UK
Training cost clawback provisions (case law)
Impact date: 10 July 2026 The Court of Appeal has considered whether a training cost repayment (or "clawback") provision in an employment contract amounted to an unenforceable restraint of trade.
The court held that the particular clause was unenforceable because it went further than was reasonably necessary to protect the employer's legitimate business interests. In reaching that conclusion, the court noted that the repayment sum did not accurately reflect the employer's actual training costs, the repayment obligation was triggered in almost all termination scenarios, and the employee was paid little more than the National Minimum Wage during the training period. The court nevertheless confirmed that employers may, in principle, recover genuine training costs through contractual repayment provisions, provided that such provisions are reasonable and proportionate.
The decision provides important guidance on the enforceability of training cost recovery arrangements and highlights the need for repayment provisions to be carefully drafted and tailored to the employer's legitimate interests.
Employer implications/action needed Employers that use training repayment provisions should review them to ensure that any repayment obligation reflects genuine and demonstrable training costs, is proportionate, and does not extend beyond what is reasonably necessary to protect the employer's interests. Consideration should also be given to whether repayment obligations reduce over time, whether the repayment period is appropriate, and whether the circumstances triggering repayment are sufficiently limited and targeted.
Employer risk Training cost recovery provisions that are drafted too broadly may be held unenforceable as restraints of trade. Particular risk arises where repayment sums exceed actual training costs, where repayment is required regardless of the reason for termination, or where the practical effect is to discourage employees from changing jobs.
Link N/A
Part-time workers (case law)
Impact date: 12 August 2026 The Supreme Court has clarified the causation test under the Part-time Workers (Prevention of Less Favourable Treatment) Regulations. The court unanimously overturned the Court of Appeal's decision, which had held that a worker's part-time status must be the sole reason for any less favorable treatment. The Supreme Court confirmed that a claimant does not need to establish that working part-time was the sole cause of the treatment. Instead, it is sufficient to show that part-time status was an effective cause of the less favorable treatment, even where other factors also contributed to the employer's decision.
The decision lowers the threshold for establishing causation in part-time worker claims. It reinforces the protective purpose of the legislation and aligns the causation test more closely with wider anti-discrimination principles, where multiple factors may contribute to a decision.
Employer implications/action needed Employers should review policies, working practices and management decision-making processes to ensure that part-time workers are not inadvertently disadvantaged. Where differences in treatment between part-time and full-time workers exist, employers should ensure that the reasons for those differences are clearly documented and objectively justified where necessary. Particular attention should be paid to access to benefits, work allocation, promotion opportunities, performance management processes and contractual terms.
Employer risk Employers will be less able to defeat claims on the basis that part-time status was only one of several reasons for a decision. Organizations should therefore review practices affecting part-time workers and ensure that any differences in treatment can be objectively justified.
Link N/A
Equal pay (case law)
Impact date: 7 September 2026 The EAT has overturned the ET’s finding that NEXT Retail Ltd breached equal pay legislation by paying its shop-floor sales staff a lower rate of basic pay than its warehouse operatives carrying out roles assessed as being work of equal value. The EAT found that it was justifiable for NEXT to rely on market forces to distinguish between the pay for the different groups of employees where there was a valid rationale for the pay differences and the pay differential was not attributable, directly or indirectly, to sex. The decision provides important guidance on the scope of the "material factor" defense in equal pay claims and the circumstances in which labour market factors may justify pay differences between roles of equal value.
Employer implications/action needed Increasing regulatory and stakeholder focus on equal pay, pay transparency and wider workforce fairness means employers are facing greater scrutiny of how pay decisions are made, documented and justified. Effective equal pay compliance requires a strategic approach to workforce governance, reward design and risk management. Employers should ensure that the rationale for pay differences is clearly documented and supported by evidence, particularly where market factors, recruitment pressures or retention concerns are relied upon to justify different rates of pay for roles that may be of equal value.
Employer risk Employers relying on market forces or other material factors to justify pay differences should be able to demonstrate a legitimate business reason for the differential and retain evidence supporting the decision-making process. Increased focus on equal pay, pay transparency and workforce fairness is likely to result in continued litigation and regulatory scrutiny in this area.
Immigration – labor and migration
Impact date: 2025 - 2026 A Statement of Changes to the Immigration Rules (HC 1691) was published on 5 March 2026, which included: the introduction of a “visa brake” for specified nationalities on Skilled Worker and Student routes; and a new pay period salary compliance requirement for Skilled Worker sponsors. Some changes were effective immediately, with other changes taking effect on various dates between March 2026 and March 2027.
The government’s sponsor guidance glossary has been updated, including a new “eligible role” test and a requirement for sponsors to proactively inform sponsored workers of their UK statutory employment rights.
