Employment Update March 2026

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In the News

Misconduct investigations

Crispin Odey, founder of hedge fund Odey Asset Management, is in the news again as he seeks to overturn penalties imposed by the Financial Conduct Authority (FCA). In 2025, Mr Odey was fined £1.8m and banned from the financial services industry after he twice tried to frustrate his firm's disciplinary processes into allegations of sexual misconduct against him.

While perhaps an extreme example, the case offers important lessons for employers across all sectors, not just financial services. The collapse of Odey Asset Management highlights the scrutiny employers now face from investors, regulators, the media and staff in relation to allegations of serious misconduct. This is underscored by the duty to prevent sexual harassment which applies to all employers and is set to be strengthened from October 2026, as well as the new rules on non-financial misconduct which will apply to financial services firms from 1 September 2026.

Employers across all sectors should have robust policies and training for staff and managers on harassment and bullying, as well as take active steps to foster a "speak up" culture where staff feel able to raise concerns. Employers should also have governance structures in place to ensure allegations are properly investigated and dealt with. Consideration should be given to appointing external investigators, particularly where senior individuals are involved, to add credibility to the investigation and avoid the risk or perception of internal influence.

We frequently provide training for managers and staff on bullying, harassment and "speak up" and are increasingly being retained as "crisis counsel" to support on issues as they arise. Please speak to your usual Employment department contact for more information.

Unfair dismissal reforms

As widely reported, the qualifying period for unfair dismissal claims will reduce from two years to six months, and the cap on compensation will be removed, with effect from 1 January 2027. However, it is not yet clear whether these changes will apply where the dismissal takes effect on or after 1 January 2027 or where the claim is brought on or after 1 January 2027. It is more likely to be the former: the Government has said its intention is to extend unfair dismissal protection to employees who already have six months’ service as of 1 January 2027, suggesting the relevant date will be when the dismissal takes effect. If the changes were to apply based on when the claim is brought, this would affect dismissals taking place prior to 1 January 2027. An employee dismissed in as early as July 2026 might not bring a claim until after 1 January 2027 when time limits and early conciliation are factored in. Given the significance of this point, we are asking the Government to clarify the position and Employment Update will report developments.

New Law

Collective redundancy consultation

Employers have a duty to consult employee representatives where they are proposing 20 or more redundancies within a 90-day period at a single site or establishment. Failure to do so could result in a protective award of up to 90 days' pay per affected employee. From 6 April 2026, the maximum protective award will double to 180 days' pay per affected employee, meaning the costs of failing to consult will increase significantly. The change is expected to apply to redundancies taking effect on or after 6 April 2026. Separately, the Government is consulting on changes to the threshold trigger for collective redundancy consultation (see Consultations below).

National minimum wage

On 1 April 2026, the rates of the National Living Wage and the National Minimum Wage will increase. The rates applicable from 1 April 2026 will be:

£12.71 per hour for workers aged 21 and over (increasing from £12.21 per hour);
£10.85 per hour for workers aged 18-20 (increasing from £10 per hour); and
£8.00 per hour for workers aged 16-17 and apprentices under 19 or in the first year of apprenticeship (increasing from £7.55 per hour).

Statutory family leave and pay

From 6 April 2026, the weekly rate of statutory maternity pay will increase from £187.18 to £194.32 per week. This new rate will also apply to statutory adoption, paternity, shared parental, parental bereavement and neonatal care pay.

Under the Employment Rights Act, the current qualifying periods for paternity leave (26 weeks) and unpaid parental leave (one year) will be removed, so that employees will be able to take such leave from day one. Employees will also be able to take paternity leave following shared parental leave (currently an employee who takes shared parental leave loses the right to any untaken paternity leave). These changes will come into force on 6 April 2026.

Statutory sick pay

On 6 April 2026, a number of changes will be made to statutory sick pay. The current three-day waiting period will be removed, so that statutory sick pay is available from day one of absence. The earnings threshold will also be removed, so that it is available to all workers regardless of their earnings. The rate of statutory sick pay will also change so that it is the lower of the statutory rate and 80% of the employee's normal weekly earnings, with the statutory rate increasing from £118.75 to £123.25 per week with effect from 6 April 2026.

Umbrella companies

On 6 April 2026, new rules on tax avoidance for umbrella companies will come into effect. Umbrella companies are sometimes used by employers or employment agencies to employ temporary workers and handle their payroll, including accounting for PAYE income tax and national insurance contributions. Under the new rules, where the umbrella company fails to pay the correct amount of income tax or national insurance, HMRC will be able to seek recovery from either the employment agency or, in some cases, the client that uses their services. Ahead of the changes, employers should assess whether they, or any employment agencies they use, engage workers through umbrella companies, and ensure there are appropriate protections in place.

