Looking ahead to 2026: Employment, Immigration and Pensions Law developments

14th January 2026

A key feature of 2025 was the Employment Rights Bill as it made its way through the Parliamentary process. This culminated with Royal Assent on 18 December 2025 and we now have the Employment Rights Act 2025 which topped our Employment Law Top Ten 2025.

Unlike 2025, there will be a significant amount of new employment legislation in 2026 because many of the measures contained in the Employment Rights Act 2025 will be implemented. We know from the Roadmap published last summer, that the Government is taking a phased approach to implementation to ensure there is plenty of time to prepare. There are two specific implementation dates to look out for this year: 6 April 2026 and 1 October 2026. However, an important provision took immediate effect when Royal Assent was given, namely, repeal of the Strikes (Minimum Service Levels) Act 2023 which was effective on 18 December 2025.

While much of the focus will be on the Employment Rights Act 2025 and the many consultation papers still to be published over the coming months, there are other important changes that employers and HR professionals need to be aware of such as the annual increases to the National Minimum Wage and statutory payments. There will also be important and wide-ranging developments in immigration and pensions which will have implications in the months ahead.

There’s no doubt that it will be a busy year and we take a look at the key changes and developments to be aware of in 2026.

January

The last few months of 2025 were dominated by the Parliamentary ping-pong between the House of Commons and House of Lords. Although there was a delay in Royal Assent, that did not impact on the publication of a number of important consultation papers between September and November 2025. Some of these consultations have already ended but some are still open.

Read about the consultation papers in our dedicated Employment Rights Act 2025, legislation for 2026 article here.

February

Reform of non-compete clauses in employment contracts

On 26 November 2025, a working paper on reform of non-compete clauses was published and the time for responses ends on 18 February 2026. Non-compete clauses restrict an employee’s ability to work for, or establish, a competing business after they have left their employment. Such a clause is unenforceable unless the employer can demonstrate it is reasonable in scope, duration and geographical area and it protects a legitimate business interest.

There is concern that non-compete clauses restrict labour market mobility and competition. The working paper identifies possible options for reform each of which would have different implications for employers and employees:

A statutory limit on the length of non-compete clauses according to employer size.
A ban on non-compete clauses in employment contracts.
A ban on non-compete clauses below a salary threshold.
Combining a ban below a salary threshold with a statutory limit of three months.
A hybrid model combining a ban on non-compete clauses below a salary threshold with a statutory maximum duration for those above the threshold.

For more details of these options see our recent article Non-compete clauses.

Employment Rights Act 2025: trade unions and industrial action

As mentioned above, many of the measures contained in the Employment Rights Act 2025 will be implemented in April and October 2026 with the remainder during 2027. However, the Act also provides that a range of trade union and industrial action changes come into force “at the end of the period of two months beginning with the day on which this Act is passed”.

Read about trade unions and industrial action in our dedicated Employment Rights Act 2025, legislation for 2026 article here.

April

Employment Rights Act 2025: April implementation

Collective redundancy protective award
Paternity leave and Parental leave
Statutory sick pay (SSP)
Whistleblowing and expanded protection for sexual harassment disclosures
Trade union recognition and electronic balloting
Fair Work Agency (FWA)
Equality action plans

Read about implementation in April in our dedicated Employment Rights Act 2025, legislation for 2026 article here.

Gender pay gap reporting

The deadline for reporting and publishing is 4 April 2026 in the private and voluntary sector (30 March 2026 for the public sector).

ONS statistics published on 23 October 2025, showed that the gender pay gap has fallen over the last decade by more than a quarter among full-time employees. In April 2025, it was 6.9%, down from 7.1% in April 2024. Even so, men in full-time employment earned more than women in full-time employment in all major occupation groups in April 2025 and the gender pay gap is larger for employees aged 40 and over. The ONS also found that the gender pay gap is larger among high-paid employees than among lower-paid employees, and women employees’ share in high-paying occupations decreases with age.