English language requirement for some new applicants increased in January and the Electronic Travel Authorisation regime has been fully enforced since 25 February 2026. The Government continues to consult on and implement reforms announced in the Immigration White Paper, including proposed changes to settlement, citizenship and the Graduate route, with further measures expected to be introduced from 2027 onwards.
The Government has also now laid the regulations needed to implement the significant expansion of the right to work regime from 1 October 2026, alongside a draft Code of Practice and updated draft Employer's Guide. The expanded regime will extend right to work checking obligations beyond traditional employment relationships to a wider range of working arrangements, including certain workers, individual subcontractors and some gig economy arrangements. This is likely to require many organizations to reassess their right to work compliance processes and contingent workforce arrangements, as the expanded regime could apply in circumstances where checks have not previously been required.
Employer implications/action needed
Employers should consider: assessing the sponsored population, pipeline roles and cost forecasts; updating policies and offer letters to reflect changes; reviewing sponsor license compliance processes and payroll practices in light of the new salary compliance requirements; reviewing right to work procedures and contingent workforce arrangements and conducting audits to ensure compliance given increased enforcement activity.
Employer risk
Employers should prepare for higher recruitment and sponsorship costs, increased sponsor compliance obligations, and potential civil penalties, criminal liability and sponsor license consequences arising from non-compliance with sponsorship and right to work requirements.
Employment Rights Bill*
Impact date: 2025 - 2027 The Employment Rights Act 2025 (ERA) received Royal Assent on 18 December 2025 and is being implemented in stages from 2026 onwards. The Government has published a roadmap detailing an anticipated timetable for consulting on, and implementing, the ERA’s key measures. Most of the measures not yet in force will commence in October 2026 or 2027.
Some of the key measures that are now in force include: reduced industrial action regulation; an increase in the maximum protective award for failure to comply with collective redundancy consultation obligations; statutory sick pay, statutory paternity and unpaid parental leave becoming day one rights; a new employer duty to keep adequate records to show compliance with statutory annual leave entitlements; trade union balloting changes; and changes to the trade union statutory recognition procedure. A new statutory right to bereaved partner’s paternity leave was also introduced on 6 April 2026.The next changes will take place in October 2026. The October changes will include:
- 1 October 2026: extension of most Employment Tribunal limitation periods from three to six months (with the Scottish breach of contract change taking effect on 9 November 2026).
- 30 October 2026: trade union access rights, duty to inform workers of the right to join a trade union, enhanced sexual harassment duties, and third-party harassment provisions.
From January 2027, the qualifying period for unfair dismissal will be reduced to six months and the compensation cap removed. However, as prior service will count, employees starting employment from 1 July 2026 will benefit from the qualifying service change.
The new Fair Work Agency was established on 7 April 2026, bringing together existing enforcement bodies with some new powers, including to enforce underpayments in respect of statutory holiday pay, statutory sick pay as well as the national minimum wage. The Agency has already begun exercising its enforcement role, including public naming activity relating to minimum wage underpayments.
A number of government consultations are ongoing or have recently closed, including on the misuse of non-disclosure agreements; trade union rights of access; the collective redundancy trigger threshold; flexible working; detriments for taking industrial action; modernizing the agency work regulatory framework; holiday pay compliance and enforcement; and workplace monitoring technologies. In addition, a call for evidence on the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) closed on 1 July 2026.
Employer implications/action needed Employers should prioritize preparations for the next tranches of measures in August and October 2026, including:
- auditing industrial relations strategies, dispute resolution procedures and industrial action contingency plans
- training on measures in response to a union seeking workplace access
- reviewing and updating anti-harassment policies, training, contractual clauses, reporting channels and mechanisms for investigating and handling reports of workplace harassment
- reviewing documentation retention, litigation and dispute-management strategies and processes to prepare for the increase in the time limit for making claims in employment tribunals
- employers should also review contractual probationary periods and practices, executive severance strategy and the management of recruitment and dismissal procedures in readiness for the changes to the unfair dismissal qualifying period and compensation cap
- the impact of the ERA on workplaces across all areas should continue to be risk assessed, and employers should and stay abreast of updates as further details emerge via consultations and commencement regulations, to support more focused preparations
Employer risk The Employment Tribunal enforcement route will remain, but a new single enforcement body is also expected to take a targeted approach to enforcement.
Link For more detail on these changes and anticipated timescales see our tracker: Home - Preparing employers for workplace changes (eversheds-sutherland.com)
Acas consultation on a revised Code of Practice on disciplinary and grievance procedures
Impact date: Awaited (consultation closes on 23 September 2026) Acas published a consultation on a revised Code of Practice on disciplinary and grievance procedures, which would replace the current Code that has been in place largely unchanged since 2009. While the core principles of fair disciplinary and grievance processes remain the same, the proposed changes place significantly greater emphasis on informal resolution, transparency and workplace dialogue, and extends the Code beyond employees to include workers. The draft Code also includes new or expanded sections on suspension, avoiding unlawful discrimination, training, mediation, and accompaniment requests.
