Employment Law Update: Key Developments Summer 2026

2026 is a year of significant change and development for employment law.  We have summarised some of the more significant developments from recent weeks, to assist employers with keeping up to date with upcoming changes.

Changes to Unfair Dismissal rules

Regulations have been made to bring into force section 25 of the Employment Rights Act 2025, which will make substantive changes to the unfair dismissal regime from 1 January 2027 onwards as follows:

• Reduction of the qualifying period of employment for bringing an unfair dismissal claim from two years to six months.
• Removes all limits on the compensatory award (currently capped at lower of 52 weeks gross pay or £123,543).
• Removes the power to vary the unfair dismissal qualifying period by regulations, thereby requiring primary legislation for any further amendments to the period.

This is a significant change for employers to get to grips with.  Employers should review how they are dealing with probationary periods for new hires and any ongoing employee issues to ensure that decisions about ongoing employment are made prior to the individual acquiring unfair dismissal rights. 

ACAS Code of Practice on Disciplinary and Grievance Procedures

The ACAS Code of Practice on Disciplinary and Grievance Procedures is a statutory code of practice, setting out the standards of expected behaviour for employers and employees in situations covered by the code. The ACAS Code is not binding in itself but any unreasonable failure to comply with the ACAS Code may lead a tribunal to award either an uplift in, or reduction to, compensation in relevant claims by up to 25%.

On 30 July 2026, ACAS published a fully revised updated draft ACAS Code. At the same time, it published a consultation seeking views on the revisions, which ends on 23 September 2026.

The draft is significantly different from the existing version and twice as long.  Notable differences include:

• References to “employees” are now references to “workers”.  ACAS considers that it is good practice for employers to follow the ACAS Code in relation to both workers and employees. However, the uplift for unreasonable failure to comply is unaffected and remains only available to employees.
• The current ACAS Code does not refer to any obligations under the Equality Act 2010 that may apply when dealing with workplace concerns. The draft Code explicitly refers to equality issues and the obligation on employers to make reasonable adjustments for workers with a disability.
• Expectations around suspension are clarified with confirmation that this is only appropriate in a limited range of circumstances.
• There is an emphasis on early and informal resolution of workplace issues wherever possible and a proposal that the written invite to a disciplinary meeting will need to include what steps an employer has taken to resolve matters informally, or where this has not happened, an explanation as to why.
• The use of alternative methods of dispute resolution such as mediation is encouraged.

If the draft Code is adopted in its current form, this will represent a significant change in the way that employers are expected to manage disciplinary and grievance matters.  Policies and procedures will need to be updated, and managers will require additional training.  Whilst there is no timeframe as to when the draft Code may be adopted, as the purpose of the update was to support changes in the law on unfair dismissal, it is possible that this will be in early 2027.

Extension of Time Limits for Bringing Tribunal Claims

From 1 October 2026, Section 152 of the Employment Rights Act 2025, will come into force to extend the time limit to bring most employment tribunal claims, increasing from three months to six months. This will include claims such as unfair dismissal and discrimination.

The requirement to first go through ACAS early conciliation has not changed. The early conciliation period (which can last up to 12 weeks) stops the limitation clock from running during that time, which effectively means that the full window from dismissal or discriminatory act to submission of a tribunal claim could be up to 9 months from the act complained of.

Given that claims may in future arrive more than six months after the incident, accurate record keeping will be key. Employers should not be hasty in deleting relevant documentation (disciplinary records, correspondence, payslips) and consider whether current retention periods need to be adjusted.

Extended Right to Work Check Regime

Following consultation, the Government has published its response confirming that the right to work checks regime will be extended. On 1 October 2026, section 48 of the Border Security, Asylum and Immigration Act 2025 will come into force, extending the duty to check right to work beyond traditional employees. The Home Office has also published a draft updated Employer’s guide to right to work checks, which will, if implemented in full, also come into force on 1 October 2026

The effect of the legislation (and its supporting Code of Practice) is that organisations engaging workers under casual and zero-hours arrangements, individual subcontractors, and those in the gig economy business will be required to carry out right to work checks.

Existing penalties and sanctions for illegal working will apply to the newly covered working arrangements, which can be a fine as high as £60,000 per illegal worker for repeated breaches.

Employers who engage casual staff will need to consider how to ensure that appropriate checks are undertaken at the relevant time.

Trade Union Access

From 30 October 2026, trade unions will gain a new statutory right to access workplaces. Following a period of consultation, the government has now published a new Code of Practice which provides some further clarity of how this new right will work in practice.

Employers who have not previously engaged with or recognised trade unions may assume this new right will have little relevance to them. However, a key feature of the new rules is that trade unions will be able to request access even where they have no existing presence within the workforce. As a result, employers will need to consider how these new rights may impact them in practice.

