Federal funding could help employers prepare for disruption in the labor market, but the money is often difficult to access, Assistant Labor Secretary Henry Mack told SHRM26 attendees.

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Tuesday 14 July 2026, 11:00am BST

With the new unfair dismissal protections coming into force in January 2027, HR and reward professionals need to understand how the risk landscape has changed.

Qualifying periods for ordinary unfair dismissal protection drop from two years to just six months, but the statutory cap on unfair dismissal compensatory awards will be abolished entirely.

The cushion of a two-year window to resolve underperformance or a cultural mismatch has gone. But the predictability of an employment tribunal exit will also vanish.

This Personnel Today webinar, in association with Employee Benefits Live, provides practical insights into what these changes mean for your business.

Rob Moss and Debbie Lovewell-Tuck, editors of Personnel Today and Employee Benefits, are joined by Sonya O’Reilly and Olivia Toulson, partners at Birketts law firm, to examine how employers should prepare for the new regime.

Register now to learn:

• About the practical realities of the shorter qualifying period and what it means for probationary periods
• How tribunals will calculate compensation
• What it means for high earners and senior executives’ salaries, discretionary bonuses, pension contributions and incentive plans
• How contracts need to change to accommodate the new rules
• About the actions HR must take to avoid compliance failures.

This 60-minute webinar features a presentation and panel discussion with an audience Q&A.

Reserve your place on the webinar now

About our panellists

Sonya O’Reilly is an employment law partner at Birketts in Ipswich. She has more than 24 years’ experience advising employers and senior executives on contentious and non-contentious employment issues arising out of the employment relationship. Sonya regularly advises on difficult staff grievances and the mediations and employment tribunal claims that can ensue, and has particular expertise in senior executive settlement agreements, large and small-scale redundancy situations, TUPE transfers, and changes to terms and conditions.

Olivia Toulson is a partner in Birketts’ employment team, based in Cambridge. She predominantly acts for clients in the financial services, technology and independent healthcare sectors. Olivia has considerable experience handling employment tribunal litigation for employers, having worked on many complex, multi-day claims involving unfair dismissal, discrimination, whistleblowing, breach of contract and unlawful deductions from wages.

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Data released by HMRC under the Freedom of Information Act showed that only 90 employee ownership trusts (EOTs) received tax clearance in the first quarter of this year, the lowest figure since Q2 2022, when 79 were authorised.

The fall followed two strong surges in late 2024 and late 2025, when business owners accelerated transactions ahead of expected Budget changes to the EOT regime.

An employee ownership trust is a special form of employee benefit trust introduced by the coalition government in 2014 to encourage wider staff ownership and engagement. The structure has historically offered sellers significant capital gains tax (CGT) advantages with employees able to receive tax-free cash bonuses of up to £3,600 per year.

Price Bailey said that the Budget 2024 reforms – including a four‑year CGT clawback period, tighter rules on trustee funding, and the reduction of CGT relief from 100% to 50% from November 2025 – have fundamentally altered the risk landscape for business owners considering an EOT.

Simon Blake, partner at Price Bailey, said: “The rush to complete deals before the Autumn Budgets created two artificial peaks in late 2024 and late 2025. While Q1 2026 is likely temporary pipeline exhaustion, the new rules mean volumes are unlikely to return to their previous long-term averages unless future Budgets restore some of the earlier advantages.”

“The four‑year CGT clawback can be triggered by events outside the seller’s control. Breaches can arise if the trust stops operating for the benefit of all eligible employees, if rewards disproportionately favour a subset of staff, if former owners regain influence, or if company contributions are used for non‑qualifying purposes.”

Under the revised rules, company contributions to an EOT are now taxable by default, unless they fall within a narrow definition of “qualifying acquisition costs”.

This increases the complexity of funding structures and may encourage some businesses toward alternative ownership models such as management buyouts or employee benefit trusts.

Blake added: “We are still seeing EOT transactions, but sellers who prioritise certainty, control or flexibility may now find that an MBO or hybrid structure is a better fit than a trust‑based model with a four‑year qualification window.”

The firm also noted that the macroeconomic backdrop is weighing on deal activity. Despite interest rates falling to their lowest level in two years, the lagged impact of high borrowing costs and weaker productivity growth continues to depress valuations and cash‑flow projections, both key ingredients for structuring sustainable EOTs.

Blake said: “Mid‑market M&A is showing signs of recovery, but some of that activity is being driven by fears of further tax rises. For certain founders, a clean sale with upfront cash and fewer post‑sale obligations is now more attractive than the deferred, trust‑based EOT model.”

