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Our 7 Step Guide to: Employment Law Changes in 2026

May 12, 2026

Our 7 Step Guide to: Employment Law Changes in 2026

The Employment Rights Act 2025 is set to transform the UK labour landscape. Starting 6 April 2 026, these reforms will reshape how businesses engage workers and manage supply chains.

The challenge for agencies and end-clients is no longer just understanding the rules, it's applying them in a commercially sound, proactive way. To help you prepare, we have distilled the core changes into an essential 7 step guide.

Step 1: Understanding the New PAYE/NIC Liability.

The most critical shift is the introduction of joint and several liability for PAYE and NICs. If an umbrella company in your supply chain fails to meet its tax obligations, HMRC can now pursue the agency or the end-client for the shortfall.

For Agencies / Clients:

You are no longer insulated from supply chain risk. Proactive vetting is now a legal necessity.

For Contractors:

Expect more rigorous onboarding processes as agencies act to protect the entire supply chain.

Step 2: Choose the Right Umbrella Partners.

Accreditation is now a baseline expectation, not a "nice-to-have."

Best Practice:

Prioritise providers that are FCSA accredited and utilise real-time audit technology like SafeRec.

SafeRec Advantage:

This AI-powered tool provides automated, real-time verification of payslips, ensuring

deductions are compliant. If malpractice occurs, the entire supply chain is notified instantly.

Step 3: Implementing Ongoing Compliance Monitoring

Compliance isnʼt a one-time task anymore. Itʼs now an ongoing responsibility.

Strategy:

Move toward a model of continuous monitoring. If you manage high volumes, automated tools are essential to verify RTI submissions and payslip accuracy consistently.

Internal Shift:

As part of the Pertemps Network Group, we are reducing our Preferred Supplier List (PSL) to increase the frequency of our internal audits and ensure we maintain a proactive monitoring system.

Step 4: Reduce and Strengthen Your Supply Chain

Complexity is the enemy of compliance. Now is the time to streamline your supply chain. Work with fewer, more reliable partners who provide full transparency over their payroll processes. A simplified supply chain is significantly easier to audit and secure.

Step 5: Mastering Employment Status (CIS vs. PAYE)

Employment status remains under intense scrutiny. To remain compliant, ensure your assessments of "Control, Direction, and Supervision" (CDS) are robust.

CIS Compliance:

Workers engaged as CIS Sole Traders must be genuinely self-employed. They should provide their own tools, manage their own training, hold appropriate insurances, and be free from client-led "hand-holding."

The Test:

If you control the how, when, and where of the work, the role likely falls under PAYE/Umbrella scope.

Step 6: New Worker Rights.

From 6 April 2026, several protections shift to "Day One" status. Ensure your internal policies are updated to reflect:

Day-one rights:

Statutory Sick Pay (SSP), Paternity Leave, and Unpaid Parental Leave.

Protective Awards:

The penalty for failure to consult in collective redundancies has been extended from 90 to 180 days.

Equality Plans:

Businesses with over 250 staff should begin preparing Gender Equality plans (voluntary in 2026, mandatory by January 2027).

Step 7: Plan for Rising Costs and Future Obligations.

The financial impact of the 2026 UK employment law changes shouldnʼt be underestimated.

For Agencies / Clients:

The National Living Wage has risen to £12.71 per hour (21+) Equality Action Plans are being introduced, becoming mandatory in 2027 Make sure these are built into your pricing, tenders, and long-term planning.

For Contractors:

As businesses adjust to rising costs, you may see shifts in pay structures or contract rates so itʼs worth staying informed.