Your quick guide to the latest developments affecting UK employers.
July has brought further clarity on the phased rollout of the Employment Rights Act 2025, alongside new consultation activity and updated guidance on data protection, right to work checks and holiday pay enforcement. It has also been a strong month for wider HR themes, including AI in recruitment, carers’ rights and flexible working.
1. Employment Rights Act 2025 – July Implementation Update
The Government updated its implementation timetable in July, confirming that the Employment Rights Act 2025 and the wider Plan to Make Work Pay will continue to be introduced in stages across 2026 and 2027. That means employers should expect a phased rollout rather than one single commencement date.
Several measures are already in force, while others are due to follow later this year and into 2027. The changing timetable means HR teams should keep policies, contracts and internal processes under regular review.
What this means for employers:
Employers should be checking sickness, family leave and redundancy arrangements now to make sure they reflect the latest position. It is also sensible to keep an eye on the practical impact of the new enforcement landscape as the reforms continue to bed in.
2. October 2026 Changes Confirmed
Government guidance published in July confirms that the next major wave of changes is due to take effect from 1 October 2026. These include:
- The extension of most tribunal time limits from three months to six months
- The next phase of workplace harassment-related reforms
- The expansion of the prevention of illegal working regime to cover zero-hours contracts and gig economy workers
Further changes in relation to tips and gratuities are also expected, with employers likely to need to keep pay and allocation practices under closer review. The overall direction of travel is clear: employers are being asked to strengthen processes now rather than waiting until autumn.
What this means for employers:
Start updating harassment policies, manager training and reporting routes now. It is also worth reviewing record-keeping and grievance procedures in anticipation of longer tribunal time limits. Employers using flexible workforce models should pay particular attention to the expanded right to work requirements coming into force.
3. Holiday Pay Enforcement – New Consultation
At the end of June, the Government launched a consultation on how the Fair Work Agency might enforce statutory holiday pay compliance. The consultation is part of the wider move to strengthen labour market enforcement under the current reform programme.
The proposals focus on statutory holiday pay rather than enhanced contractual holiday arrangements, and they suggest stronger investigatory and enforcement powers for the new body. Employers with variable pay, overtime, commission or irregular working patterns should take this particularly seriously.
Looking ahead: National Minimum Wage enforcement transfers to the Fair Work Agency in April 2027, with holiday pay enforcement to follow.
What this means for employers:
Holiday pay calculations should be checked carefully, especially where pay varies from month to month. Payroll records, holiday records and calculation methods should be kept clear and consistent in case of scrutiny.
4. Fair Work Agency Now Enforcing Tribunal Awards and Acas Settlements
The Fair Work Agency has taken over responsibility for enforcing employment tribunal awards and Acas settlements – and employers who fail to pay could face fines of up to £5,000 plus public naming on the government website.
How the scheme works:
Claimants can now apply to the FWA if an employer hasn’t paid:
- An ET judgment (after 42 days have passed), or
- An Acas COT3 settlement by the agreed date
The FWA will issue a warning notice giving employers 28 days to respond. If payment still isn’t made, a penalty is issued:
- 50% of unpaid award
- Minimum £100, maximum £5,000
- Paid to the Government (not the claimant)
Key points:
- The scheme covers awards and settlements made after 6 April 2016
- Non-payers may be publicly named on the government website
- If penalties don’t prompt payment, claimants can pursue civil court enforcement
What this means for employers:
Review any outstanding tribunal awards or Acas settlements. Ensure payment processes are in place to avoid penalties and reputational damage.
5. Right to Work Checks – Draft Expansion
The Home Office published draft updated right to work guidance in July, with changes expected to apply from 1 October 2026. The draft guidance suggests a wider approach to checking working relationships, so employers should pay close attention to the final position.
This is especially relevant for businesses that use agency labour, subcontractors or more flexible labour models. Even where final implementation details are still being confirmed, the direction of travel is toward broader compliance expectations.
Current penalties for employing illegal workers:
| Breach type | Penalty |
|---|---|
| First breach | £45,000 per illegal worker |
| Repeat breach | £60,000 per illegal worker |
| Criminal offence | Unlimited fine and/or up to 5 years’ imprisonment |
The latest Home Office quarterly report (October–December 2025) named over 300 employers for illegal working, with multiple fines exceeding £100,000 and the largest single penalty reaching £315,000. Sectors affected included nail bars, car washes, barbers, takeaway shops, construction and care services.
What this means for employers:
Map all working arrangements and identify which roles or relationships may fall within the expanded checks. Onboarding processes, supplier contracts and agency arrangements should be reviewed now so any required changes can be made in good time. This is particularly important for employers in high-risk sectors or those using flexible workforce models.
6. Data Protection Complaints – New Duties Now Active
New data protection complaint-handling obligations under the Data (Use and Access) Act 2025 came into force on 19 June 2026. Organisations subject to UK data protection law must now:
- Provide a formal way for individuals to complain
- Acknowledge complaints within 30 days
- Deal with complaints without undue delay
The ICO has published guidance on how organisations should handle these complaints in practice. For employers, this is a reminder that data protection concerns now need a clearer internal route to resolution.
What this means for employers:
Data protection complaints procedures should be created or updated immediately if they have not already been put in place. Managers should also be trained to recognise when a concern about personal data needs to be escalated through the formal process.
7. Employment Tribunal Caseload Hits Record Levels
The Ministry of Justice has released its quarterly employment tribunal statistics for January–March 2026, revealing unprecedented pressure on the system.
The headline figures:
- 52,400 new ET cases filed in the quarter
- 531,000 live claims in the system (up 1.5% on last quarter)
- 55% increase in single claims compared to the same quarter last year
Fastest growing claim types (year-on-year):
- TUPE: +227%
- National Minimum Wage: +122%
- Whistleblowing: +112%
- Disability discrimination: +79%
What’s driving claims:
- Unfair dismissal: 23% of all claims (included in 51% of new filings)
- Disability discrimination: 16% of all claims
- Unauthorised deduction of wages: 13% of all claims
Looking ahead: The Government’s own impact assessment estimates claims could rise by a further 17% once Employment Rights Act 2025 reforms take effect – including the reduction of the unfair dismissal qualifying period from two years to six months from 1 January 2027.
What this means for employers:
With the tribunal system already under strain, early resolution of disputes is more important than ever. Consider reviewing your internal grievance procedures and exploring mediation or Acas early conciliation to avoid lengthy tribunal delays.
8. Wider HR Themes
July commentary from UK employment specialists has also highlighted a few recurring HR themes worth keeping on the radar:
AI in recruitment and employee relations
AI is becoming a bigger issue in recruitment screening, performance tools and even grievance handling. Employers should think carefully about transparency and bias in automated decision-making.
Carers’ rights and flexible working
These remain important employee relations topics, particularly for businesses looking to improve retention and support.
Early dispute resolution
With tribunal backlogs at record levels, resolving disputes internally through robust grievance procedures and mediation is more valuable than ever.
What this means for employers:
Review any AI tools used in recruitment or performance management to make sure decision-making remains explainable and well documented. It is also worth checking flexible working and carers’ support policies so managers are clear on process and expectations.
July has been another significant month for UK employment law, but the picture is becoming clearer. The Fair Work Agency is now actively enforcing tribunal awards, tribunal caseloads are at record levels, and October’s changes are just around the corner.
Employers who act early on policy updates, training and record-keeping will be in a stronger position as the next round of changes arrives in October and beyond.
Need help getting ready? If you have questions about any of these updates or want support reviewing your policies and processes, get in touch with the Supportis team.