Employer implications/action needed If Acas proceeds with the revised Code, it will be submitted for government approval and then laid before Parliament. Before any changes take effect, employers should review their existing policies and approach to informal resolution and assess whether existing employee relations frameworks, training and governance arrangements remain fit for purpose.
Employer risk Employment tribunals must take the Acas Code into account where relevant to any question a tribunal has to determine. An unreasonable failure to comply with the Code can result in tribunals adjusting certain awards of compensation by up to 25% in relevant claims, including unfair dismissal, discrimination and whistleblowing claims.
Pay gap reporting
Impact date: Awaited, but anticipated to be introduced in Northern Ireland in 2026 or 20272027, which would likely mean the first reports being made in 2028. Already well established in Great Britain, in Northern Ireland the Employment (NI) Act 2016 provides for a gender pay gap regime to be introduced. The consultation response has been published by the Department for Communities in Northern Ireland, which largely aligns with the workings of the existing gender pay gap reporting regime in Great Britain, including reporting by mean and median pay, the inclusion of bonuses and information being published in quartiles. However, further consideration is being given to the threshold for reporting, which could be lower than the 250 employee trigger used in Great Britain. Previously it was anticipated that the NI reporting regime would also include ethnicity and disability pay gap reporting, however, that will not proceed at this stage. Alongside the gender pay gap legislation, the potential application of the EU Pay Transparency Directive in Northern Ireland is also under consideration. This is in the context of the special post-Brexit arrangements applicable in Northern Ireland under the Windsor Framework.
In Great Britain, the Employment Rights Bill (see above) includes a requirement for employers to publish an equality action plan on addressing gender pay gaps. In addition, with a Draft Equality (Race and Disability) Bill (yet to be published, see under Equality change below), it is proposed to mirror the existing legislation relating to equal pay and gender pay reporting to introduce mandatory ethnicity and disability pay gap reporting for employers with 250 employees or more and to enshrine in law the full right to equal pay for ethnic minorities and disabled people. The government has published its consultation response on mandatory ethnicity and disability pay gap reporting, confirming that it will be introducing such reporting for large employers, although it has not committed to a specific commencement date (see below). Alongside this, the Government has published its response to the 2025 Call for Evidence on equality law and is consulting on equal pay and pay discrimination until 27 October 2026, signaling the potential for further reforms in this area (see under Equality change below).
Employer implications/action needed Employers should continue to monitor developments and ensure that they have the infrastructure in place to comply with updated reporting requirements, once in force.
Modern slavery and supply chain transparency
Impact date: Awaited Draft legislation was published proposing to strengthen the UK's modern slavery and supply chain transparency regime. The proposals would introduce enhanced reporting obligations and penalties aimed at increasing transparency within organizations’ supply chains and strengthening compliance with modern slavery requirements. The changes form part of a broader focus on corporate accountability and ESG-related governance.
Employer implications/action needed Employers with modern slavery reporting obligations should monitor the Bill closely. If implemented, organizations would need to adopt more formal and evidence-based processes for identifying, assessing and addressing modern slavery risks, together with more robust record-keeping and reporting processes. Modern slavery statements would be subject to mandatory content requirements, senior-level approval and an accuracy declaration.
Employer risk The prospect of significant new financial penalties and associated reputational risk reinforces the need to ensure that statements are accurate, evidence-based and defensible.
The “Good Jobs” Employment Rights Bill (Northern Ireland)
Impact date: Awaited. If the legislation does proceed, then it will need to be passed before the mandate of the current NI Assembly expires in 2027. On 28 April 2025 the Minister for the Economy provided an update on the proposals for the “Good Jobs” Employment Rights Bill. It was confirmed that the key areas of focus will include amendments and/or new rights, entitlements and obligations in relation to (a) zero hours contracts (b) fire and rehire (c) agency workers (d) tips (e) holiday pay (f) trade unions and industrial action, and (g) family related rights, including paternity leave, carer’s leave, neonatal leave and flexible working.
Draft legislation was originally expected in early 2026, but this was delayed on several occasions. The current position of the bill is unclear, but we should receive clarity with the NI Assembly returning after the summer recess in September 2026. More importantly, given that the legislative mandate of the NI Assembly will end for elections in May 2027, there is also a question mark as to whether the legislation will come into force prior to then, which was the original intention.
Employer implications/action needed The Minister for the Economy described this as the “biggest upgrade in workers’ rights since the Good Friday Agreement [in 1998]”.
Any employer with a presence in Northern Ireland should monitor developments closely and prepare for the introduction of the legislation as it develops. The changes are likely to be significant.
