By Peter Campbell
Running a business is hard enough without worrying whether you’re accidentally breaking employment law. Yet many employers don’t realise they’ve made crucial mistakes until it’s too late.
This guide discusses common legal and regulatory risks faced by UK employers in 2026 and how seeking employment law advice can help them stay protected.
Unfair Dismissal Claims
Unfair dismissal rules are set to tighten significantly, with major changes proposed under the Employment Rights Bill currently progressing through Parliament. If passed as expected, the reforms would take effect from 2027.
The central change would reduce the qualifying period for ordinary unfair dismissal claims from two years to just six months’ service. The current cap on unfair dismissal compensation — which stands at £118,223 or a year’s pay, whichever is lower, as of April 2025 — is also proposed for abolition, though employers should check the current figure as it is reviewed annually each April.
So how can businesses protect themselves from this increased financial exposure? First, ensure the entire dismissal process is fair and well-documented. All legal guidelines must be met to prevent tribunal claims.
When terminating employment, make sure that performance evaluations, documented warnings, and other records align clearly with the stated reason for dismissal. Any discrepancies can make you vulnerable to an unfair dismissal claim.
Even if you have a fair reason for dismissal, a failure to follow the correct process — such as conducting a proper investigation — can increase any compensation awarded by up to 25%. Strict adherence to ACAS guidelines is strongly recommended.
Redundancy Processes
Under UK employment law, redundancy is a form of dismissal that occurs when an employer no longer requires a role, often due to closures, restructuring, or cost-cutting. Redundancy processes carry significant risks for employers, including unfair dismissal claims, discrimination claims, financial penalties, and reputational damage.
Handling redundancies fairly and legally is therefore essential. Key steps include:
- Inform employees early and hold private meetings to discuss alternatives
- Be transparent about reasons and processes, keeping employees informed throughout
- Base selection decisions on objective, non-discriminatory factors such as skills or performance
- Provide outplacement services, career counselling, or redeployment options where possible
- Ensure employees receive all statutory entitlements including redundancy pay, notice pay, and any contractual benefits
- Maintain thorough records of all consultation meetings, selection scores, and decisions
Flexible Working Requests
As of April 6, 2024, the right to request flexible working became a day-one right for all employees in England, Scotland, and Wales. Employees may make two statutory requests in any 12-month period and can request changes to hours, times, or location from the first day of employment.
Employers should handle all requests in line with the Acas Code of Practice. Rejecting requests without providing clear, documented business reasons can expose employers to legal claims.
Looking Ahead
The UK’s employment law landscape is undergoing its most significant reform in a generation. Staying ahead of incoming changes — and ensuring internal processes are already compliant — is the most effective way to manage risk and avoid costly tribunal proceedings.
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This article is for informational purposes only and does not constitute legal advice. Employers facing specific issues should consult a qualified legal professional.
Peter Campbell is a freelance journalist who specializes in recruitment and HR matters.
