of the cap on compensation – into effect from 1 January 2027. Both are set to apply where the employee's employment terminates on or after 1 January 2027.

During his time as Mayor of Greater Manchester, Andy Burnham introduced a "Good Employment Charter" stating that "providing good employment is a win-win" for businesses and "employers who are best at engaging and supporting their employees are the most successful".

On immigration, Andy Burnham MP has not laid out any specific policies but has said recently that net migration needs to fall further. He is therefore unlikely to change direction from the Government's recent reforms aimed at tightening the immigration rules. The Government is currently consulting on plans to double the standard route to settlement for many visa holders from five to ten years. Andy Burnham MP has in the past expressed his broad support for the reforms but has also expressed concern about the possible retrospective effect on those already in the UK.

Ultimately, we will have to wait and see what, if any, policy announcements the new Prime Minister makes in these areas when he takes over the premiership. Employment Update will report developments.

New Law

Harassment

Significant changes to the law on harassment come into effect in October 2026 under the Employment Rights Act 2025:

Third party harassment: From October 2026, employers will become liable for harassment of staff by third parties (e.g. customers, clients, suppliers and contractors) unless the employer took all reasonable steps to prevent it. Ahead of October, employers should assess the risks of third party harassment occurring in their business and put in place preventative measures. Appropriate steps will depend on the nature and size of the organisation but may include communicating anti-harassment policies to customers, clients and other third parties, updating supplier codes of conduct, referencing anti-harassment policies in third party contracts, and providing training to managers and staff.
Preventing sexual harassment: The existing duty to prevent workplace sexual harassment, which applies to all employers, will be strengthened with effect from October 2026. The duty will become a duty to take "all reasonable steps" to prevent sexual harassment. Ahead of October, employers should therefore refresh their existing policies, training and risk assessments relating to sexual harassment.

We are working with clients on compliance projects, including reviewing and updating contracts, policies, training and risk assessments. Please speak to your usual Employment department contact for more information.

Employment Tribunal time limits

The Employment Rights Act 2025 will increase the time limit for workers to bring claims in the Employment Tribunal from three to six months. It is expected that this will take effect on 1 October 2026, where the relevant events occur on or after 1 October 2026. Regulations have been made which extend the time limit from three to six months from 1 October 2026 for certain claims, including breach of contract claims – it is expected that further regulations will follow. The change will give workers considerably longer to bring claims, particularly given the ACAS pre-claim conciliation period was increased from six to twelve weeks in December 2025. However, it also gives parties more time to potentially resolve disputes before a claim is brought.

Trade Union Rights

The Employment Rights Act 2025 is introducing various measures to strengthen the rights of trade unions and increase their presence. Two key changes come into force in October 2026:

Duty to inform staff: All employers will have a new duty to inform workers of the right to join a trade union and their rights as union members. A written statement will need to be provided at the outset of employment and periodically after that. Details of what information will need to be included, and the manner and frequency it must be provided, will be set out in regulations and guidance which are expected imminently.
Rights of access: From 30 October 2026, trade unions will also be given new rights to request access to workplaces for recruitment and organising purposes. The right could see employers who have not previously interacted with trade unions receive requests for access. The Government has published regulations and a draft code of practice on how the right will operate in practice, which set out how employers should respond to access requests. The regulations and code of practice are due to come into force on 30 October 2026.

Employers should await the guidance on the new duty to inform staff and update contracts and induction processes accordingly. Employers should also ensure that managers and HR/People teams are aware of the new union access rights and how to respond to requests from unions.

Industrial Action

Two changes in relation to industrial action under the Employment Rights Act 2025 are expected to take effect in the coming months:

Strike ballots: To be lawful and protected, industrial action must be supported by a ballot of trade union members. Currently, industrial action ballots must be conducted by post. From August 2026, to encourage more voting, trade unions will also be able to conduct industrial action ballots electronically, by a combination of postal and electronic voting or by using a physical ballot box at the workplace. The Government has consulted on a new code of practice to provide guidance on electronic and workforce balloting, which is also expected to come into force in August 2026.
Penalties for taking part: There are currently restrictions on dismissing employees who take part in protected industrial action but there is no statutory prohibition on action short of dismissal, e.g. warnings or removing overtime or other benefits. The Government has published draft regulations which will prohibit all forms of detriment against workers for taking protected industrial action. The regulations are expected to come into force on 30 October 2026. However, proportionate deductions from pay for workers taking part in a strike or other industrial action will still be allowed, as is currently the case.

