Preparing for change: Key employment law updates coming in 2026

This is a guest blog written by REC Business Partner, Brabners LLP.

As 2026 approaches, the government is set to introduce several legislative changes that will significantly reshape hiring practices and the employment framework in the UK. REC legal supplier, Brabners, outlines some of the main changes on the horizon and suggests practical steps to help businesses prepare.

Fair Work Agency (“FWA”) – April 2026

The FWA is a new body designed to strengthen enforcement of employment rights and compliance. It will come into force in April 2026 and will have powers to inspect workplaces, demand compliance evidence, enforce payment of statutory entitlements (such as holiday pay and sick pay), name and shame non-compliant employers and agencies, bring Employment Tribunal claims on behalf of workers, and recover enforcement costs from employers. 
With the FWA putting businesses under increased scrutiny, now’s the time to review policies, practices and procedures to ensure you are operating compliantly. 

Joint and Several Liability – April 2026

Relevant agencies and end clients will be jointly and severally liable for the PAYE and NICs liabilities of any umbrella companies in the supply chain. If the umbrella company fails to pay HMRC, whether through fault, fraud or insolvency, the liability will fall (in most cases) to the agency closest to the client in the supply chain. 
A robust PSL and careful due diligence of umbrella companies will be crucial. This should include investigating the umbrella’s financial stability as well as its compliance with PAYE obligations. 

Statutory Sick Pay (“SSP”) – April 2026 

From April 2026, SSP will be payable from day one of illness; the current 3 “waiting days” will be abolished. The lower earnings limit will also be removed, meaning all employees and workers will be eligible to receive some form of SSP payment, irrespective of their level of earnings.
Agencies should update their sickness policies and consider making a provision for the increased cost of paying SSP from day one.

Employment Tribunal time limits – October 2026

Currently, in most cases, employees and workers must bring a Tribunal claim within three months of the date of their dismissal or other incident. This time limit will be extended to six months from October 2026. This could result in an increase in claims, so agencies and employers should review their internal procedures and seek to resolve disputes before they escalate.
How to prepare now for changes coming next year

• Audit policies, processes and payment structures.
• Review contracts to ensure compliance.
• Expect greater scrutiny on statutory payments and holiday pay.
• Update systems and settle any outstanding back payments.
• Complete robust due diligence on umbrella companies within your supply chain.

Summary

While substantial reforms are expected, the precise details are yet to be determined and some of the most talked-about changes won’t happen immediately. Draft regulations and consultations will shape the details, so expect a phased approach rather than sudden implementation, and keep your eye out for updates. Agencies have the necessary time to prepare but need to start planning early to avoid last-minute compliance challenges.

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