HR briefing - June 2026

Welcome to this month's briefing for HR teams and in-house employment counsel – bringing you this month’s employment law highlights in an easy-to-read package.

Bonus schemes

Bonus schemes usually fall into two main categories: genuinely discretionary schemes, where the only controls on the employer are that bonus allocations must not be perverse, arbitrary or capricious; and formulaic or fixed schemes, where amounts are predetermined or derived from a known metric such as profit or EBITDA. In an unusual recent case, the Tribunal had to decide whether a one-off sales bonus announced at a company town hall could be changed to introduce a cap on the cash amount and a senior authorisation requirement. Neither of those elements were communicated during the town hall, and the individual who had secured the relevant deal was, the Tribunal decided, therefore entitled to an uncapped amount. The decision is a useful reminder of the need to document bonus schemes carefully, and ensure all the required limits and controls are included from the outset.

ZHCs

One of the most significant changes in the new Employment Rights Act will be the new obligations on businesses that make use of zero-hours arrangements (and some low hours arrangements). Secondary legislation is needed to fill in the details in the general structure set out in the Act, but essentially, the scheme will require businesses to offer a guaranteed-hours contract at the end of each reference period, offering at least the hours actually worked in that period. Zero-hours workers will be entitled to minimum advance notice of upcoming shifts, with compensation if those shifts are cancelled or moved. A new consultation setting out the options being considered by Government for the details of the scheme (how long should the reference period be, which low-hours workers should be in-scope, and so on) has been published.

Group income protection (or permanent health insurance)

Legislation that has gone almost unchanged since the Victorians allows employees to recover underpayments of wages. Ordinarily, wages are only paid during employment – but what is the position if an employee becomes entitled to benefits under a group income protection scheme and is then dismissed. Can benefits under the scheme be recovered as “wages” even after the end of employment? That question now has an answer: yes. The facts were very unusual: the employer said that it would put in place a group income protection scheme, but ultimately failed to do so. When the employee became ill, so that she would have qualified for benefits under the non-existent scheme, she rightly sought payment from the employer itself. Realising the cost, the employer promptly dismissed her. In the circumstances, the decision to require payments to be continued after termination is understandable from an emotional perspective, but the extension of the wages legislation to permit this is novel. It remains to be seen whether the extension will have repercussions for other forms of remuneration, but the obvious takeaway is not to promise something you then fail to deliver.

Redundancy

As readers will all be aware, collective redundancy consultation is mandatory where 20 or more redundancies are proposed in a 90-day period. There has been a huge volume of litigation at UK and EU levels on when, precisely, an employer “proposes” a redundancy (or “contemplates” a redundancy in the EU Directive’s language). In the most recent instalment, a struggling business with 51 staff appointed administrators in April 2023, went into administration on 2 May 2023 and made 15 redundancies that same day. A further group of 30 employees were made redundant on 5 May 2023 when the business was wound up. There was no collective consultation, so in principle, a protective award (the name given to the sanction for that failing) was in issue. The initial ruling was that the 5 May group was entitled, but the 2 May group was not. The Tribunal felt that, as at 2 May, the intention was to sell the business as a going concern and there was no proposal to make 20 or more redundancies.

The Appeal Tribunal took a different view, because the question is not whether there was a proposal to dismiss as at 2nd May, it was whether the employer was proposing to dismiss as redundant 20 or more employees within a period of 90 days. That technical difference between “a proposal” and “is proposing” is crucial, as "proposing to dismiss" can include current and ongoing consideration of future events, albeit events which are not certain. Collective consultation is not required where closure of a business is just floated as a possibility, but will be mandatory where closure becomes a clear, albeit provisional, intention. The point for employers, especially ones encountering financial difficulties, is to try to “project forward” as much as possible to ensure that consultation is begun in good time where it is required.

Salary sacrifice pension contributions

We have written previously about changes to the National Insurance contributions (NICs) treatment of pension contributions made through salary sacrifice. The legislation - the National Insurance Contributions (Employer Pensions Contributions) Act 2026 – has now received Royal Assent so, from 6 April 2029, the NICs savings available to employers in respect of employee pension contributions made via salary sacrifice arrangements will be capped at £2,000 per employee per tax year.

Employers operating salary sacrifice arrangements for pension contributions should consider the potential financial impact of this cap and whether any changes to remuneration structures may be warranted and appropriate in advance of April 2029.

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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.