Labor Rules are Changing – Staying Ahead with Policy, Training and More for a Healthier Culture and Fewer Incidents

Labor rules changing in 2026

2026 will see significant developments in United Kingdom employment rights, as well as new pay reporting measures in Europe. In this article, we look at what this means in practice and how employers can stay ahead of the forthcoming changes – trends that may also be worth consideration well outside of Europe.  

Expansion of day one rights

U.K. workers will gain increased rights from the start of their employment, under the Employment Rights Bill.  

Unfair dismissal

All employees will benefit from unfair dismissal protection from day one of employment. Currently, there is a two-year service requirement before employees can bring an unfair dismissal claim (save for in limited circumstances, such as whistleblowers who can claim from the start of employment), but this will be abolished in 2027.  

This is a significant change, meaning that many more employees will have unfair dismissal rights than before. Employers intending to dismiss any employee, including a new starter, will need to ensure they have a fair reason (such as poor performance, misconduct or redundancy) and follow a fair process. However, there will be a statutory probation period (likely to be nine months) during which the employer can terminate for performance or conduct with a lighter touch dismissal process.  

In the United States, most workers are employed “at will,” meaning employers can terminate employment for nearly any reason that is not unlawful. Unlike many other countries, the U.S. does not offer a general right to claim unfair dismissal. Instead, protections focus on specific violations – such as discrimination, retaliation, or breach of contract. As a result, wrongful termination claims arise only when a dismissal violates these defined legal standards, and employees typically pursue them through the EEOC, state agencies, or the courts.  

Employers in the U.K. should ensure all new starters have a probation period in their contracts and that there is a process in place for regular performance reviews during probation. More widely, employers will need to review disciplinary and dismissal policies and processes and ensure managers are trained on managing conduct and performance issues.  

Family and sickness

Paternity leave and unpaid parental leave will become day one rights in the U.K. from April 2026. At the moment, employees need minimum service before taking this leave (26 weeks’ service for paternity leave and one year for unpaid parental leave).  

Paternity leave consists of two weeks leave to be taken within a year of the child’s birth/adoption, paid at the statutory rate (currently £187.18 per week). Unpaid parental leave may be taken for up to 18 weeks (but no more than four weeks in any one year) before the child’s 18th birthday.  

From 2027, there will be enhanced dismissal protections for employees taking any type of family leave, including maternity, adoption or shared parental leave. Employers will be unable to dismiss employees who are pregnant or on family leave, or who returned from family leave within the previous six months, except in certain narrow circumstances (details of which are currently subject to consultation).    

Employees will have a new right to at least one week of bereavement leave following the death of a family member (the detail of which family members are covered is yet to be confirmed), from 2027.  

Also, statutory sick pay (SSP) will become available to all workers from day one of sickness absence, from April 2026, as both the current four day waiting period and minimum earnings eligibility threshold (£125 per week) will be removed. SSP is payable at the statutory rate, currently £118.75 (or 80% of average earnings for workers who earn below the statutory rate).  

Paid sick leave in the United States is not required at the federal level, so access depends on state and local laws or employer policies. This leads to wide variation in coverage, making it even more important for employers to support people when they need us most. Offering paid sick leave not only protects employee health but also strengthens trust, wellbeing and a healthier workplace overall.  

Flexible working

Flexible working rules in the U.K. will be strengthened. Employees already have a right to request flexible working from day one of employment, which employers can only refuse for certain business reasons (e.g., impact on customer service). From 2027, employers will have to consult employees about their request and must explain why any rejection is reasonable. This is a higher bar for employers to meet and will require employers to review their current policies and practices and ensure managers receive training in how to handle flexible working requests in a compliant manner.  

Flexible working in the United States is not guaranteed by national law, and employees generally have no statutory right to request it. Instead, flexible arrangements – such as remote work, flexible hours, or hybrid schedules – are set by individual employers and vary widely across industries and roles. Even without legal mandates, flexibility has become a key tool for attracting and retaining talent and supporting employee wellbeing.  

Workplace harassment

Since October 26, 2024, U.K. employers have been under a duty to take reasonable steps to prevent sexual harassment of their employees, with compensation for sexual harassment claims increased by up to 25% if they breach this duty. In addition, the duty is enforceable by the Equality and Human Rights Commission (EHRC) which can issue enforcement notices and fines.  