Data Protection Complaints

As of 19 June 2026, all organisations that handle personal data are required to have a process for handling data protection complaints. The requirement is wider than employees and includes complaints from anyone whose personal data is processed, e.g. customers and clients. The Information Commissioner's Office has produced guidance which confirms that it is up to the organisation to decide how complaints can be made, e.g. by email or post or electronic form. However, complaints must be acknowledged within 30 days of receipt, and the organisation must take appropriate steps to respond to the complaint and inform the complainant of the outcome without undue delay. Employers should ensure that they or their data protection teams have appropriate complaints processes in place.

Consultations

Zero Hours and Casual Workers

Under the Employment Rights Act 2025, workers with zero and low contracted hours will have a right to receive a guaranteed hours contract reflecting the hours they regularly work. Workers with casual or irregular hours will also have a right to receive reasonable notice of shifts, and compensation if shifts are cancelled or curtailed at short notice. The changes are expected in 2027.

The Government has launched a consultation on how these rights will operate in practice. In relation to the right to receive a guaranteed hours contract:

the right will apply to workers with contracted hours below a threshold, to be set at between eight and 20 hours a week;
a guaranteed hours offer will be based on actual hours worked over a reference period. The Government is proposing an initial reference period of 12 weeks but is considering whether longer reference periods (e.g. 26 or 52 weeks) should apply after that.

In relation to shifts, the Government proposes that:

employers will be required to give workers minimum notice of shifts, to be set at between one and four weeks;
if a shift is cancelled or changed at short notice – to be set at one to seven days – the employer would have to pay compensation at a percentage of what the worker would have earned from the shift, either at their normal rate or at the national minimum wage.

The Government is also proposing that the Fair Work Agency would have the power to enforce the right to short notice payments, and the power to impose penalties of 50 percent of arrears owed up to a maximum of £5,000 per worker. The consultation closes on 25 August 2026.

Holiday Pay Enforcement

The Government has launched a consultation on its approach to holiday pay compliance and enforcement. Currently, holiday pay is enforced by individual workers through the Employment Tribunal system. However, from 2027, statutory holiday pay entitlement will also be enforced by the Fair Work Agency, the Government's new enforcement body for worker rights. The consultation paper states that the Agency will work with employers to ensure compliance, both through awareness and proactive investigations, and that employers will be given the chance to correct underpayment before punitive enforcement action is taken. The Government is also proposing that the Agency:

would be able to enforce holiday pay going back six years (but only as far back as 18 December 2025 when the Employment Rights Act 2025 received Royal Assent);
would be able to issue penalties of up to 200% of arrears per worker, up to a maximum of £20,000 per worker (mirroring the position for national minimum wage); and
would focus holiday pay enforcement on lower-paid workers and those in precarious work.

The consultation is open until 22 September 2026.

Immigration Radar

Extending the Right to Work Scheme

The Government has published a draft Code of Practice on Preventing Illegal Working outlining how the expanded Right to Work Scheme will operate from 1 October 2026. While the scope of the Scheme has widened, the Code confirms that right to work checks remain the responsibility of employers who have a direct contractual relationship with the worker. The Code also introduces extended liability, allowing civil penalties to apply through contractual chains when the direct employer cannot be identified or fails to comply. For those not acting as direct employers, the Code sets requirements around contractual terms, substitution controls, and identity verification systems. Employers would be able to outsource in person checks to digital verification providers using facial recognition technology. Businesses should review their compliance procedures and arrangements with labour providers ahead of the implementation date.

Case Watch

Protected Conversations

A recent case highlights the limits of relying on "protected conversations" which allow employers to have "off the record" conversations with employees to discuss a negotiated exit.

