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Unemployment rises as employers anticipate ERA driven slowdown
New research from the CIPD suggests the Employment Rights Act could act as a “handbrake” on hiring, with employers becoming more cautious about recruiting permanent staff amid rising costs and legal risk. According to the CIPD’s Winter 2025/26 Labour Market Outlook, more than a third of employers, 37%, plan to reduce the recruitment of permanent employees as a result of the ERA’s reforms to unfair dismissal, statutory sick pay, zero-hours contracts or trade union rights. Overall hiring intentions are at their lowest level since the first year of the pandemic. The survey of 2,000+ employers notes that 74% expect employment costs to rise, while 55% anticipate an increase in workplace conflict linked to the new legislative framework. The CIPD cautions that, without careful implementation, the ERA could have the unintended consequence of reducing permanent job creation and encouraging greater reliance on temporary workers and contractors. In response, it has called on the government to continue consulting with employers, provide clear communications and guidance ahead of the reforms coming into force and ensure Acas is adequately resourced to help manage disputes and compliance.
This week the Office for National Statistics published its latest Labour Market Overview showing that the unemployment rate for people aged 16 years and over was estimated at 5.2% in October to December 2025, which is above pre-pandemic levels. The unemployment rate for 16 to 24-year-olds was 16.1%, an increase from 14.7% a year before. Yesterday, in the aftermath of refreshed concerns around youth unemployment, the media reported that the government is considering slowing down plans to pay adults of all ages the same minimum wage by removing "discretionary age bands" (the removal of which would result in the minimum wages of 18 to 20-year-olds being increased to match the 21+ national living wage). Whether the government does slowdown this policy will be revealed when it updates its remit to the Low Pay Commission. The LPC makes recommendations for minimum wage increases each year.
First wave of ERA trade union reforms in force
A reminder that the government brought ERA reforms impacting industrial action into force yesterday, 18 February 2026. The first phase of ERA implementation focusses on simplifying industrial action processes and strengthening associated employee protection and you can read more on Outlaw.
EHRC update on meaning “sex” was lawful
The High Court dismissed a judicial review challenge to interim guidance issued following the Supreme Court’s decision in For Women Scotland. (You will recall that case confirmed that the reference to “sex” in the EqA means biological sex.) The request for judicial review concerned an “Interim Update” published by the EHRC in April 2025 and later revised, in which it set out the practical implications of the Supreme Court’s decision. The Good Law Project and three individual claimants brought the judicial review claim. Last Friday, the High Court concluded that the EHRC acted lawfully when it issued the interim guidance under its statutory powers to provide advice and guidance on equality law. The guidance accurately reflected the legal consequences of the Supreme Court’s decision. However, the High Court also emphasised that each set of statutory provisions considered in the Interim Update establishes a minimum standard for the provision of facilities rather than a maximum limit. Therefore, employers must ensure that their arrangements for workplace facilities do not discriminate on the ground of gender reassignment.
TUC reports gender pay gap to persist until 2056
New analysis published by the Trades Union Congress highlights the scale of the UK gender pay gap, estimating that the average woman effectively works 47 days of the year unpaid compared with the average man. The TUC calculates that this means women only begin earning the equivalent of men’s annual pay from mid February. The TUC reports that the gender pay gap currently stands at 12.8%, equating to an average annual difference of £2,548 between men’s and women’s earnings. On current trends, it estimates it could take until 2056 to close the gap entirely. The analysis shows that pay disparities persist across the economy, including in sectors where women make up the majority of the workforce. For example, the pay gap stands at 12.8% in health and social care and 17% in education, while the largest gap appears in finance and insurance, at 27.2%. The TUC also reports that the gap widens with age, reflecting the long term impact of career breaks, part time work and unpaid caring responsibilities which disproportionately affect women. The TUC has welcomed reforms under the ERA, including plans to require large employers to publish action plans alongside gender pay gap reports, but has called for more ambitious and robust measures to drive meaningful change. It argues that improved access to flexible working, childcare and increased access to paid parental leave will be critical to addressing the structural causes of pay inequality. Employers wanting to dig deeper into pay inequalities may be interested in Pinsent Masons’ global Pay Equity Solution which allows us to calculate your pay gaps, assess equal pay risks and develop targeted action plans and associated comms in line with applicable legal frameworks internationally.
Change to UK Entry Rules for Dual British Nationals from 25 February
From 25 February, dual nationals who hold British citizenship alongside another nationality will no longer be able to rely on their non British passport to travel to the UK, even where that nationality currently benefits from visa free entry and requires only Electronic Travel Authorisation. Instead, travellers must present either a valid British passport or a Certificate of Entitlement to the Right of Abode in order to board a flight to the UK. The government has introduced this change for dual nationals with minimal notice. As a result, the change creates a significant risk of travel disruption for individuals who are currently overseas or who plan to travel imminently without the correct documentation. Affected individuals should urgently review their travel plans and confirm that they hold the appropriate documents to avoid airlines refusing boarding. Although individuals can apply for British passports and Certificates of Entitlement from outside the UK, this option often involves higher costs and may create practical difficulties, particularly where travel deadlines are tight or urgent.
This page is updated weekly with News and Views from that week’s employment weekly briefing email. For previous articles, please contact us: Employment Law Plus.
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Employment law horizon watching | Upcoming employment law changes