Key compliance measures for employers include:  

• Carrying out a risk assessment and keeping it under regular review  
• Having an effective sexual harassment policy which is relevant to the employer’s specific workplace  
• Training managers and staff in sexual harassment including raising and handling complaints  
• Encouraging staff to “speak up” to report any concerns  
• Investigating complaints and keeping a centralized record to identify trends 
• Addressing third-party harassment risks

From October 2026, U.K. harassment laws will expand further. Employers will be liable for third-party harassment of any kind (not just sexual harassment) by third parties who their employees deal with in the context of their work, such as clients or suppliers. Employers will need to take steps to reduce the risk of third-party harassment, such as appropriate wording in contracts or in codes of conduct with clients and suppliers. Additionally, anti-harassment policies should be updated to encompass third-party harassment, and employers should clearly communicate to employees how they can report concerns about third-party harassment, including through designated “speak up” channels.  

The active duty of employers to prevent sexual harassment, and the new third-party harassment rules, are similar to the California workplace violence laws which came into force in 2024. Both in California and the U.K., employers are obliged to take proactive, preventative steps to protect employees before any harm is done. It will be interesting to see whether this develops into a wider global trend in the future.

Pay reporting and transparency

Expansion of UK pay reporting requirements

Employers operating in the U.K. with 250 or more employees are required to report annually on their gender pay gap figures. From 2027, employers will also be required to publish an action plan setting out how they plan to reduce their gender pay gap, with these plans being recommended on a voluntary basis from April 2026.   

In future, the U.K. government will be extending the gender pay gap reporting requirements to cover disability and ethnicity pay gap reporting (likely from 2027, although not confirmed). In addition to reporting the pay gap figures, it is proposed employers would be required to report on the overall breakdown of their workforce by disability and ethnicity, as well as the percentage of employees not disclosing their personal data for these characteristics.   

Whilst it is common for employers to hold gender data which can be linked with pay, this is not always the case for data about ethnicity and disability, which, if it is collected at all, is often done so anonymously. In preparation for the new reporting requirements employers will need to review the data they already hold and assess what additional information they need to collect to calculate their ethnicity and disability pay gap, and how to do so in compliance with GDPR.   

Pay equity remains a challenge in the United States, with persistent gaps across gender, race, and disability status. Women – especially women of color – and workers with disabilities continue to earn less on average, and protections vary widely without federal pay transparency requirements. Closing these gaps is essential to building fair, inclusive workplaces where all talent is valued and rewarded equitably.  

EU pay transparency directive

New gender pay gap reporting requirements will come into force in 2026 for businesses with EU operations, under the EU pay transparency directive, with timing and frequency of reports varying depending on the size of the employer:   

• Employers with 250 or more workers will have to report gender pay gap figures from 2027 and annually thereafter  
• Employers with 150-249 workers will have to report from 2027 and every three years thereafter  
• Employers with 100-149 workers will have to report from no later than 2031 and then every three years thereafter

Individual EU countries may also choose to extend the reporting requirement to smaller employers (for example, Ireland is applying the rules to employers with 50 or more employees). Where the employer has a gender pay gap of 5% or more, which cannot be justified, the employer will be required to conduct a joint equal pay assessment with worker representatives.   

There will also be new measures relating to pay transparency in recruitment and promotion including:  

• A requirement to inform job applicants about the starting salary/pay before interview  
• A ban on asking job candidates about their pay history  
• A right for workers to ask employers for information about pay levels and pay and promotion criteria

Employers with EU operations should use the time ahead of implementation to prepare, including reviewing their pay structures and addressing any anomalies, considering pay data currently held and how any additional data will be collected. In addition, they should assess existing recruitment practices and the changes which may be required under the new pay transparency framework.    

To prepare for growing pay transparency, U.S. employers should start by conducting regular pay equity reviews, standardizing compensation structures, and documenting clear criteria for hiring and promotion. Training managers to discuss pay openly and aligning internal policies with emerging state requirements will also be essential. Ultimately, readiness comes from embracing fairness and clarity in how pay decisions are made and communicated.