The employee in this case, an engineer, was dismissed for redundancy. Prior to his dismissal, he claimed that he was summoned to a meeting without notice and without any opportunity to bring a companion. At the meeting, he said he was threatened with redundancy if he did not sign a settlement agreement, and that he was then only given five days to consider the employer's offer. The employer argued that this was a "protected conversation" and so could not be relied on in the Employment Tribunal. However, the employee argued that the conversation could not be protected due to the employer's improper behaviour.

The Employment Tribunal ruled there was no improper behaviour and therefore the conversation could not be used as evidence in the case. The Tribunal was satisfied that the employer had not threatened redundancy but had merely explained that if the employee did not accept the offer, he would face a redundancy process and was unlikely to score well. However, on appeal, the Employment Appeal Tribunal (EAT) ruled that the question of improper behaviour had to be reconsidered. The Tribunal had failed to address the employee's arguments that he had been "ambushed" by the meeting without notice and without the opportunity to bring a companion. The EAT therefore sent the case back to the Tribunal to consider these points.

A "protected conversation" is a statutory way for an employer to have a confidential conversation with an employee about an agreed departure. Provided certain conditions are met, the conversation cannot be used as evidence against the employer in an unfair dismissal claim. However, as this case shows, there are a number of limitations with protected conversations. First, they only work in unfair dismissal claims – such conversations can still be used as evidence in other cases, including whistleblowing and discrimination claims. Second, guidance suggests employees should be given the right to be accompanied at the meeting by a colleague or trade union official. The protection also falls away where there is any improper behaviour by the employer – such as a threat of dismissal or not giving reasonable time to consider the proposed settlement – which can lead to arguments about whether a conversation is truly protected. For these reasons, it is usually safest to assume that any conversation about an agreed departure could be relied upon in an Employment Tribunal. The offer of an agreed departure should be couched accordingly, usually as just one of a number of options available to the employee.

TARBUC V MARTELLO PILING LTD

Religion or Belief Discrimination

The employee in this case was a member of ambulance crew for an NHS trust. He was issued with a final written warning and required to undergo training after he had referred to a black colleague as a 'roadman' and said he did not believe in systemic racism during a separate conversation following the death of George Floyd. He claimed that the disciplinary action amounted to discrimination based on his protected beliefs.

An Employment Tribunal accepted that the employee had a protected belief that all people should be treated equally, regardless of race or colour. The Tribunal went on to say that the employee's rejection of systemic racism was a manifestation of this belief. However, on appeal, the Employment Appeal Tribunal disagreed. It ruled that the rejection of systemic racism did not necessarily follow from the belief about how people should be treated – it was possible to believe all people should be treated equally and also believe in the existence of systemic racism. The belief about systemic racism was a belief about how things are (or are not) whereas the belief about how people should be treated was a belief about how things should be. The EAT therefore rejected the discrimination claim.

The case highlights the difficulties employers and tribunals can face when determining which beliefs are capable of protection under the Equality Act. Several cases have held that beliefs are capable of protection even if they are controversial or offensive to others. In another case, an Employment Tribunal has ruled that an employee's opposition to critical race theory (i.e. denial of structural racism) was itself a belief capable of protection under the Equality Act. The cases highlight the challenges employers face in this area. When faced with an employee who expresses divisive views, employers must be careful to act only on any inappropriate behaviour, such as the way the belief is expressed, rather than the belief itself. Employers should also consider providing training for staff in this area to reduce the chances of issues arising in the first place

LONDON AMBULANCE SERVICE NHS TRUST V GARRETT

Community Engagement

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Future Dreams, Ella's and Foundervine.

Our Work

Since the last edition of Employment Update, our work has included:

advising a financial services client on the TUPE issues arising on the outsourcing of its technology function
advising an asset management client on an investigation into sexual harassment allegations
carrying out training on Respect in the Workplace and Non-Financial Misconduct for financial services clients
advising on the resignation of a cross-border listed company CEO
advising a UK business on holiday pay compliance and go-forward strategy with respect to various commission and bonus schemes, in light of the introduction of the Fair Work Agency
advising a UK private equity-backed business on the termination of its CEO.