Employment law news in brief - May 2026

Here's our round-up of employment law news for May 2026.

The government has announced plans to reform the UK’s “broken” fit note system, launching a series of pilots designed to improve support for workers who become ill. 

The reforms aim to replace what ministers describe as a “tick-box” process with a more personalised approach focused on helping people remain in or return to work. 

Currently, around 11 million fit notes are issued each year, with more than nine in ten stating that individuals are not fit for work. This, the government says, often leaves employees without practical support or guidance to improve their recovery or ask for workplace adjustments. 

Four pilot schemes will run across England for up to a year, covering around 100,000 appointments. The trials will test new models that either combine an initial GP-issued fit note with referral to community health support or bypass the GP-issued note altogether in favour of specialist services led by clinical and non-clinical professionals. 

Under the new approach, patients will receive tailored work and health support, including discussions involving employers and trained practitioners. These conversations will focus on reasonable adjustments and maintaining contact with the workplace from the first day of absence.

HMRC increases statutory mileage rates for 2026–27

HMRC has updated its Employment Income Manual to reflect an increase in statutory mileage allowance rates for cars and vans from the 2026–27 tax year.

The revised rates, backdated to 6 April 2026, raise the payment for the first 10,000 miles to 55p per mile, up from 45p. The rate for any additional mileage remains unchanged at 25p per mile.

Employers should review their mileage reimbursement policies in light of the increase and consider whether to uplift payments already made in April and May 2026 to reflect the higher rate.

The retrospective change may also affect payroll calculations where employees have been reimbursed above the previous rates. In addition, employees who receive less than the updated rates may wish to claim tax relief from HMRC on the shortfall.

Climate committee urges maximum workplace temperature to protect workers

The UK’s Climate Change Committee (CCC) has called for the introduction of a legal maximum workplace temperature to safeguard employees as climate change drives rising temperatures. 

In its report, A Well-Adapted UK, the independent advisory body warns that increasingly frequent heatwaves, alongside floods and droughts, pose significant risks to workers and the wider economy. 

The Committee wants the government to set a maximum temperature for workplaces “to protect workers’ safety” of up to 25°C. It also encourages employers to invest in cooling measures and suggests that indoor temperatures should be within the 16°C to 25°C range. 

The report highlights that businesses are responsible for ensuring safe working environments, particularly as rising heat can increase occupational health risks, disrupt productivity and lead to higher absence levels. Employers may need to adapt working practices, including adjusting hours, providing shade and hydration, and improving workplace design to prevent overheating. 

The CCC also calls for wider national investment, estimated at around £11 billion per year, to improve climate resilience across infrastructure, including transport, energy and water systems.

Report finds widespread breaches of workers’ rights in UK labour market

A new independent report published by the Fair Work Agency (FWA) has highlighted the scale of non-compliance and work-related harm across the UK labour market.

The report, Working Lives: the scale and nature of labour market non-compliance and other work-based harms in the UK, found that 14% of UK workers experienced at least one breach of their core employment rights in the two years leading up to summer 2025. These include entitlement to the National Minimum Wage, receiving payslips, access to written terms, and protection from unlawful agency fees.

The research also identified a wider pattern of harmful workplace practices. Seven in ten workers reported experiencing at least one issue, including unlawful deductions, unpaid overtime, problems with taking leave, bullying and harassment, physical injury, or negative impacts on their mental health. This equates to an estimated 26.6 to 28.7 million workers.

The report concludes that the scale of unlawful or potentially unlawful behaviour challenges the assumption that non-compliant employers are a minority.

Britain ‘undersaving’ for retirement

The Pensions Commission has warned that millions of people across the UK are not saving enough for retirement.  

In its interim report, the Commission found that around 15 million people are currently under‑saving for retirement, and it believes that figure that could rise to 19 million without intervention. 

Those most at risk of not saving enough for retirement are low and middle-income earners, women and the self‑employed. Around 45% of working-age adults - approximately 18 million people - are not contributing to a pension, despite many being in employment. 

While automatic enrolment has increased participation in workplace pensions, the report concludes that contributions are often too low to deliver adequate retirement income. It warns that, without reform, future retirees may be worse off than current generations and could face a “cliff-edge” in later life.

MPs call for two-week deadline on disability adjustment requests

MPs have called for a legal requirement for employers to respond to disabled workers’ requests for reasonable adjustments within two weeks, following a report by the Work and Pensions Committee. 

