Employment Disputes
Key trends for 2026
UK employment law in 2026 is expected to be defined by major legislative reform, increased workplace conflict and economic pressures, leading to a significant shift in employment disputes.
Research by Acas found that 44% of working-age adults experienced conflict in the workplace in the past year.
Disputes on the rise
Conflict at work is at a historic high.
With the Employment Rights Act predicted to increase claims by 15%, this trend is likely to continue. For employers, this risks greater litigation and higher costs, making robust policies and early intervention essential.
Employment Tribunal backlog
Increased disputes are putting the Employment Tribunal system under severe strain.
As of September 2025, there were 52,000 single open Employment Tribunal claims, an increase of 33% compared to the same period the previous year.
Cases routinely take over a year to reach hearing, with short-notice postponements increasingly common. Tribunal delays prolong uncertainty, increase financial and emotional strain, and erode confidence in access to justice. Delays also complicate case management and settlement strategies.
Employers should maintain thorough records and consider alternative dispute resolution to minimise risk and costs during prolonged delays.
The Employment Rights Act 2025
The Employment Rights Act 2025 – the most significant overhaul of UK employment law in decades – recently became law, and its impact will start to be felt in 2026.
Several reforms scheduled for 2026 have the potential to escalate employment disputes. The ban on 'fire-and-rehire' (expected in October 2026) will remove a long-standing mechanism for contractual change. Litigation is expected over the scope of what changes are 'restricted' and the circumstances when the narrow statutory exceptions will apply.
Strengthened duties to prevent sexual harassment and protect against third party harassment (both anticipated in October 2026) will create compliance challenges and broaden avenues for complaint. Combined with the extension of Tribunal time limits to six months, these changes increase employer exposure to disputes and will require proactive policy reviews and training to mitigate the risk.
The new Fair Work Agency, due to be established in April 2026, may create another route for employee complaints, though its powers and timeline remain uncertain.
More detail is available on our insights page: Employment Rights Act 2025: Updates, Key Reforms and Resources | Farrer & Co.
Economic pressure driving redundancies
2025 has seen employers contending with rising costs, including higher National Insurance contributions and an increased Living Wage. These pressures have already led to organisations reducing headcount, a trend which is likely to continue into 2026.
A CIPD report found that 22% of employers planned redundancies in the three months to December 2025.
Managing redundancy programmes can carry legal risk, particularly around consultation obligations. From April 2026, the Employment Rights Act will double the maximum protective awards for collective consultation failures to 180 days’ pay, significantly increasing employers’ financial exposure. Ensuring fair and compliant redundancy processes will be important to avoid costly disputes.
Neurodiversity claims increase
Tribunal data shows a sharp rise in neurodiversity-related claims in recent years, with recent case law confirming that even non-verbal behaviour can amount to unlawful discrimination.
With one in seven people in the UK estimated to be neurodivergent, employers face growing legal and reputational risks if they fail to make reasonable adjustments. As awareness and employee confidence in asserting rights increases, it is expected that neurodiversity will continue to feature in employment complaints.
Inclusive management practices, such as proactive adjustments and clear communication, should be a priority for organisations seeking to reduce disputes and build a supportive working environment.
Restrictive covenant disputes
Economic uncertainty and competitive hiring are prompting employers to protect business interests and confidential information more robustly. With business formations on the rise, and reform of non-competes on the horizon, High Court litigation involving restrictive covenants and team moves is expected to increase in 2026.
Employers should review restrictive covenants to ensure enforceability, particularly in sectors where talent competition is intense.
Preparing for 2026
The employment landscape in 2026 will be shaped by significant legislative reform, economic uncertainty and shifting employee rights. The common thread across these trends is the need to manage risk effectively. Organisations that take steps now to implement effective workplace policies, invest in manager training, and plan proactively, will be best placed to minimise disputes in the year ahead.
Employment Disputes
Our employment lawyers offer judgement-based practical solutions to employers and individuals, including senior executives. Resolving disputes in the workplace requires an in-depth understanding of an organisation, its needs and priorities, and the people involved. Our lawyers have the emotional intelligence, commercial understanding and legal expertise to guide you towards a practical resolution.