Freeths Employment Survey 2026 reveals shifting employer priorities amid significant legislative change

While awareness of the Employment Rights Act is broad, depth of understanding remains limited, and sentiment is largely pessimistic (61% believe that it will make the UK less attractive for investment). Employers anticipate the greatest impact from unfair dismissal reform and flexible working changes, prompting many to prioritise practical action such as updating contracts, handbooks, and management capability. In light of reforms that strengthen the presence and powers of trade unions, 27% of respondents reported that they planned to change their information/collective procedures in 2026.

Employers are moving towards compliance with the duty to prevent sexual harassment, with noticeable increases in policies, training, and reporting mechanisms. 10.5% reported a slight increase in sexual harassment complaints last year, with 1.5% reporting a significant increase. The Employment Rights Act will see the burden on employers increase from taking “reasonable steps” to taking “all reasonable steps” to prevent sexual harassment and will also impose liability for employers where they fail to take all reasonable steps to prevent employees being harassed by third parties, so this will need to remain an area of focus for business including updated policies, training programmes and reporting mechanisms.

Most organisations feel operationally ready for day one parental and paternity leave rights, but few (only 2%) intend to enhance pay. More broadly, hybrid working continues to present cultural rather than technical challenges, with 47% reporting that maintaining team and culture engagement was the key challenge.

AI adoption within HR remains low and, in some areas, has slowed. While a small number of employers (12%) are experimenting with AI for recruitment screening, preparedness for governance, ethical standards, and regulatory compliance is minimal.

Neurodiversity and menopause support have emerged as the leading DEI priorities for 2026. However, the survey also revealed low manager confidence in supporting employees experiencing menopause and only 12% offering manager awareness or training sessions.

Performance management has emerged as a top HR priority for 2026, cited by nearly half of respondents. This represents a significant shift: in 2025, only 16% identified it as a top‑five priority. The data reflects a broader organisational focus on productivity, accountability, and capability building as employers navigate hybrid working and cultural change.

Despite increased civil penalties and enforcement activity, concern levels remain low and over a third of organisations have made no changes to their processes. This appears driven by limited awareness rather than confidence, indicating a potential compliance risk that may not yet be fully appreciated at senior levels.