Employment Rights Act Royal Assent: Five HR trends for 2026
The world of HR is approaching a seismic transformation with the Employment Rights Act receiving Royal Assent. Employee relations cases are rising by up to 40%, even before the most significant wave of legal reform in a generation.
Coupled with the highest rate of sickness absence and the wellbeing crisis, HR’s focus in 2026 needs to be on proactive, data‑driven and people‑focused strategies that align with business goals.
Looking ahead, five trends will shape people strategies in the year ahead and transforming the HR operating model will be at the heart of these:
- Employee-Relations-as-a-Service
- Proactive probation and legal reform
- Manager empowerment is non-negotiable
- Navigating the politicised workplace
- A new approach to wellbeing.
1. Transform the HR operating model – Employee-Relations-as-a-Service
The first of the trends that HR teams need to prioritise is to evolve outdated operating models, which are no longer fit for the rising risk and cost of compliance. AI is a key driving force behind the increased risk.
While AI helps HR streamline routine tasks, identify risks and uncover workforce patterns, it also introduces new challenges, as employees are increasingly aware of their rights and use tools like ChatGPT to raise detailed, legally informed complaints.
To keep pace, HR teams needs an operational overhaul to be able to cope with the rising caseload and complexity. This requires a combination of fit-for-purpose technology, outsourced advisory services backed by legal support and a data-driven approach to people strategies. For many businesses, this will be a completely new way of working and we call this new operating model ER‑as‑a‑Service.
ER‑as‑a‑Service connects data, people and expert knowledge so organisations can spot risks, keep up with new laws and empower HR professionals to act as trusted advisors. AI, next-level ER case management, and analytics, bring speed and insight, while human judgement adds empathy and context. Together, this makes HR data a real asset, helping teams solve issues faster and make better decisions.
Evolving the HR operating model in this way protects the human in human resources, but also frees them up to focus on strategic priorities to deal with the ever-evolving legal landscape. There are two key areas that need laser focus in the new era of the Employment Rights Act, driven by the need to improve sickness absence and protect against the impact of new unfair dismissal rights.
With ER‑as‑a‑Service, proactive risk protection and absence reduction come as standard, but these benefits are only effective if managers are equipped with the right technology and training to lead confidently.
2. Manager empowerment is non-negotiable
Managers roles are rapidly evolving. No longer just task managers or policy gatekeepers, today’s managers are pivotal in shaping culture, wellbeing and performance – and they are going to be a single point of risk because they are at the frontline of managing much of the impact of the Employment Rights Act.
Our new HR research paper indicates a real need for action. Only 40% of HR leaders believe managers know how to handle employee relations issues well, and many feel worried and unprepared. Even more, CMI found that 82% of managers start their roles without ever having training on how to lead.
In many cases, the challenges faced by managers are not due to a lack of intent or commitment, but rather because many are promoted into managerial roles based on their technical expertise, often without prior experience or training in people management. This leaves them unprepared for the responsibilities of leading teams, especially in today’s complex, hybrid and high-pressure workplaces.
Organisations can effectively address this by investing in strategic development and self-service platforms that empower managers to lead with confidence. This is key to improving the employee experience and building a resilient, high-performing workforce committed to fairness and care – and this is at the heart of ERaaS.
When we consider that unfair dismissal rights will impact employees in employment now – giving them rights to unfair dismissal a year earlier than what they would have had in 2025 – equipping managers to effectively assess whether new employees are fit for their role is now critical.
3. Proactive probation and legal reform
Strengthening probation practices ties directly into empowering those responsible for managing people. Probationary periods have always been a critical part of the employee journey, but the Employment Rights Act is raising the stakes.
Reducing the unfair dismissal qualifying period to six months by 2027 means organisations are facing a sharp rise in probation-related activity – potentially increasing by up to 230% according to our assessment. Managers are at the frontline of this change, responsible for shaping culture, driving performance and managing legal risk, within a much shorter and higher-risk timeframe.
This puts pressure on managers to make fair, evidence-based decisions while supporting new hires effectively. It is no longer enough for managers to rely solely on their own experience – they need structured guidance, clear objectives and robust processes to navigate probationary periods successfully. Improving capabilities of managers supporting employees with disabilities or neurodivergence is also essential to embedding inclusion, minimising risk and improving performance from day one.
This is where ER-as-a-Service plays a transformative role. By providing step by step guidance and HR and legal advice, ER-as-a-Service empowers managers to make confident, compliant and fair decisions.
4. Navigating the politicised workplace
In a world where news travels fast and every decision is under the spotlight, acting with honesty and backing up choices with robust data and analytics is what will set strong leaders apart.
With global events and cultural differences shaping our everyday lives, employees now expect their organisations to listen and take action that matches their values. This puts HR and business leaders in a position where they need to handle these matters thoughtfully and clearly.
Leaders who succeed will be those who act openly and consistently, backed by solid data. Clear expectations and transparent communication reduce discrimination and build trust, and HR plays a vital role in addressing problems proactively.
Yet even with fairness and transparency, employees cannot thrive if the growing wellbeing and burnout crisis is left unaddressed.
5. A new approach to wellbeing and burnout
Stress and burnout are rising across all sectors, driving up absence rates. Mental Health UK report 9 in 10 experience high or extreme levels of pressure or stress in the last year. Heavy workloads, gaps in leadership capabilities and clunky systems are major contributing causes.
Manual HR processes and limited tools only add to employee stress and reduce productivity, undermining workforce confidence and efficiency. Progressive HR leaders now use technology spot early signs of stress or disengagement by analysing data from wellbeing, performance and attendance.
This shift redefines HR’s role with purpose-built technology reducing frustrations, boosting retention and strengthening team performance.
One major UK retailer, Starbucks UK, have lowered absence costs by 10% in just one year, returning 15,000 hours to frontline services. This demonstrates how data-driven initiatives deliver tangible returns and a positive customer experience.
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Preparing for 2026
Together, these five trends make it clear that HR transformation is essential to maintaining compliance and building a resilient, high-performing workplace culture.
To stay ahead, HR must move from reactive problem-solving to a proactive, data-driven approach that aligns closely with business priorities. Embracing ER-as-a-Service as a modern HR operating model enables organisations to remain agile, reduce legal risk and deliver measurable business value.
By partnering with employee relations experts now, HR teams can strengthen manager capability, build confidence and develop the resilience needed to navigate an increasingly complex and regulated workplace.
Take the next step to future-proof your HR function for 2026 and beyond.
Useful HR resources
- Book an empower® demo to see how ER-as-a-Service can transform your HR operating model
- Download this free Employment Rights Bill tracker to stay ahead of upcoming legal reforms
- Check out this free HR research paper for insights into the preparedness of organisations and takeaway practical guidance.