Further details about the new rights can be found in our previous update:  https://taylorwalton.co.uk/article/trade-unions-right-of-access-into-workplaces/

Holiday Pay Compliance and Enforcement

The government has published a new consultation paper exploring how the newly established Fair Work Agency (FWA) should enforce employers’ statutory holiday pay obligations from 2027 onwards. The consultation is open until 22 September 2026.

The government’s intended approach is for the FWA to have the power to take enforcement action where statutory holiday pay has been underpaid, not paid or leave has been refused. Enforcement by the FWA is intended to sit alongside, but not replace, a worker’s right to bring an employment tribunal claim in respect of holiday issues.

It is proposed that the FWA will have the power to look back at compliance over 6 years, and enforcement penalties proposed currently mirror those for National Minimum Wage enforcement (200% of arrears owed per worker, capped at £20,000 per worker).

Employers should review their practices around holiday entitlement and pay to ensure compliance and ensure that record keeping is adequate and up to date in order to demonstrate compliance.

Fair and Transparent Distribution of Tips

Since October 2024 rules have required that workers receive in full all tips, gratuities and service charges and that where tips are regular, a written tipping policy is in place.

The Employment Rights Act 2025 enhances protections for workers in this area by introducing new requirements for employers to consult with workers about how tipping is managed.  These changes were expected to come into force in October 2026, but it now seems likely that this will be delayed until the end of the year.

Earlier this year the government launched a consultation about how the new consultation obligations would work in practice.  The government has now responded to the consultation and issued a draft Code of Practice.  However, the Code was subsequently withdrawn, it appears in response to criticism from unions that it was not sufficiently precise on employer obligations.

The draft Code had proposed a requirement on employers to consult staff or trade unions before making or changing tipping policies, three-yearly reviews of tipping policies and providing workers with an anonymised summary of consultation responses.

The withdrawal of the draft Code of Practice leaves some uncertainty as to how the new consultation requirements should be implemented in practice.  However, steps that employers could consider now include reviewing tipping arrangements and updating tips policies.  Compliance with current rules relating to tips should mean that it is easier to adjust practices to comply with new requirements in due course.

Report and Consultation on Time Off for Public Duties

The Government has published a report following its review of the public duties eligible for time off under section 50 of the Employment Rights Act 1996 and a consultation seeking views on its proposed amendments.

The report includes proposed changes to the list of public duties eligible for time off work under section 50 and notes that the legislation has not been comprehensively reviewed since its introduction over 50 years ago. The review aims to ensure the list remains fit for purpose and addresses current public service needs.

The consultation also invites responses on how the entitlement to time off work should operate in practice and whether reforms are needed to better support individuals undertaking these roles. The consultation remains open until 4 September 2026.

Consultation on Employment Rights of Unpaid Carers and Parents of Seriously Ill Children

The Government has also launched a consultation on strengthening employment rights for unpaid carers and parents of seriously ill children. The consultation recognises the significant challenges faced by employees with caring responsibilities and seeks views on how employment protections could be improved.

The consultation considers when unpaid carers should be able to take leave, and whether to extend the current five-day unpaid entitlement. It also explores the idea of a short period of paid carer’s leave and what level of payment might be appropriate.

The consultation also considers parents with children who have serious or life-limiting illnesses. It asks for responses on what may qualify as a “serious” illness, the length of any statutory leave entitlement and whether there should be a baselines level of remuneration (if introduced).

Whilst the government recognises the disruption and financial uncertainty that is faced by parents for a prolonged period following a child’s diagnosis, the consultation makes clear that all that the Government is doing at this stage is exploring possible solutions, without committing to specific proposals. The consultation closes on 1 September 2026.  

Data Protection Changes

The Data (Use and Access) Act 2025 grants a new statutory right for employees to raise data protection complaints directly with their employer. Previously, data protection disputes were resolved directly through the Information Commissioner’s Office (ICO).

The new right requires employers to:

• Provide at least one accessible way through which individuals can submit data protection complaints.
• Acknowledge complaints within 30 days of receipt.
• Take “appropriate steps” to investigate complaints (including making enquiries into their subject matter) without undue delay.
• Keep complainants informed about the progress and outcome of complaints without undue delay.
• Inform individuals of their right to complain via privacy notices.

Individuals do not need to use formal legal terminology to trigger these obligations; a simple written or verbal statement will suffice.

Organisations must ensure their procedures are clear and accessible – the ICO has published useful guidance and how employers can meet their obligations under this new requirement.

Employers should review and update privacy notices to ensure that individuals are made aware of their rights and available channels to raise complaints.  They should also consider establishing a formal complaints-handling process to ensure complaints can be logged and responded to appropriately, timescales complied with efficiently and escalation pathways identified for complex matters.

If you have any questions on the topics discussed above, or any other employment matters, please contact the TW Employment Law Team.

Disclaimer: General Information Provided Only

Please note that the contents of this article are intended solely for general information purposes and should not be considered as legal advice. We cannot be held responsible for any loss resulting from actions or inactions taken based on this article.