What UK employers need to know now and what’s coming next
Several significant developments have occurred in employment law over the past few months, including updates on worker status and proposed changes under the Employment Rights Bill. If you employ staff, manage HR, or draft contracts, this summary will help you stay informed about what’s changing and what action to take next.
1. Changes to Confidentiality Clauses in Settlement Agreements
The Government is proposing new limits on what employers can include in confidentiality clauses, particularly around discrimination and harassment.
If passed, these changes will make it unlawful to include terms in contracts or settlement agreements that stop an employee from discussing their experiences of workplace discrimination or harassment. This includes gagging clauses in NDAs, COT3 agreements, or internal settlements.
What employers should do if the Bill is passed:
- Review your standard contract templates and settlement agreements
- Update any confidentiality wording to allow appropriate carve-outs for disclosures relating to discrimination.
- Don’t panic. The right to settle claims will remain. The key issue is what confidentiality clauses can and cannot restrict.
2. Employment Rights Bill: Timeline for Key Reforms
The Government has now confirmed the timeline for introducing new rights under the proposed Employment Rights Bill.
From April 2026:
- Protective awards for redundancy consultation failures will double
- Day one rights introduced for Paternity Leave and Unpaid Parental Leave
- Waiting days and lower earnings limits for Statutory Sick Pay will be scrapped.
- Changes will be made to how trade unions are recognised.
- Workplace balloting processes will be overhauled.
From October 2026:
- Tribunal time limits for employment claims will be extended
From 2027:
- The most significant shift is expected. Unfair dismissal protection becomes a right from day one. Currently, employees require two years of service.
What this means:
Employers will need to rethink how they approach short-service dismissals and probation reviews. These changes are not immediate, but getting your policies aligned early is the best way to stay protected.
3. New Guidance on Definition of ‘Sex’ Under Equality Act 2010
The Equality and Human Rights Commission (EHRC) has issued new guidance following a key court decision on the definition of sex under the Equality Act.
Key takeaway:
Sex in the Act refers to biological sex, not an acquired gender. This has particular implications for workplaces that provide single-sex facilities such as toilets or changing rooms.
However:
This guidance does not remove the rights of transgender employees. It remains unlawful to discriminate against someone based on gender reassignment. Employers must ensure facilities are respectful and inclusive and consider creating gender-neutral options where appropriate.
What employers should do:
- Review your workplace policies and facilities
- Take a balanced approach that complies with both Equality Act protections and the new guidance.
- Seek advice before making changes that could affect access to single-sex space.s
4. Tribunal Confirms Drivers Are ‘Workers’ Not Contractors
In a recent case involving BCA Logistics Ltd, the Employment Appeal Tribunal ruled that the company’s drivers were workers, not self-employed contractors as the business claimed.
Although the drivers’ contracts contained a substitution clause suggesting they could send someone else in their place, this clause had never actually been used. The tribunal found that the clause was not genuine and that the drivers were entitled to:
- National Minimum Wage
- Paid holidays
- Parental leave
- Breaks and working time limits
Why this matters:
If you engage freelancers, contractors, or self-employed individuals, especially on regular or long-term terms, now is the time to verify whether their actual working arrangements align with their legal status.
Misclassification can lead to claims for back pay, holiday entitlement, and even tax liabilities.
Final Thoughts
Employment law is evolving quickly, and it can feel overwhelming to keep up. But proactive steps now can prevent costly claims and protect your reputation as a fair and compliant employer.
Whether you need help updating contracts, reviewing your workforce structure, or planning for the upcoming changes, we’re here to support you.
Want advice tailored to your business?
Get in touch with our Employment and Dispute Resolution team at KMC Legal:
📞 Call us on: 0800 9494 667
📩 Email: hello@kmc-legal.co.uk
🌐 Visit: www.kmc-legal.co.uk
