Key Employment Developments for 2026

It has been an eventful period for employment law, and several significant developments have emerged in recent days which you will need to keep on your radar.

Unfair dismissal

After much political manoeuvring, the proposal to bring in Day One unfair dismissal rights has been abandoned in favour of a much shorter qualifying period. The government now appears to be settled on reducing the qualifying period for unfair dismissal claims from the current two years to six months. This is likely to take effect in January 2027.

This will have widespread practical consequences. Many employers currently operate probationary periods of six months, meaning employees could gain unfair dismissal protection at, or very shortly before, the end of the probationary period. We will work with you next year to re-evaluate probationary lengths, review mechanisms, and performance management processes. Employers will need to act much earlier, and much more clearly, when addressing underperformance or conduct concerns during the early months of employment.

In addition to the reduced qualifying period, the statutory cap on the compensatory award for unfair dismissal is to be removed. This is currently the lower of 52 weeks wages or £118,000, but it appears that the government intends to abolish the cap altogether. This would mark a major shift for employers, potentially exposing businesses to substantially higher awards.

National Minimum Wage rises from April 2026

From 1 April 2026, the minimum wage is expected to increase across all age brackets. The proposed new hourly rates are:

•                 21 and over: £12.71 (up from £12.21)

•                 18–20: £10.85 (up from £10.00)

•                 16–17 and apprentices: £8.00 (up from £7.55)

These changes represent notable uplifts for younger workers as well as adult employees, and employers should ensure budgeting and payroll systems are updated in good time.

Proposed new statutory rates from April 2026

The Government has published draft increases to statutory sick pay and family-related pay, due to take effect from 6 April 2026. Weekly rates for maternity, paternity, adoption, shared parental, parental bereavement and neonatal care leave pay are all set to rise from £187.18 to £194.32 per week, and statutory sick pay is due to increase to £123.25. The earnings threshold to qualify for family leave pay is also expected to rise to £129 or more per week.

Employment Rights Bill

A number of significant amendments and policy signals have been released in rapid succession, suggesting that the Government’s employment law reform programme is gathering pace. The changes being proposed could materially alter the landscape for recruitment, probation management, workforce planning, trade union recognition rights and dismissal processes.

We will keep you informed of those developments in the year ahead.