Ian Machray, Partner and Head of our Business Services Team, analyses the data from 2026’s Breakfast Briefing poll, offering insights into the issues causing most concern for HR professionals.
As we move into 2026, we do so against the backdrop of one of the most significant periods of employment law change in over a decade. The Employment Rights Act 2025, with its proposed reforms to unfair dismissal, harassment law, flexible working, trade union rights, and conditions for atypical workers, has given rise to a climate of heightened uncertainty for many employers.
We hosted our 14th Annual Employment Breakfast Briefing in January, to try and help shed some light on these changes. As part of that session, we carried out a series of polls with the input of those HR professionals and business leaders in attendance, to assess how employers are feeling about the Act’s proposals. The data paints a picture of where employers’ priorities lie, what changes they fear most, and how prepared they feel for a year in which employment practice is expected to evolve at pace.
Skills, skills, skills – the defining priority of 2026?
Attendees’ number‑one HR priority for 2026 is improving skills and performance at 33%, ahead of cost‑cutting (22%) and recruitment/retention (20%).
With much talk about improving productivity and the advent of workplace AI, these results are perhaps not surprising. The unfair dismissal changes coming into force on 1 January 2027 may also be a contributing factor, as employers attempt to “skill-up” their struggling employees now, before formal performance improvement processes become more commonplace.
That said, a comparison with last year’s poll highlights a noticeable shift in priorities. In 2025, improving skills and performance was the dominant frontrunner at 43%; its drop to 33% in 2026 suggests that while improving employee performance remains employers’ primary concern, organisations are diversifying their HR focus to address other issues.
Meanwhile, restructuring and cost‑cutting at 22% (21% in 2025) and recruitment and retention at 20% (19% in 2025) remain consistently high‑ranking concerns. The most pronounced movement is in changing working practices, which has climbed from 7% in 2025 to a more prominent 16% in 2026, reflecting ongoing adjustments to hybrid models and flexibility expectations – an increasingly common ask of both new and existing employees.
A clear message on unfair dismissal reform
One of the most striking takeaways is the response to the proposed unfair dismissal reforms. 68% of respondents favour keeping the current rules, consisting of a two‑year qualifying period and capped compensation. By contrast, only 5% prefer the Government’s original “day-one rights” plan, with 27% favouring the revised six‑month qualifying period and no cap on compensation proposal set out in the Employment Rights Act 2025.
The alternative models, both of which would provide earlier access to unfair dismissal rights and expose businesses to additional risk, are clearly a cause for anxiety among employers. The results of our polling suggest a preference for certainty and clarity in employment law across the board, not just in respect of the unfair dismissal changes.
It is perhaps unsurprising, then, that the “day-one rights” plan, which would have seen a new statutory probationary period and a short-form dismissal process introduced, was especially unpopular with our respondents, given that these changes would likely have made the process of dismissing short service employees far more complex and high-risk.
The new six-month qualifying period does afford more certainty than the “day-one rights” plan did, in that it is simply a case of employees qualifying for unfair dismissal rights after six months rather than two years. However, this will of course result in a wave of employees acquiring rights on 25 December 2026, putting additional pressure on employers to review employee performance and conduct before the end of the year. The removal of the cap on compensation also means potentially higher levels of liability, especially when dismissing senior managers or directors.
Flexible Working: Still Seen as an Employee Advantage
Despite years of debate about whether flexible working has levelled the playing field, 43% of respondents felt current rules favour employees, with only 17% believing that employers benefit from the current state of play. That said, a sizeable 32% think the current system is well balanced, suggesting that – while opinions vary – many organisations are beginning to settle into a rhythm in respect of flexible working arrangements.
Trade Union Activity: Increase or Ambiguity?
Views on trade union activity remain mixed. While 24% have seen some level of increase, 38% report no change, and 36% are unsure. This uncertainty may reflect uneven patterns across sectors or simply that some organisations have limited visibility of union engagement within their workforce.
The Most Impactful Change? Unfair Dismissal Tops the List Again
When asked which upcoming change will have the greatest organisational impact, respondents again pointed to unfair dismissal reforms (45%), far outweighing concerns around harassment and discrimination changes (24%) or zero‑hours and shift reforms (15%).
Taken together, the message is clear: dismissal rules remain the most significant area of focus for employers in 2026, overshadowing high‑profile topics like fire‑and‑rehire or trade union legislation. However, while the unfair dismissal reforms will represent a significant shift in employment law and practice, employers should not as a result disregard other upcoming changes, such as those to harassment law.
In Summary
Looking ahead, the next 12 months are likely to test employers’ ability to keep pace with employment law and practice. As the Employment Rights Act comes into effect and its practical implications become clearer, HR teams will need to assess policies, processes, and risk frameworks with a renewed focus.
If you require any support with reviewing your policies or contracts, or have any questions regarding upcoming changes to employment law, please get in touch at [email protected]
You can watch a summary of the Breakfast Briefing here.
