Freeths Employment Survey 2026 Reveals Shifting Employer Priorities Amid Significant Legislative Change

Why It Matters

The findings highlight imminent compliance risks and strategic shifts that will shape talent management, cost structures, and competitive positioning for UK businesses in a more regulated environment.

Key Takeaways

• 61% say Employment Rights Act will deter UK investment
• Only 2% plan to increase parental leave pay
• AI use in HR limited; 12% trial recruitment screening
• Neurodiversity and menopause top DEI focus, manager training low
• Performance management priority rises to nearly half of firms

Pulse Analysis

The Employment Rights Act 2025 represents the most sweeping overhaul of UK labour law in a generation, extending unfair‑dismissal protections and granting trade unions greater powers. As the survey reveals, a majority of senior HR leaders recognize the legislative tide but lack depth of understanding, prompting a rush to revise contracts, handbooks, and managerial capabilities. This regulatory pressure is already influencing investment decisions, with 61% of respondents fearing reduced foreign capital, underscoring the need for proactive compliance strategies that balance legal risk with operational agility.

Beyond legislation, cultural dynamics are reshaping the employee experience. The duty to prevent sexual harassment now requires employers to take "all reasonable steps," driving a surge in policy updates, training programmes, and reporting mechanisms. Meanwhile, hybrid work remains technically mature, yet 47% of firms cite cultural cohesion as the biggest hurdle. Family‑leave reforms have left pay unchanged for most, and emerging DEI priorities—particularly neurodiversity and menopause support—highlight gaps in manager readiness, as only a fraction of organisations provide targeted training. These trends signal a shift toward a people‑first framework where wellbeing and inclusion are strategic imperatives.

Technology adoption offers both opportunity and caution. While 12% of employers are experimenting with AI for recruitment screening, overall HR AI uptake is sluggish, hampered by concerns over governance, ethics, and regulatory compliance. Simultaneously, performance management has vaulted to a top‑five priority, reflecting a heightened focus on accountability in hybrid settings. Right‑to‑work compliance remains a blind spot for over a third of companies, despite rising penalties, suggesting latent exposure. For HR leaders, the convergence of stricter law, evolving employee expectations, and cautious tech integration demands a balanced roadmap that safeguards compliance while driving productivity and inclusive culture.