Employment, contingent workforce and immigration | UK Regulatory Outlook April 2026

Employment

New Vento bands published 

The new Vento bands applying to injury to feelings awards for cases presented on or after 6 April are: 

• lower band of £1,300 to £12,600 (up from £1,200 to £12,100) for less serious cases;
• middle band of £12,600 to £37,700 (up from £12,100 to £36,400) for cases that do not merit an upper band award;
• upper band of £37,700 to £62,900 (up from £36,400 to £60,700) for the most serious cases; and
• amounts above £62,900 are available in the most exceptional cases. 

Employers should factor the updated figures into their liability assessments and settlement strategy. Read more.  

Employment law reform: new consultations, guidance and a call for evidence 

The government has issued further publications on its employment law reforms covering: 

• Non-disclosure agreements (NDAs).
• Trade union workplace access.
• Call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations, (TUPE).
• Equality action plans. 

It has also updated its implementation roadmap, which now confirms its intention to bring reforms to NDAs into force in 2027. 

Osborne Clarke's dedicated microsite on the employment law reforms tracks the latest developments, looking at the implications and actions for employers.  

Employers wishing to discuss the reforms and next steps to prepare should contact their Osborne Clarke adviser. Read more. 

GDPR for HR 

In our latest GDPR for HR Insight, Osborne Clarke's specialist team examines the role of data in internal investigations, the impact of artificial intelligence on tactical data subject access requests (DSARs) in employment disputes, and a recent EU court ruling offering UK employers practical clarity on two recurring DSAR questions: deleted data and who counts as a recipient. 

Contingent workforce 

Umbrella companies and the conduct regulations 

The UK government's consultation on modernising the agency work regulatory framework remains open until 1 May 2026 and proposes to bring umbrella companies within the existing recruitment regulatory regime.  

The consultation also looks at wider changes to the Conduct of Employment Agencies and Employment Businesses Regulations 2003, including a ban on umbrella companies paying "referral" fees to agencies, a restriction on any requirement for a work seeker to be engaged via a particular umbrella company, and the possible removal of the complex temp to-perm/temp-to-temp fee rules.  

See Osborne Clarke's Insight on how the new regime for "umbrellas", agencies and intermediaries could pose problems for the UK staffing industry for an overview of the changes. 

Guaranteed hours for agency workers 

The consultation under the Employment Rights Act 2025 on guaranteed hours rights for agency workers and zero-hours workers has not yet been issued but is expected soon.  

If a right to guaranteed hours for agency workers is introduced, it would significantly affect all those who use and supply agency workers.  

Immigration  

Right to work 

What is changing and why? 

The Border Security, Asylum and Immigration Act 2025, which received royal assent on 2 December 2025, introduced major reforms to UK migration law. Important changes include establishing a Border Security Command, repealing the Rwanda plan, increasing the Immigration Skills Charge by 32% from 16 December 2025, and strengthening penalties for illegal working in order to tighten control over small boat Channel crossings. 

On 15 April 2026, the Home Office opened a consultation on a draft code of practice for employers on avoiding unlawful discrimination while preventing illegal working. The draft code is stated to apply to all employment commencing on or after 1 October 2026, as well as to repeat checks on existing workers where these must be carried out on or after that date to retain a statutory excuse.  

While the effective date may still be subject to revision, publication of the draft code represents the strongest confirmation to date that the Home Office intends to implement the expanded illegal working regime and associated changes to right to work check processes from 1 October this year. 

Key changes in the draft code of practice 

The draft code introduces a number of notable updates, including: 

Expanded and new definitions 

• "Employer" is expanded to cover those employing individuals under a contract of employment, a worker's contract, as an individual sub-contractor, or via an online matching service.
• "Worker", "right to work', and "right to work checks" are newly defined.
• "eVisa" and "permission to stay" have been revised to reflect updated terminology. 

New and revised obligations 

• Employers using a digital verification service (DVS) as well as DVS providers, must have systems in place to ensure the process does not introduce or perpetuate discriminatory outcomes.
• Employers must treat all applicants fairly at each stage of recruitment and when carrying out right to work checks.
• Employers must not mandate digital checks, in addition to the existing prohibition on mandating online checks, except for eVisa holders.
• Employers cannot refuse to use the Employer Checking Service for workers who do not have or cannot access the Home Office online checking service.
• The direct discrimination example has been updated to reflect a more contemporary scenario: checking a foreign national worker but not their UK-born colleague.
• Employers may encourage use of DVS technology alongside the online checking service.
• Employers should try to keep the job open to provide all workers with a reasonable opportunity to demonstrate their right to work. 

The 1 October 2026 deadline is fast approaching, and businesses should begin preparing, particularly given the need to review policies, consider DVS arrangements and ensure adequate resourcing over the summer period. The consultation on the draft code of practice also gives businesses an opportunity to engage with the Home Office on the proposed wording before it is finalised. 

Earned settlement: a fundamental shift in the UK's immigration rules 

Indefinite leave to remain 

Indefinite leave to remain (ILR), also known as settlement, gives individuals the right to live and work permanently in the UK, free from immigration restrictions. It is also a necessary precursor to applying for British citizenship. Under the current system, most immigrants qualify for ILR after five years on a qualifying visa (typically a work or family visa) provided they continue to meet the relevant requirements throughout that period. 

Government proposals 

The government is proposing a fundamental overhaul of the settlement system through a new "earned settlement" model. The headline change is an increase in the standard qualifying period from five to ten years. However, this ten-year baseline would not apply uniformly. Individual waiting periods would be adjusted up or down, based on criteria designed to measure personal contribution to the UK.  

Under the proposals, higher earners and fluent English speakers could qualify sooner while those who claim benefits or entered the UK illegally could face extended waits. In extreme cases, some individuals could wait up to 30 years for settlement, while others may qualify in as few as three. 

The EU Settlement Scheme will remain unaffected, but EU citizens arriving in the UK who are not eligible for that scheme will be subject to the new rules. 

People already in the UK 

The government intends to apply the changes to individuals already in the UK and progressing towards settlement, though there have been suggestions that the new requirements will only apply to those who entered the UK from 2021.  

Many of those affected argue that it is unfair to change the rules for those who made decisions, including relocating to the UK, on the basis of a five-year route. While it is not without precedent to apply changes to those already in the immigration system, the government will need to set out clear transitional arrangements and suitable mitigations for those affected, including those currently on the 10-year family or private life route, on which more information is awaited. 

Timing and implementation 

The Home Office has indicated that implementation will begin from April 2026, but has not provided a clear timeline for when specific changes will take effect. Given the scale and complexity of these reforms, the government will need to allow sufficient time to assess the impact of its final policy, avoid unintended consequences, and provide a clear and realistic implementation timetable so that individuals can make informed decisions and sponsor licence holders can factor in additional costs arising from extended visa periods and extensions. 

What employers should consider 

The earned settlement proposals represent one of the most significant changes to UK immigration policy in recent years.  

Businesses should consider: 

• Reviewing workforce planning strategies in light of the extended settlement timeline.
• Assessing the position of existing employees who may be affected by transitional arrangements.
• Monitoring for further developments, including the publication of a final policy following the consultation, and any accompanying changes to visa routes and eligibility criteria. 

The consultation closed on 12 February and the government's final policy is awaited.