Significantly, the Employment Rights Act 2025 provides that large employers will be required to produce action plans on how to address their gender pay gaps (as well as menopause action plans). This will be mandatory in 2027 but note that gender pay gap and menopause action plans will be introduced on a voluntary basis in April 2026. No date confirmed as yet.

Increase in statutory rates and limits

Increase in National Minimum Wage

From 1 April 2026 the new National Minimum Wage and National Living Wage hourly rates, following recommendations from the Low Pay Commission, will be:

National Living Wage (21 and over) £12.71 (currently £12.21).
18-20 year-olds £10.85 (currently £10.00).
16-17 year-olds and apprentices £8.00 (currently £7.55).

These increases range from 4.1% to 8.5%, with the largest uplift for younger workers.

As always, employers should audit the ages of their workforce so that payroll or payroll providers are informed of the details of anyone benefitting from the increases to ensure that the new rates are paid.

Increase in Statutory Rates

Increases to statutory payments will take effect from 6 April 2026, following the Government’s publication of Benefit and Pension Rates 2026-2027:

Statutory Sick Pay

Statutory sick pay will increase to £123.25 a week (up from £118.75).

Family Related payments

Maternity, paternity, adoption, shared parental, neonatal and parental bereavement leave payments will increase to £194.32 a week (up from £187.18) or 90% of the employee’s average weekly earnings if this is less than the statutory rate.

Lower Earnings Limit

Lower earnings limit will increase to £129 a week (up from £125).

These adjustments represent a 3.8% increase in line with the Consumer Prices Index (CPI) for September 2025.

New Employment Tribunal limits

At this stage, we do not have the details of the new limits on statutory redundancy pay and the Employment Tribunal’s basic and compensatory awards which are expected to come into force in April 2026. Statutory redundancy pay (and the basic award) is calculated taking into account length of service, the employee’s age and weekly pay which is subject to a statutory cap, currently £719. The maximum compensatory award for unfair dismissal is currently £118, 223.

Immigration

The Government is continuing to implement the proposed reforms outlined in its white paper published in May 2025. The stated intended purpose of the reforms is to reduce net migration and strengthen border controls.

English language requirements

The English language requirement for new skilled worker, scale-up and High Potential Individual visa applicants increased from B1 (GCSE level) to B2 (A level) from 8 January 2026.

Those already holding permission under the above immigration routes can extend without the need to demonstrate the higher proficiency level.

UK Border changes

From 25 February 2026, the UK will strictly enforce its Electronic Travel Authorisation (ETA) system which requires visitors from 85 visa-free countries to obtain an ETA which is a digital pre-travel permission. This will be a “no permission, no travel policy”, as the Government describes it. Airlines, ferry operators and train companies will check ETA status at boarding and deny travel without valid permission.

Countries affected include USA, Canada, Australia, most of Europe, Japan, South Korea and some Gulf States. British and Irish citizens remain exempt.

Earned Settlement policy changes

The Government is proposing to extend the qualifying period for settlement (Indefinite Leave to Remain) from 5 to 10 years for most sponsored work routes. A consultation period on the proposals will close on 12 February 2026 and implementation is planned for April 2026.

The proposals introduce a points-based “earned settlement” system with three categories of factors that can reduce or increase the time taken to complete the qualifying period.

It is not clear as yet whether the above changes will apply retrospectively, affecting those in the UK on a settlement pathway or whether transitional arrangements will be put in place for those persons.

Temporary Shortage List

The Temporary Shortage List which allows sponsorship of a limited number of below degree level roles which are deemed to be vital to the UK’s Modern Industrial Strategy is set to expire on 31 December 2026. Unless the Migration Advisory Committee recommends that the list is continued, those occupations on it will no longer be available for sponsorship.

For more details of the 2026 Immigration changes and considerations for individuals and employers see our recent article.

Pensions

Pension Schemes Bill

This is expected to receive Royal Assent in early 2026. Some provisions will come into force automatically on Royal Assent while others will have to be brought into force through secondary legislation which will also specify detailed provisions in certain areas.