Employer risk While some of the proposed reforms will make Northern Ireland more closely aligned to Great Britain (for example, regarding flexible working and family rights), others will create further divergence and this will pose an additional risk to multi-jurisdictional employers, in addition to those already present. The differences/risks will be even more pronounced as the extensive reforms in the Employment Rights Act will not apply in Northern Ireland.
Safe leave for victims of domestic abuse (Northern Ireland)
Impact date: Awaited (but by 2027)
The Domestic Abuse (Safe Leave) Act 2022 makes provision for an entitlement to paid safe leave for victims of domestic abuse in Northern Ireland. Regulations are awaited that will set out the details of how safe leave will work. On 8 July 2026, the NI Economy Minister reaffirmed her commitment to introducing the secondary legislation required to bring Domestic Abuse Safe Leave into force before the end of the current Assembly mandate (in 2027).
Employer implications/action needed While the exact details are awaited, we know from the framework that this will be a ‘day one right’ (i.e. no length of service will be required) and that it will provide for leave relating to domestic abuse, such as for the individual to obtain legal advice and find alternative accommodation, with their employment terms protected in the meantime. Proposals include an entitlement of ten days’ paid leave each leave year for workers experiencing domestic abuse.
Employer risk Employers should continue to monitor/stay ahead of developments and consider whether existing domestic abuse policies, handbooks and support measures will require updating ahead of or at implementation.
Equality changes*
Impact date: Awaited The Government has published its consultation response on mandatory ethnicity and disability pay gap reporting, confirming that it will be introducing such reporting for large employers. The following organizations will be in scope if they have 250 or more employees: private and voluntary sector employers in Great Britain; public sector bodies in England; and certain public authorities operating across Great Britain in relation to non-devolved functions.
Together with a call for evidence, the consultation response will inform the proposed Equality (Race and Disability) Bill, although the timing of publication remains uncertain. The call for evidence addressed a range of equality topics, including: equal pay rights for ethnic minority and disabled people; ensuring that outsourcing of services cannot be used to avoid paying equal pay; improving enforcement; improving pay transparency; steps to prevent workplace harassment; strengthening protections against combined discrimination; socio-economic duty; and public sector equality duty.
The Government has now published its response to the call for evidence and launched a consultation on equal pay and pay discrimination, which closes on 27 October 2026. The consultation seeks views on simplifying the equal pay framework, strengthening enforcement and making equal pay rights more effective across sex, race and disability.
Large employers will be required to publish an equality action plan addressing gender pay gaps and menopause support. Publication is voluntary from April 2026, and will be mandatory from April 2027. On 4 March 2026, new guidance and a list of recommended actions with associated guidance for each was published. Employers will have to choose at least one action to address gender pay gaps and one to support employees experiencing menopause. The action plans form part of the wider equality action plan requirements introduced by the Employment Rights Act 2025.
Employer implications/action needed The proposed Equality (Race and Disability) Bill remains awaited and there is likely to be an implementation transition period to allow employers to get ready for the change, for example, there may be a period during which it is voluntary for employers to comply. However, employers should not wait to take steps until the law is implemented, reflecting the unique challenges associated with collecting and analyzing ethnicity and disability data. Employers with 250 or more employees should be acting to ensure that they have the infrastructure in place to be able to report on affected pay practices and workforce numbers. Employers should also monitor the equal pay and pay discrimination consultation, as it signals the possibility of wider reforms extending beyond pay gap reporting and into the substantive equal pay framework.
Non-compete clauses
Impact date: Awaited On 26 November 2025, the Department for Business and Trade published a working paper, exploring options for reforming rules on non-compete clauses in employment contracts. Options under consideration include:
- introducing statutory limits on the length of non-compete clauses – either a fixed limit (e.g. one to three months), or different limits according to company size
- banning non-compete clauses in employment contracts entirely, or a ban below a certain salary (or income tax) threshold
- combining a ban below a certain salary threshold with a statutory limit on length
The government invited views on these options, together with a number of further questions. The working paper closed for responses on 18 February 2026 and the Government is considering the feedback received before deciding whether to take forward any reforms. In the meantime, a number of responses have been published, including from the Competition and Markets Authority, which gave the view that current law and policy on non-compete clauses may need updating.
Employer implications/action needed Employers should continue to monitor this development. Organizations that rely heavily on non-compete clauses, particularly for senior, client-facing or strategically important employees, may wish to review the extent to which other protections, such as confidentiality provisions, garden leave and non-solicitation restrictions, would adequately protect business interests if future reforms limit the use of non-compete clauses.
Employer risk Potential reform of non-compete clauses remains a live policy issue and could have significant implications for employers' ability to protect confidential information, customer relationships and workforce stability. However, the direction and scope of any reforms remain uncertain.
*Applies to England, Wales and Scotland only.
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