Employment, contingent workforce and immigration | UK Regulatory Outlook October 2025

How tech advances and new legislation are shaping UK staffing and recruitment valuations and deals 

Merger and acquisition (M&A) activity has been relatively depressed in most parts of the workforce solutions sector in the UK and beyond since the post-Covid recruitment bounceback. 

Economic and geopolitical uncertainty has affected hirer confidence. Many hirers are also exploring the extent to which vacancies and entry-level jobs can be covered by the use of new technology, including artificial intelligence, rather than replacement hires. And, in some sub-sectors in the UK, such as healthcare, there are hirer-orchestrated moves to reduce the use of agency staff. 

All of this has had a predictable impact on recruitment and staffing revenues which has, in turn, reduced the number of M&A deals and new investments in the sector. 

But a number of tech, legal and tax developments may now change these conditions for many workforce solutions companies. And some trends in tech M&A may give helpful pointers to how staffing and recruitment company M&A deals will play out into 2027 and beyond. Read our Insight for more.  

End users and staffing supplier need to start preparing for the April 2026 umbrella tax reforms  

New UK tax legislation coming into effect in April 2026 will make staffing agencies jointly and severally liable with umbrella companies for failure by the umbrella company to properly pay PAYE and national insurance contributions.  Consultation on the draft legislation, published in July, closed on 15 September. The final form of the legislation will be published as part of the Finance Bill the week following the Budget: significant changes are not expected to the draft legislation.  This means that with less than six months to go until the reforms take effect, all those involved in the use, procurement and/or supply of contingent workers need to know whether they have umbrella companies in their staffing supply chains and understand how the new law affects them.   

It will take time to implement appropriate due diligence checks on staffing supply chains, contract changes and to transition to more compliant arrangements.  In most cases tax liability will lie with staffing agencies and umbrella companies, but in certain cases end user organisations may also become liable.  For more information read our Insight or contact a member of our Contingent Workforce team. 

Employment law reforms: Employment Rights Bill update and NDAs 

Employment Rights Bill expected to receive Royal Assent and further consultations  

The Employment Rights Bill is due to return to the House of Lords on 28 October for further consideration of amendments. The House of Commons has rejected amendments proposed by the House of Lords (and not backed by the government) but we should not yet rule out some further movement on specific provisions. However, it is widely anticipated that the Bill will receive Royal Assent in early November.  

In line with the government roadmap, many of the reforms in the Employment Rights Bill will not come into force at Royal Assent but will be gradually introduced during 2026 and 2027. The government has made it clear that it will be consulting on the detail of many of the reforms which will be set out in regulations. In line with this, the government has today published four consultations on: 

• the duty to inform workers of the right to join a union;
• the trade union right of access;
• the enhanced dismissal protections for pregnant women and new mothers;
• leave for bereavement, including pregnancy loss.

The government has not announced any changes to its proposed timeline for implementation in the roadmap (see here). Employers should note that the proposed reforms around non-disclosure agreements and discrimination and harassment were introduced into the Employment Rights Bill after the roadmap was published but the government has indicated that the change is a "priority" and confirmed that it will be "moving as fast as possible to consult on the related secondary legislation and commence the measure". 

Legislative change to ensure NDAs do not silence victims and direct witnesses of crime  

The government has also announced this week it will make an amendment to the Victims and Courts Bill to ensure that NDAs can no longer be used to silence victims of crime but that " victims and direct witnesses of crime – whether inside or outside the workplace – can share their experiences with anyone, for any purpose, including family, friends, employers and journalists, without fear of legal repercussions".  

This change will replace the existing narrower provision in the Victim and Prisoners Act 2024 which came into force on 1 October 2025 and under which NDAs cannot be used to stop victims of crime from reporting crimes to the police and from accessing legal advice and other support, including victim support services. See our earlier Coffee Break. 

However, the announcement confirms that the government recognises "that in some cases both parties may genuinely wish for confidentiality about certain details. The amendment will therefore give the Secretary of State powers to set criteria for "excepted NDAs" in limited legitimate circumstances while specifying situations where disclosures will always be allowed, even if an "excepted NDA" exists.  