The legislation (amongst other things):

Partially relaxes the rules for returning surplus to sponsoring employers in ongoing occupational defined benefit schemes.
Provides for retrospective validation of certain “potentially remediable alterations” to the rules where certain conditions are met.
Will remove the need for pension schemes to apply to the courts to enforce Ombudsman determinations on the recovery of overpayments.

WASPI success

Women Against State Pension Inequality (‘WASPI’) was formed in 2015 to campaign against the way in which the state pension ages for men and women were equalised. Formerly, women received a pension five years earlier than men. The group believe the change was badly communicated and have been fighting for compensation for the millions of women (those born between 6 April 1950 and 5 April 1960) who have been adversely affected by the state pension age increases.

WASPI challenged the Government’s rejection of the findings of the Parliamentary and Health Service Ombudsman last year, which recommended compensation for maladministration by the Department of Work and Pensions (“DWP”). DWP had justified its decision saying there were “logical errors” in the report on how many women would have benefitted from earlier letters from the DWP, informing them of state pension age changes. The Women’s State Pension Age (Ombudsman Report and Compensation Scheme) Bill 2024-25 requires the Government to publish proposals for a compensation scheme for affected women. The second reading of the Bill is scheduled for 20 March 2026.

Increases to State Pension

The basic (that is, for those who reached state pension age before 6 April 2016) and new state pensions will be uplifted by 4.8% from 6 April 2026.

Accordingly, from 6 April 2026:

The full basic state pension will increase from £176.45 a week to £184.90.
The full new state pension will increase from £230.25 a week to £241.30.

Some individuals may have insufficient National Insurance contributions to receive the full state pension. Individuals can fill gaps in their NI record from the last six years.

Pensions Dashboards

The Pensions Dashboards connection deadline for all relevant occupational pension schemes and Financial Conduct Authority (“FCA”)-regulated pension providers within scope, is 31 October 2026.

Ahead of this deadline, schemes and providers will need to prepare to connect to the Pensions Dashboards ecosystem according to the non-mandatory staged connection timetable contained in Department for Work and Pensions (“DWP”) guidance.

Failure to comply can result in fines of up to £5,000 for individual trustees, or £50,000 for corporate trustees. Schemes still in the wind-up process by 31 October 2026 are not exempt from connection. However, they do not need to provide value data unless the trustee or scheme manager consider it appropriate to do so.

Automatic enrolment

The Pensions (Extension of Automatic Enrolment) Act 2023 is still to be brought into force. It is intended to:

Reduce the lower age threshold for auto-enrolment from 22 to 18.
Reduce (or repeal) the lower end of the qualifying earnings band.

Industry experts acknowledge that automatic enrolment has been a success but caution that these changes do not go far enough to encourage pension saving.

Tax relief on pension contributions

The Government has introduced a new pension top-up scheme for people on low income whose employer and workplace pension uses the net pay method of tax relief. Affected people are likely to be contacted by HMRC in 2026 (with any top up payment backdated to the 2024/25 tax year as appropriate and paid into the individual’s bank account). By way of explanation, staff earning less than the personal allowance of £12,570 do not get tax relief on pension contributions made to a scheme that uses the net pay method of tax relief. HMRC has confirmed the top ups will not affect state benefits or NI contributions.

The Institute of Chartered Accountants in England and Wales (ICAEW) has cautioned that the default method of tax relief (relief at source or net pay, terms which can be confusing to understand) can vary between pension providers. Therefore, employers and their payroll agents should check that the right amount of contributions and tax are being paid, by checking the tax relief method used on their payroll corresponds with the method on their pension provider’s records, for each employee. If an error has been made by the employer, they will need to rework the payroll for each affected pay period to calculate contributions based on the correct method.

Upcoming judgments

We are still waiting for an important judgment from the EAT in the case of Miller v University of Bristol which we referred to in our Looking Ahead to 2025.

As a reminder, Dr Miller was Professor of Political Sociology and said that he had been subject to an organised campaign by groups and individuals opposed to his anti-Zionist views, the aim of which was to have him dismissed. He alleged that the University had not supported him and he was in fact dismissed for gross misconduct because of comments he had made.

