March 2026 HR and employment law update

This month, we look at new provisions regarding the Employment Rights Act which are taking effect, a reminder to engage with tribunal proceedings and a drop in hiring intentions.

HR and employment law

Early employment law changes roll out

New provisions from the long-awaited Employment Rights Act 2025 are beginning to take effect, and businesses need to act now to stay compliant.

From 18 February 2026, the government has introduced key reforms affecting workplace rights and union-related procedures, with more coming this spring.

Union changes won't affect most small businesses, but other changes will.

Under updated rules, workers with less than 26 weeks' service will be able to take paternity leave and parental leave from 6 April 2026, and the three waiting days for statutory sick pay (SSP) are being eliminated.

In practice, this means revisiting relevant policies, processes and contracts, and making sure managers understand how to handle these issues.

AI-generated grievances create extra work

A survey of HR leaders has highlighted a growing challenge for employers as more employees turn to artificial intelligence (AI) tools to draft formal grievances and disputes.

According to research reported by People Management, almost all (95%) HR professionals surveyed have encountered cases where AI was used to help write a grievance or appeal, and 78% said the resulting documents contained inaccurate or misleading information drawn from AI rather than fact.

HR teams describe the trend as adding "confusion and frustration" to otherwise routine processes. Employees may take AI output at face value without checking sources, leading to inflated expectations about rights or procedures that don't actually apply.

For small business owners, this trend means grievance handling could require more time and care.

Making sure your policies are clear, training managers on how to respond to poorly supported claims and documenting all stages of your internal process are now even more important to maintain fairness and defend decisions if disputes escalate.

Legal update

£150,000 award for unfair dismissal and disability discrimination

An employment tribunal found an adult social care charity had unfairly dismissed an employee and discriminated against them due to disability, awarding over £150,000.

The employee suffered from long-term health conditions, including Crohn's disease and post-COVID effects, and had requested reasonable adjustments such as reduced caseloads and hybrid working.

The tribunal held the employer:

• failed to meaningfully consider or implement adjustments before dismissal

• concluded a capability process in nine days without giving the claimant time to improve

• failed to apply sufficient extra tolerance for disability-related absence

Even small employers must actively consider disability adjustments, be tolerant of disability absence and can't rush a process.

Absence alone does not justify dismissal. Proactive engagement is essential to reduce legal risk.

Default judgement for unauthorised wage deductions

In this case, two former employees successfully claimed for unauthorised deductions from wages after the company failed to file a response to the claim on time.

Under Rule 22 of the Employment Procedure Rules, a tribunal can decide a claim without a full hearing if the respondent does not present a valid defence.

The claimants alleged that their employer – a Leeds-based micro business providing local services – had made deductions from their pay that were not authorised by contract or statute.

Because the company did not submit a valid response (ET3) by the deadline, the tribunal concluded the matter under Rule 22 and ordered payment of the full sums unlawfully withheld: £3,397.82 to the first claimant and £3,519.65 to the second.

It's so important to engage with tribunal proceedings, even if you think the claim has no merit at all, or is so straightforward you think just attending the hearing will be sufficient.

Missing a deadline can result in a default order to pay what is owed, without the opportunity to contest the matter.

To avoid default judgements and compulsory payments, make sure you monitor tribunal notices and file defences on time.

Other news

Hiring intentions drop amid reforms

A survey of UK employers shows that more than one in three plan to cut permanent hiring this year as labour law changes increase costs and administrative burden, signalling caution in recruitment planning.

Redundancy protective award cap to rise

Under reforms linked to the Employment Rights Act 2025, the maximum protective award for failures in collective redundancy consultation is set to increase significantly from April 2026, raising the stakes for properly conducted mass consultation processes.

Government proposes harder flexible working rules

A major government consultation on flexible working published this month could mean significant changes for employers in 2027.

The consultation outlines proposed reforms that would require employers to follow a statutory consultation process when refusing flexible working requests.

Conclusion

March brings a wave of change for employers, with early elements of the Employment Rights Act 2025 starting to land and new workplace trends reshaping day to day HR work.

This month's update highlights what's shifting, what needs attention now and where small businesses may feel the impact first.

If you would like to discuss anything in this month's edition, please do get in touch.

If you'd like a practical, no-pressure chat about your HR set-up, book a free HRCheckup.