Shoosmiths company logo The UK Government’s policy agenda for 2026 is set to reshape employment rights, immigration laws, and skills funding — and that means HR teams need to be ready. These aren’t just tweaks; they’re fundamental shifts that will impact how we hire, manage, and develop people. So, what does this mean for you as an HR professional? And how can you turn these challenges into opportunities?

 

What’s changing and why it matters

The Employment Rights Act 2025 (ERA 25) is the biggest overhaul of UK employment law in years. While the details are still evolving, the direction is clear: more protections for workers, more responsibilities for employers. Add to that the Government’s Get and Keep Britain Working agenda, which focuses on retention, healthy workplaces, and supporting employees to stay in work. This isn’t just compliance — it’s a cultural shift. 

The ERA 25 will undoubtedly add to the administrative load on employers, from offering guaranteed hours, to ensuring new recruits are properly assessed, to keeping holiday pay records and updating family leave policies. Alongside this, greater union power will result in more trade union interaction, even for those employers that do not currently recognise a union.

Immigration policy is tightening too. Expect stricter rules that will affect overseas recruitment and skills availability. In 2025 we saw the skilled worker route severely curtailed. Increases to the salary threshold and skills level, together with other increases, like the immigration skills charge, are making overseas recruitment less attractive to employers. This year will be no different. Higher costs, increased enforcement activity and stricter sponsorship compliance will make recruiting skilled workers from abroad more challenging for employers.

And then there’s the Growth and Skills Levy, replacing the Apprenticeship Levy, in 2026. The new reform offers more flexibility and funding for short, targeted courses — enabling businesses to upskill quickly and boost productivity. HR will need to be familiar with the new levy and leverage this as an opportunity to build in-house talent and stay competitive. Practical routes like T-level industry placements, the new work-experience duty and Skills Bootcamps offer additional ways to build domestic talent pipelines and bring new people into the workforce.

Whilst these changes bring opportunities, there are also risks to consider. 

The risks you can’t ignore

Financial pressure: 79% of employers expect higher employment costs under the ERA 25. Updating systems, training managers, and embedding new processes will require investment at increased cost to the employer. The Autumn Budget changes have also increased labour costs, putting even more pressure on the bottom line. Balancing spend from other areas of the business will be a reality for most. 

Capability gaps: Given the changes to immigration laws, skills gaps are likely to widen, presenting a business risk. Employers will need to develop and train home grown talent or attract workers from other sectors to fill gaps. For HR, this means doubling down on building in-house talent and rethinking how we attract and retain UK workers. This requires a fresh focus on talent management strategies. HR needs to work with leaders to identify talent gaps and decide whether to buy, build, borrow, bind, bounce, bot or balance. 

Legal exposure: Failure to be compliant could lead to costly claims. The increase in employee rights, together with the extension to tribunal claim time limits, will inevitably increase the risk of Employment Tribunal claims. Figures released by the Ministry of Justice for 2024/25 show that employment tribunal claims are on the rise. At the same time, the value of such claims will increase. The proposed removal of the cap on unfair dismissal compensation, alongside the increase to protective awards for collective redundancy failures, allows for higher awards. Employers will look to HR to be on top of these changes and be up to date with the latest requirements. 

Performance strain: With 30% of employers planning redundancies or hiring freezes, existing teams will start to feel the pressure to sustain business operations. HR will need strategies to maintain both productivity and employee wellbeing.

What you can do now

Here are some immediate actions to get ahead:

  1. Map the impact: Identify where these reforms will hit hardest in your business and industry.
  2. Audit your policies: Review contracts, HR processes, and systems for compliance.
  3. Assess your exposure to risks: Identify what support you need to minimise these risks.
  4. Scenario planning: Workforce planning is no longer optional. Invest in sustainable workforce planning and talent strategies as these will be key levers for business success.
  5. Build employee relations capability: Ensure managers are confident in handling ER issues and strengthen consultation and employee voice. This will ensure two-way dialogue as union access and influence increases under the new changes.
  6. Engage leadership: Senior leaders buy in will be crucial to ensure workforce planning is a business priority. Reframe workforce planning as a dual-purpose organisational lever by positioning workforce planning as both a risk and a strategic opportunity.
  7. Shape the upcoming changes: Get involved with CIPD consultations on the ERA — your voice matters.

Specific actions on ERA changes can be found on the employment law tracker.

Longer term actions and planning 

Thinking beyond compliance: 

  1. Impact of AI: Consider how AI is reshaping roles within your business. Which tasks can be automated, and how will jobs need to be redesigned? What governance do you have in place and where are the gaps?
  2. Workforce planning: Build workforce plans for different outcomes over the next 2–3 years. This will provide leaders with the full range of possible outcomes.
  3. Skills development: Build capability in future planning and horizon scanning to give people functions the ability to be ahead of the curve, anticipating how the business could respond to future disruptors. 

What other support is there for people professionals?

CIPD members have access to employment law resources, an employment law helpline and a community of peers, as well as other support helplines. 

There are a range of CIPD online courses available now:

The CIPD continues to engage with the UK Government to ensure the voice of the people profession is considered. We continue to influence important legislation, such as the inclusion of a six-month unfair dismissal period.  

 

Ultimately, HR teams have the opportunity to influence beyond compliance. Momentum from the new reforms offers HR the chance to take a lead on strategic workforce plans and build a workforce this is future ready, agile and resilient. These changes are big — but with the right planning, the people profession can lead the way and make a profound impact in 2026 and beyond.

 

More resources

Strategic workforce planning checklist

Resourcing and talent planning report

Shoosmiths | For What Matters

 

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