The Committee recommends that employers should provide a decision within 14 days and give written reasons where requests are refused. 

The proposals follow evidence that many disabled employees face significant delays when seeking workplace support. The report found that up to 82% of adjustment requests take more than four months to implement, with some taking as long as a year. 

MPs concluded that disabled people continue to encounter a “hostile environment” at work, with employers often failing to respond promptly or at all to requests for adjustments. 

The report also highlights wider issues, including a lack of awareness among employers and workers about available support, and calls for improved communication of rights alongside more proactive measures to ensure compliance.

Home Office reverses expansion of right to work check requirements for sponsors

The Home Office has withdrawn recent changes that appeared to extend sponsors’ right to work check obligations beyond employees and sponsored workers. 

Sponsors must continue to carry out right to work checks to comply with the prevention of illegal working regime. While civil penalties apply only where an individual is an employee, action can be taken against sponsors if they fail to meet their broader duties.

Earlier updates to the sponsor guidance suggested that sponsors were required to conduct checks on anyone they “directly engaged”. As the term was not defined, this created uncertainty and raised concerns that the obligation could extend to freelancers, contractors, agency workers and other non-employees.

However, updated guidance published on 20 May 2026 confirms that this wording has now been removed. The Home Office has stated that references to unsponsored workers “engaged” or “directly engaged” by sponsors should be disregarded.

Redundancy warnings reach five-year high amid rising economic pressures

Redundancy warnings in the UK have reached their highest level in five years, with new data indicating that job losses could increase further in 2026.

Figures obtained through a Freedom of Information request show that 315,605 roles were flagged for potential redundancy in 2025, representing a 45% increase compared with 2021. Over the period from 2020 to 2025, more than two million redundancy warnings were issued. 

Early data for 2026 suggests the upward trend is continuing. In the first two months of the year, 736 employers submitted plans for redundancies, placing 56,396 jobs at risk - around 9% higher than the same period in 2025. The number of advance HR1 notifications filed in February 2026 was comparable to levels seen ahead of the 2008 financial crisis. 

Forecasts indicate that as many as 327,000 redundancies could occur in 2026, slightly exceeding last year’s total. 

Flexibility alone not enough to tackle employee burnout, report finds

Flexible working arrangements are not sufficient on their own to protect employees from burnout, according to new research highlighted by the Work-Life Gap Report 2026. 

The findings suggest that while flexibility can help employees control when and where they work, it does not address the underlying pressures they face - particularly for parents and carers. 

Research cited in the report shows that only 37% of working parents and carers feel able to switch off and maintain healthy boundaries between work and home life. However, this figure rises significantly to 67% where practical support, such as reliable childcare arrangements, is in place. 

The report concludes that flexibility alone does not remove the day-to-day stressors that contribute to burnout, such as managing unpredictable care needs or balancing competing demands. Instead, employers are encouraged to provide more targeted support that addresses these pressures directly, rather than relying solely on flexible working policies.

Wage growth slows as job vacancies fall to five-year low

Wage growth in the UK has continued to slow, while job vacancies have dropped to their lowest level in five years, according to the latest Office for National Statistics (ONS) data. 

Annual growth in regular pay fell to 3.4% in the first quarter of 2026, down from 3.6% in the previous quarter and 5.6% a year earlier. Public sector earnings grew faster at 4.8%, compared with 3.0% in the private sector. 

At the same time, vacancies declined by 28,000 to around 705,000, marking the lowest level since early 2021. Vacancies fell across most industries, with retail and smaller businesses seeing the sharpest reductions. 

The data points to a cooling labour market. Payroll employment fell by around 100,000 in April 2026, and unemployment has increased compared with the previous year. 

Recruitment boost to tackle backlog in disability work scheme

The government has announced a major recruitment drive to address delays in the Access to Work scheme, aiming to speed up support for disabled people entering or remaining in employment. 

Nearly 500 additional staff will be recruited by the Department for Work and Pensions (DWP) to clear a substantial backlog of applications and reduce waiting times. The move follows a surge in demand, with claims for the scheme more than doubling since 2018–19 and around 60,000 applicants currently awaiting a decision. 

The government has already made progress in improving processing times, reporting that payment delays have been eliminated and 96% of urgent cases are now handled within 28 days. The additional recruitment is expected to further accelerate decisions and enable more individuals to access employment support sooner.

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