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

Employment 

Employment Rights Act 2025: Latest developments for employers 

February 2026 has seen a number of developments in respect of the Employment Rights Act 2026, of which employers should ensure that they are aware. These include revised dates for implementation in respect of some of the reforms. 

Employers should take steps now to prepare for the reforms coming into force this April, and also those which will come into force later in October 2026 and into 2027. Please visit our dedicated microsite for more details on the proposals. Osborne Clarke has also prepared a comprehensive tracker to support employers in this. Please contact your usual Osborne Clarke contact to discuss how we can support you as your organisation prepares for these reforms. 

Revised roadmap for implementation  

The government published an updated implementation timetable on 3 February 2026, which makes some changes to the dates that the government had originally set for some of the reforms to come into force. The key change to note is that the reforms around varying contractual terms (fire and rehire) are now expected to come into force on 1 January 2027.  

More immediately, the roadmap confirms that the following changes will come into force on 6 April 2026: 

• increase in collective redundancy protective award;
• day one rights to paternity leave and unpaid parental leave;
• introduction of bereaved partners paternity leave;
• reforms to statutory sick pay removing the three-day waiting period and the lower earnings threshold;
• sexual harassment expressly in the list of protected disclosures; and
• simplified trade union recognition process. 

The government has also indicated that menopause guidance will take effect in April 2026. It is unclear whether new guidance will be published, but the current guidance is available from the government (published in 2022), Menopause and the Workplace; together with guidance from the EHRC published in 2024. This guidance will help support large employers as they prepare to comply with the mandatory duty to publish specific equality action plans, including on supporting employees through the menopause, which comes into force in 2027 (the duty is stated to be voluntary until then). 

A number of measures also came into force on 18 February 2026 which will be of relevance to employers with a unionised workforces in the context of industrial action: 

• Simplified notice requirements: the information required in notices of intention to ballot, voting papers, ballot result notifications and notices of industrial action have been simplified.
• 40% ballot threshold removed: the requirement that in ballots for workers in "important public services" at least 40% of those entitled to vote must have voted in favour has been abolished;
• Minimum notice period: The minimum notice period for industrial action has been reduced from 14 days to 10 days.
• Extension to ballot mandate: Industrial action arising from ballots opened on or after 18 February 2026 remain effective for 12 months.
• Supervision of picketing: The requirement for unions to supervise picketing has been removed.
• Extended protection from dismissal: Employees are protected from dismissal for taking industrial action for the full duration of an official lawful strike (rather than the previous 12-week "protected period"). 

There are other amendments relating to the removal of the restrictions on check-off (deduction of union subscriptions from wages) and rules around facility time for employers in the public sector which have been repealed. 

The new implementation roadmap does not currently set out when the changes to non-disclosure agreements in respect of discrimination and harassment will come into force.  

New consultations published 

The government has confirmed that it continues to undertake "extensive engagement and consultation" on the implementation of its Plan to Make Work Pay and the Employment Rights Act 2025, to ensure the changes "work for both workers, and businesses of all sizes".  

This February has seen the government publish four consultations in relation to the Employment Rights Act 2025: 

• Improving access to Flexible Working (closes 30 April 2026), which focuses on the process for handling flexible working requests;
• Strengthening the Law on Tipping (closes 1 April 2026), which focuses on the new requirements for employers to consult with workers on tipping policies, together with the existing code of practice and guidance on this.
• Fire and rehire; Changes to Expenses, Benefits and Shift Patterns (closes 1 April 2026), which looks at the extent to which proposed changes to expenses and benefits in kind and shift arrangements will be deemed "restricted variations" for the purposes of the new rules.
• Recognition code of practice and e-balloting unfair practices (closes 1 April 2026).
• Modernising the Agency Work Regulatory Framework (closes 1 May 2026), which looks to address the regulation of umbrella companies and similar labour suppliers.  

The outcome of these consultations will shape future regulations bringing the reforms in the Employment Rights Act 2025 into force. 

Contingent workforce 

New regime for umbrella companies, agencies and intermediaries 

The UK government published a consultation on 6 February 2026 on modernising the agency work regulatory framework – the first under the Employment Rights Act 2025 to address the regulation of umbrella companies and similar labour suppliers.  

The consultation, which closes on 1 May, proposes bringing umbrella companies within the existing recruitment regulatory regime, with greater transparency requirements around worker pay and potential new powers for the Fair Work Agency to close down non-compliant providers and ban named directors. However, the proposals have raised significant concerns across the staffing industry, including conflicting definitions of "umbrella company" across employment and tax law, a potential mischaracterisation of how labour supply chains actually operate, and the risk that a broad prohibition on referral fees and "kickbacks" could inadvertently outlaw legitimate commercial arrangements (such as volume discount arrangements) alongside the tax avoidance schemes it seeks to address. 

The consultation does open the door to some welcome reforms, including revisiting restrictions that currently prevent employment agencies and gig platforms from making pay arrangements for workers they introduce, and simplifying the complex "extended hire period" rules. However, the proposals must also be read alongside the forthcoming 2027 guaranteed hours rights for agency workers under the ERA 2025, which could significantly reshape workforce arrangements further.  

All businesses involved in labour supply chains, whether as end users, recruitment agencies, or umbrella companies, may want to review the proposals carefully before the consultation closes on 1 May. For a full analysis of the proposals and their implications, read our recent Insight. 

'Day one' statutory sick pay for agency workers: what employment businesses need to do before 6 April 

From 6 April 2026, amendments introduced by the Employment Rights Act 2025 will entitle agency workers to statutory sick pay (SSP) from the first day of illness while on an assignment, removing both the lower earnings threshold and the previous three-day waiting period. Notably, agency workers engaged on a zero-hours basis will remain outside SSP entitlement between assignments, as without an agreed assignment they will not satisfy the statutory definition of an "employed earner." Employment businesses therefore have approximately two months to review and update their contracts, payroll systems, internal policies and worker communications to ensure compliance with the new rules. 

For a full breakdown of the changes, including how the new entitlement interacts with zero-hours and assignment-based arrangements, and a practical list of action points, read our recent Insight. 

Umbrella company tax reform 

The umbrella company tax legislation, published in the Finance Bill on 4 December 2025, will take effect on 6 April 2026 as a new chapter of the Income Tax (Earnings and Pensions) Act 2003.  

Under the new regime, where an umbrella company fails to pay the correct PAYE or national insurance contributions to HMRC, joint and several liability will fall on the "top" agency in the supply chain, or, where there is no agency, on the end-user client. Crucially, this is a strict liability regime, meaning that even robust due diligence will not constitute a legal defence if tax goes unpaid. The legislation is also broadly drafted, capturing not only traditional umbrella companies but also employers of record, certain consultancies, and hire-train-deploy providers, as well as a new category of "purported umbrella companies" designed to catch intermediaries that present as employers but pay workers off-payroll. 

The practical implications are significant: businesses should expect restructuring of managed service provider models, consolidation towards larger umbrella providers, greater reliance on contractual indemnities (though these alone will be insufficient), and renewed interest in alternative engagement models such as in-house payroll or genuine self-employment arrangements.  

All parties in staffing supply chains (agencies, clients, and managed service providers alike) should be taking steps to review how contingent workers are paid, tighten contracts, enhance due diligence processes, and plan worker communications ahead of the April deadline. For a full analysis of how the reforms will work and their impact on staffing supply chains, read our full briefing. 

Immigration  

Nothing to report this month.