The announcement states that "the change aligns with reforms in the Employment Rights Bill; which will void NDAs designed to silence workers about work-related harassment or discrimination". It will also not affect existing laws protecting sensitive information, such as the whistleblowing provisions in the Employment Rights act 1996.    

CMA scrutiny on employment practices with new non-competition guidelines 

On 9 September 2025, the UK Competition and Markets Authority (CMA) published new guidance titled "Competing for Talent", providing advice on how competition law applies to recruitment, retention and remuneration practices. The guidance sends a clear message to businesses: agreements or practices between firms on how they hire or set pay can be anti-competitive, with potentially significant financial and reputational consequences for both the businesses and the individuals involved. 

The guidance highlights three forms of anti-competitive behaviour for employers: no-poaching agreements, wage-fixing agreements and exchanging competitively sensitive information. For more on this, see our Insight. 

The publication of this guidance sends a clear message to employers operating in the UK that this is an area of significant interest to the CMA. As well as the reputational and employee relations damage that may arise, a business breaching competition law may be fined up to 10% of its annual worldwide turnover and may be prevented from bidding for public contracts. Individuals may also face prosecution with the prospect of up to five years' imprisonment and, where they are a company director, disqualification for up to 15 years. 

However, the guidance is careful to highlight that not all employment practices will necessarily be considered anti-competitive. For example, it does not prohibit benchmarking activities outright. The CMA recognises that benchmarking activities are common in labour markets and permitted benchmarking activities would include where a company benchmarks against publicly available data, or where benchmarking data is prepared by a third party and reports only aggregate, anonymous information. 

The guidance also acknowledges that collective bargaining plays an important role in labour markets and will generally fall outside the reach of competition law. This protection extends to both employed and self-employed workers, reflecting the shift in labour markets and the rise of self-employed people in the gig economy. The CMA will not seek to enforce competition law whenever workers and companies come together to reach a genuine collective bargain, irrespective of whether workers are employed or self-employed. However, the guidance highlights the potential risk of wage-fixing, such as where employers in a particular sector collude not to offer more than the recommended minimum wage, meaning that it becomes the norm across the sector. 

With the rise of digital technology and the ease at which information can be shared and obtained, employers should take steps now to ensure compliance: 

• Ensure that all staff involved in recruitment and HR, including managers, understand how competition law applies to their activities, including the risks of information discussions with other businesses, including training to enable situations where competition law may be relevant to be recognised and responded to appropriately.
• Regularly review recruitment and pay processes to confirm that no arrangements with other organisations are in place which restrict hiring or set pay rates and which would be viewed as anti-competitive.
• Ensure that there are clear procedures in place for reporting and addressing concerns over potential breaches. Employees and whistleblowers can report concerns to the CMA, and the CMA operates a leniency policy which may provide immunity or reduced penalties for businesses that come forward. The CMA may also offer rewards to informants in certain circumstances.
• Review and update regularly compliance policies to cover HR-related competition risks. 

The CMA's focus also reflects the wider international picture with competition authorities globally intensifying their scrutiny of anti-competitive practices within labour markets. Employers operating across jurisdictions should therefore take steps to ensure that they understand the different compliance picture across jurisdictions and that they do not inadvertently fall foul of anti-competition laws. 

Immigration changes: Watch our latest webinar 

Our recent webinar looked at the latest immigration changes and the steps UK employers can take now to manage risk and maintain recruitment and mobility plans including:  

• The confirmed changes to work routes and sponsor compliance
• Intended policy shifts and timelines based on current government announcements
• Implications of the home secretary’s recent statements for recruitment, right to work checks, salary thresholds, dependants, and indefinite leave to remain
• Impact on workforce planning, onboarding, visa extensions and global mobility programmes
• Immediate actions for HR/sponsor licence holders and risk management 

If you missed the webinar, you can catch up here. 

If you have any questions or would like to discuss the changes further, please get in touch with your usual Osborne Clarke contact or Gavin Jones, head of our immigration team.