Equality action plans

The Government is encouraging large employers to produce equality action plans setting out the steps they are taking to reduce the gender pay gap and support employees through the menopause. Equality action plans are voluntary from April 2026 but will become mandatory from April 2027 for employers with 250 or more employees. The Government has now published guidance for employers on producing equality action plans. The guidance contains a list of recommended actions covering five areas: recruiting staff, developing and promoting staff, building diversity into the organisation, increasing transparency and supporting women experiencing menopause (and other health conditions). The guidance suggests employers should choose at least one action to address the gender pay gap and one to support employees through the menopause. Employers are also encouraged to engage with employees, by discussing action plans with staff and stakeholder groups such as trade unions and employee networks. In practice, much of the content for an equality action plan could be drawn from any existing menopause policy or narrative included with existing gender pay gap reports. The Government also plans to produce further guidance on equality action plans in April 2026.

Unfair dismissal compensation

On 6 April 2026, the maximum compensatory award for unfair dismissal will increase from the lower of a year's pay and £118,223 to the lower of a year's pay and £123,543.

Statutory redundancy pay

On 6 April 2026, the maximum amount of a week's pay, for the purposes of calculating statutory redundancy pay (among other things) will increase from £719 to £751 per week. The maximum statutory redundancy payment will therefore increase from £21,570 to £22,530 for redundancies taking effect on or after 6 April 2026.

Immigration Radar

Consultation on 'earned settlement'

The Government's 'Earned Settlement' consultation closed on 12 February 2026 and further updates on the proposals are expected by autumn. As previously reported, the Government proposes to double the baseline qualifying period to apply for settlement in the UK from the current five-year period to 10 years. This will represent a significant change if implemented and could mean employers having to sponsor Skilled Worker visa holders for longer periods in lower skilled and/or lower paid roles (although note that there are minimum salary thresholds for Skilled Worker visas and settlement applications). On the other hand, it could result in a shorter pathway to settlement for some high earners on relevant visas, who could see a reduction to a three-year qualifying period under the proposals. It is not yet clear whether transitional provisions will apply for individuals who are already in the UK on a visa. Employment Update will report developments.

Sponsor compliance – Skilled Worker visas

From 8 April 2026, Employers who sponsor employees on the Skilled Worker route must ensure that the salary paid in each ‘pay period’ is at least the amount specified on the Certificate of Sponsorship ("CoS"). UK Visas & Immigration ("UKVI") will check that, for monthly paid employees, total salary in any three-month period meets at least one quarter of the annual CoS salary. This change is being made to allow the UKVI to review salary compliance and allow for prompt compliance action in the case of underpayments to sponsored employees.

For further information on recent and upcoming changes to the UK immigration rules, please see our briefing.

Case Watch

Dismissal – getting the reasons right

A recent decision of the Employment Appeal Tribunal highlights the importance of getting the reason for dismissal right in misconduct cases.

The employee in this case was a senior customer service employee within high street branches of a mobile network company. She was dismissed for gross misconduct based on four separate incidents which the employer deemed were fraudulent. However, an Employment Tribunal found that there was no reasonable basis to conclude that any of the four incidents constituted fraud. Nevertheless, the Tribunal ruled that the dismissal was fair because one of the incidents was a serious breach of company policy. The employee appealed.

On appeal, the Employment Appeal Tribunal ruled that the dismissal was unfair. The EAT said that the reason for dismissal was the employer's view that each of the four separate incidents constituted fraud. Since there was no reasonable basis to conclude that any of the incidents constituted fraud, the dismissal was unfair. It was not right for the Tribunal to speculate that it could have been fair to dismiss for a single breach of company policy, since this was not the stated reason for dismissal. In addition, the decision maker had given evidence that there might have been a different outcome if there had been fewer incidents of misconduct given the employee's unblemished record over several years.

This case is a reminder of the importance of being clear about the reasons for dismissal. Where there are a number of instances of misconduct, the employer should be clear if the decision to dismiss is based on all of the allegations in aggregate or if any one incident alone would be sufficient to dismiss. Where the decision is based on multiple instances, the dismissal could be unfair if a tribunal finds that any one of those incidents did not happen or was not as serious as the employer thought.

CHAND V EE LIMITED

Tactical whistleblowing – does the protection apply?