Dr Miller brought various claims including for direct belief discrimination and unfair and wrongful dismissal. He argued that his anti-Zionist beliefs qualified as a protected philosophical belief under the Equality Act 2010. The Employment Tribunal agreed that those beliefs qualified as a philosophical belief and as a protected characteristic under the Act. It held that the decision to dismiss constituted direct discrimination against Dr Miller because of his philosophical belief. Further, the dismissal was unfair because the University acted unreasonably in treating Dr Miller’s conduct as a sufficient reason for dismissal and the reason for dismissal was tainted by discrimination. The wrongful dismissal claim also succeeded because Dr Miller had been dismissed without notice and pay.

The University’s appeal was heard by the EAT on 12 November 2025.

Other developments

Employment Rights Act 2025: further consultations

In the Government’s Roadmap published last summer, details of the consultations to take place between summer 2025 and winter/early 2026 were set out. Some of these timelines have now slipped.

Read about what is to come in our dedicated Employment Rights Act 2025, legislation for 2026 article here.

Consultation on Services Code of Practice following legal definition of “woman”

Featuring at number three in our Employment Law Top Ten 2025 is the updated draft Code of Practice for Services, Public Functions and Associations.

As a reminder, in April 2025, the Supreme Court held that the terms “woman”, “man” and “sex” in the Equality Act 2010 refer to biological sex. Following the judgment, the Equality and Human Rights Commission (EHRC) issued an interim update to highlight the main consequences of the judgment for workplaces and services open to the public. The EHRC advised that single-sex toilets and changing rooms must be restricted to biological sex and mixed-sex options should be provided where possible, alongside single-sex facilities.

The EHRC had already consulted on the Services Code between October 2024 to January 2025. It then updated the parts affected by the judgment and consulted on these between 20 May 2025 and 30 June 2025. On 4 September 2025, the EHRC sent the updated draft Services Code (300 pages) to Bridget Phillipson, Minister for Women and Equalities, for approval. Once approved by her, the next stage is to lay the draft Services Code before Parliament for a 40-day scrutiny period before it can become statutory guidance. We have not yet reached that stage but can be certain that there will be further developments about the draft Services Code in 2026 because three months ago, the EHRC asked for the draft Services Code to be “brought into force as soon as possible to reflect the law as it has now been clarified by the Supreme Court.

Conflict at work

Back in November 2025, Acas published a comprehensive report about conflict at work. The report is the largest study of its kind with 4,000 responses from both employers and employees. Acas found that 44% of people reported experiencing some form of conflict during the last 12 months and people working for small and medium enterprises were more likely to report experiencing conflict. Unsurprisingly, 57% of people who reported experiencing conflict said this resulted in stress, anxiety or depression which clearly has an impact on productivity.

Acas research from 2021 estimated the annual cost of workplace conflict between £590 million and £2.3 billion. With the comprehensive data contained in this report Acas has announced that it will be updating the cost of conflict in spring 2026.

Conclusion

This year more than ever, it is important for employers and HR professionals to stay informed and to prepare for the many employment law changes ahead.

With a wide range of the Employment Rights Act 2025 measures being implemented in April and October 2026, employers will need to plan ahead to ensure compliance. Taking the April changes for example, employers will need to review and update their paternity, parental and shared parental leave policies as well as their sickness absence policy to reflect the legislative changes. They should think about their communications with staff and explain the reason for the changes to the policies and when these are effective. If redundancies are anticipated in the months ahead, employers should be mindful of the considerable increase in the protective award for failing to collectively consult. Employers may also want to consider whether additional training is needed for staff.

Employers also need to keep an eye out for the publication of the many consultation papers we are expecting during 2026 in case they want to respond on an issue particularly relevant to their organisation, for instance, if they use zero hours contracts extensively.

Finally, it is worth mentioning that although the Roadmap was published six months ago, the Government recently confirmed that it does not have plans to revise this but intends to follow the same timelines. It’s going to be busy in 2026 for sure!

We will keep you updated via our Employment Rights Act 2025 Hub.

Tags: Employment Rights

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