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Labor rules changing in 2026
2026 will see significant developments in United Kingdom employment rights, as well as new pay reporting measures in Europe. In this article, we look at what this means in practice and how employers can stay ahead of the forthcoming changes – trends that may also be worth consideration well outside of Europe.
Expansion of day one rights
U.K. workers will gain increased rights from the start of their employment, under the Employment Rights Bill.
Unfair dismissal
All employees will benefit from unfair dismissal protection from day one of employment. Currently, there is a two-year service requirement before employees can bring an unfair dismissal claim (save for in limited circumstances, such as whistleblowers who can claim from the start of employment), but this will be abolished in 2027.
This is a significant change, meaning that many more employees will have unfair dismissal rights than before. Employers intending to dismiss any employee, including a new starter, will need to ensure they have a fair reason (such as poor performance, misconduct or redundancy) and follow a fair process. However, there will be a statutory probation period (likely to be nine months) during which the employer can terminate for performance or conduct with a lighter touch dismissal process.
In the United States, most workers are employed "at will," meaning employers can terminate employment for nearly any reason that is not unlawful. Unlike many other countries, the U.S. does not offer a general right to claim unfair dismissal. Instead, protections focus on specific violations – such as discrimination, retaliation, or breach of contract. As a result, wrongful termination claims arise only when a dismissal violates these defined legal standards, and employees typically pursue them through the EEOC, state agencies, or the courts.
Employers in the U.K. should ensure all new starters have a probation period in their contracts and that there is a process in place for regular performance reviews during probation. More widely, employers will need to review disciplinary and dismissal policies and processes and ensure managers are trained on managing conduct and performance issues.
Family and sickness
Paternity leave and unpaid parental leave will become day one rights in the U.K. from April 2026. At the moment, employees need minimum service before taking this leave (26 weeks' service for paternity leave and one year for unpaid parental leave).
Paternity leave consists of two weeks leave to be taken within a year of the child's birth/adoption, paid at the statutory rate (currently £187.18 per week). Unpaid parental leave may be taken for up to 18 weeks (but no more than four weeks in any one year) before the child's 18th birthday.
From 2027, there will be enhanced dismissal protections for employees taking any type of family leave, including maternity, adoption or shared parental leave. Employers will be unable to dismiss employees who are pregnant or on family leave, or who returned from family leave within the previous six months, except in certain narrow circumstances (details of which are currently subject to consultation).
Employees will have a new right to at least one week of bereavement leave following the death of a family member (the detail of which family members are covered is yet to be confirmed), from 2027.
Also, statutory sick pay (SSP) will become available to all workers from day one of sickness absence, from April 2026, as both the current four day waiting period and minimum earnings eligibility threshold (£125 per week) will be removed. SSP is payable at the statutory rate, currently £118.75 (or 80% of average earnings for workers who earn below the statutory rate).
Paid sick leave in the United States is not required at the federal level, so access depends on state and local laws or employer policies. This leads to wide variation in coverage, making it even more important for employers to support people when they need us most. Offering paid sick leave not only protects employee health but also strengthens trust, wellbeing and a healthier workplace overall.
Flexible working
Flexible working rules in the U.K. will be strengthened. Employees already have a right to request flexible working from day one of employment, which employers can only refuse for certain business reasons (e.g., impact on customer service). From 2027, employers will have to consult employees about their request and must explain why any rejection is reasonable. This is a higher bar for employers to meet and will require employers to review their current policies and practices and ensure managers receive training in how to handle flexible working requests in a compliant manner.
Flexible working in the United States is not guaranteed by national law, and employees generally have no statutory right to request it. Instead, flexible arrangements – such as remote work, flexible hours, or hybrid schedules – are set by individual employers and vary widely across industries and roles. Even without legal mandates, flexibility has become a key tool for attracting and retaining talent and supporting employee wellbeing.
Workplace harassment
Since October 26, 2024, U.K. employers have been under a duty to take reasonable steps to prevent sexual harassment of their employees, with compensation for sexual harassment claims increased by up to 25% if they breach this duty. In addition, the duty is enforceable by the Equality and Human Rights Commission (EHRC) which can issue enforcement notices and fines.
Key compliance measures for employers include:
- Carrying out a risk assessment and keeping it under regular review
- Having an effective sexual harassment policy which is relevant to the employer's specific workplace
- Training managers and staff in sexual harassment including raising and handling complaints
- Encouraging staff to "speak up" to report any concerns
- Investigating complaints and keeping a centralized record to identify trends
- Addressing third-party harassment risks
From October 2026, U.K. harassment laws will expand further. Employers will be liable for third-party harassment of any kind (not just sexual harassment) by third parties who their employees deal with in the context of their work, such as clients or suppliers. Employers will need to take steps to reduce the risk of third-party harassment, such as appropriate wording in contracts or in codes of conduct with clients and suppliers. Additionally, anti-harassment policies should be updated to encompass third-party harassment, and employers should clearly communicate to employees how they can report concerns about third-party harassment, including through designated "speak up" channels.
The active duty of employers to prevent sexual harassment, and the new third-party harassment rules, are similar to the California workplace violence laws which came into force in 2024. Both in California and the U.K., employers are obliged to take proactive, preventative steps to protect employees before any harm is done. It will be interesting to see whether this develops into a wider global trend in the future.
Workplace culture, "speak up" and investigations
Workplace culture remains firmly in the spotlight and will continue to be so in 2026. There is ongoing scrutiny of how employers handle "speak up" complaints, against a backdrop of media coverage of historic misconduct allegations at high-profile organizations. Median report volumes have increased in Europe in the years following the passage of the EU Whistleblower Protection Directive, and recent years have seen Workplace Civility-type reports in the region increase as well. Globally, report volumes remain at historically high levels.
The importance of ensuring that "speak up" reports are fully and transparently investigated is brought into focus by the forthcoming restrictions on confidentiality provisions in U.K. settlement agreements from October 2026. Employers will not be able to use confidentiality provisions or non-disclosure agreements to prevent employees from making allegations or disclosures about harassment or discrimination, including about how the employer responded to any allegations or disclosures.
The proposal is likely to have a significant impact on settlement agreements. Often, both employer and employee want to maintain confidentiality in a settlement involving harassment or discrimination, given the sensitivity involved. There has been some indication from the government that these restrictions will not apply if an employee requests confidentiality, but it is unclear how this would work in practice. If it is not possible for parties to agree on enforceable confidentiality provisions, this could result in fewer settlements, because either or both sides may feel they have less to lose from litigation if they cannot settle the matter in the knowledge that the details will stay private.
For financial services firms, new rules from September 1, 2026 will address non-financial misconduct by regulated employees. Any act of bullying, harassment or violence by an employee will have to be treated by the firm as a potential breach of the Financial Conduct Authority (FCA) Conduct Rules. The FCA may also introduce further guidance on how non-financial misconduct (including outside work) should be approached when assessing whether an employee should be permitted to continue their work in a regulated environment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