The employee in this case was employed as an accountant. The employer had several concerns about the employee's performance and asked a contractor working in the business to "peer review" her work. The employee was unhappy about this and raised concerns that the contractor was not a member of the Association of Chartered Accountants and had been disqualified from being a company director but still appeared as director of a company associated with his wife. The employee was later dismissed for poor performance and brought claims arguing she had been dismissed, and subjected to a detriment, for blowing the whistle.

An Employment Tribunal initially ruled that the employee's disclosures about the contractor were not protected whistleblowing disclosures. It said they were not made in the public interest, but in the employee's own interests, in response to the contractor monitoring her performance. However, on appeal, the Employment Appeal Tribunal ruled that even if the employee's motive was to discredit the contractor, the disclosures could still be in the public interest and so the matter had to be remitted to a fresh tribunal to consider this point.

The case highlights that it is a relatively low bar for a worker to establish they are a whistleblower. All that is required is a disclosure of information which, in the worker's reasonable belief, is in the public interest and tends to show some sort of wrongdoing or breach of a legal obligation. What matters is the worker's belief. If a worker genuinely and reasonably believes something to be in the public interest and a breach of law, they will be protected, regardless of whether the matter is in fact in the public interest or a breach. The case also shows that the worker's motive is irrelevant. It is common for employees to raise whistleblowing allegations tactically in response to a performance or disciplinary process against them. Even where that is the case, the employer should assume they are protected as a whistleblower and treat them accordingly.

BIBESCU V CLARE JENNER LIMITED T/A JENNER'S

Consultations

Collective redundancy consultation

The Government has published a consultation on the threshold for triggering collective redundancy consultation. Currently, the duty to consult with employee representatives is triggered where an employer is proposing 20 or more redundancies within a 90-day period at a single site or establishment. Under the Employment Rights Act 2025, this trigger will continue to apply but a new additional threshold will be introduced based on the number of redundancies across the organisation. The Government is consulting on what the new "organisation-wide" trigger should be. Its preferred option is to set the threshold at between 250 and 1,000 proposed redundancies, regardless of the size of the organisation. As an alternative, the Government is also seeking views on whether the different thresholds should apply based on the size of the employer as follows:

250 redundancies for organisations with 0-2,499 employees;
500 redundancies for organisations with 2,500 – 9,999 employees; and
750 redundancies for organisations with 10,000 or more employees.

However, the Government's preference is to have a flat trigger which does not vary with the size of the organisation. The Government has also considered a threshold based on a percentage of the workforce but proposes not to pursue this given the complexity involved. The consultation is open until 21 May 2026.

Flexible working

The Government plans to set out in regulations the steps employers must follow before refusing a flexible working request, and has launched a consultation on what those steps should be. The proposal is that:

employers would be required to meet with the employee making the request without undue delay;
someone with authority to make a decision would need to attend the meeting and keep a record of it;
the decision maker would need to clarify with the employee whether they would like the request considered as a reasonable adjustment under the Equality Act 2010;
the decision maker would also need to communicate to the employee any challenges identified with agreeing to the request and consider ways to navigate those challenges along with any feasible alternatives; and
the employer would be required to provide the employee with written notification of the outcome of the meeting, including a summary of what was discussed.

If these requirements are adopted, they would apply from 2027. From 2027, any rejection of a flexible working request will also need to be reasonable and the employer will need to specify in its response why the rejection is reasonable. Employers will need to ensure managers are appropriately trained and there are processes in place to ensure the new requirements are met. The consultation is open until 30 April 2026.

Industrial action detriment

There are currently restrictions on dismissing employees who take part in lawful industrial action such as strikes but there is no statutory prohibition on action short of dismissal, such as issuing warnings or removing overtime or other benefits. It has been ruled that the current UK law is incompatible with the European Convention on Human Rights. To address this, the Employment Rights Act will introduce a new prohibition on subjecting workers to a detriment for taking part in protected industrial action, with details to be set out in regulations. The Government has launched a consultation on whether it should prohibit all forms of detriment or specify in regulations particular detriments which are prohibited. The Government's preferred approach is simply to prohibit all forms of detriment where the purpose is to prevent or deter a worker from taking protected industrial action or to penalise them for doing so. The consultation closes on 23 April 2026.

Community Engagement

In recent weeks, our team has been involved in a variety of pro bono work for organisations such as Refugees at Home, Evotrack, Ella's and Pulpatronics.

Our Work

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

dealing with an anonymous whistleblow and subsequent investigation
consolidating claims in the employment tribunal where an individual has made multiple applications
defending an interim relief application (emergency application made by a whistleblower regarding termination of employment)
advising on investor governance and employment protections in connection with a major property investment fund
running training sessions on people issues for a private equity firm's portfolio investment management deal teams.