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Staff retention strategies aren’t a top priority right now. That’s what I’m hearing from some employers at the moment, and I do understand where they’re coming from.

Job vacancies have sunk to a five-year low, according to the latest figures from the Office for National Statistics.

As a result, workers are “job-hugging”: resignation rates have fallen to their lowest levels since the pandemic began.

The upshot is that the perceived risk of employees “flying off” in the near future is relatively low.

It also means that employers, whose running costs are rising and who are having to choose between competing priorities, new workers’ rights and the rise of AI, are devoting less time and resources to employee retention strategies.

Flight risk still stands

But putting flight risk prevention on the back burner is a mistake. For one, employers who don’t act now to keep staff content and engaged risk seeing a mass staff exodus as soon as the job market starts to recover.

When this happens, there is unlikely to be enough cash in the coffers to simultaneously cover panic pay rises for every top performer who’s considering fleeing the nest. Prevention is therefore the best medicine.

For another, the same strategies that reduce employee turnover also improve employee engagement and performance. Businesses need to prioritise these policies if they wish staff to not only keep turning up at their desks but also perform well whilst they’re there.

So what should HR teams do now to ground their future flight risks, beyond making sure staff are paid fairly?

Hire right

Preventing turnover starts as early as the hiring process. If new hires don’t share the company’s values, they’re unlikely to stay put for long.

Investing more time into finding the right talent and, crucially, hiring for ‘value fit’ as well as ‘skill fit’ can prevent this from happening.

It will enable employers to build teams of people who share the company’s ethos and are therefore more likely to be content in their roles and stay in them for longer.

Give staff space to grow

A 2025 report from Owl Labs found that a lack of career progression is among employees’ top workplace concerns.

A Gallup study also found that organisations that strategically invest in staff development are twice as likely to retain their employees, compared to those that don’t. Helping staff to grow should therefore be a “must-do” for businesses looking to reduce their future turnover.

Managers should work with staff to set clear goals that align with their career aspirations and company requirements. Progress towards these goals should be discussed regularly during one-to-ones, along with what support is needed to reach them.

This might include targeted training and mentorship, as well as exposure to new projects or tasks that allow employees to practice new skills.

In certain industries, such as retail and hospitality, this might involve putting workers on formal development programmes like a management track.

It could also entail offering a team member a role in a different department, if the position would better serve their career goals and suit the needs of the business.

Train managers

We all know that if you have a good manager, you’re likely to feel happier at work and thus will probably stay in the role for longer. Research also shows that workers who feel well supported by their line manager are over three times more likely to feel engaged.

However, one in five line managers say they received no training before taking on the role, and around the same number say they’ve never been trained to handle tricky workplace situations.

This lack of training could stymie line managers’ ability to support their direct reports, and this has consequences for employee wellbeing and engagement and, crucially, retention.

Employers must close this line management training gap if they wish to unlock the full power of their line managers and create a working environment that staff want to be part of long-term.

Make work sustainable

Two-thirds of UK workers don’t use their full annual leave allowance, and over half of UK employees (57%) work whilst on holiday, according to our research at Breathe HR.

Plus, eight in ten professionals in the UK report working extra hours all or some of the time. These habits are a recipe for disengagement at best and burnout at worst. And employees who feel this way are unlikely to stick around in roles for long.

Employers can prevent this from happening and protect employee wellbeing by actively encouraging staff to switch off outside work hours and use their full annual leave allowance.

Alongside this, managers should also keep an eye on team members’ workloads and ensure they remain manageable, so staff genuinely feel able to clock off at a reasonable time and take leave. The result will be more productive and engaged workers who stay in roles for longer.

Offer staff greater flexibility

More than a million UK workers left jobs last year due to a lack of flexibility, according to research from the CIPD. So employers who wish to up their retention rates should consider how they could offer staff greater flexibility.

This should be in addition to considering workers’ individual requests for flexible working, which employers have a legal responsibility to respond to.

The level and type of flexibility you can offer will ultimately depend on the needs of your organisation. For certain office-based roles, this might involve introducing a formal hybrid working or flexible working hours policy.

For shift-based organisations, this could look like giving staff more choice over their shifts. Workforce management software can help firms do this. Organisations need to find the form of flexibility that suits the needs of both the business and workers alike.

By offering strong opportunities for career progression, greater flexibility, hiring for value fit, cultivating supportive managers, and encouraging sustainable work habits, employers will be able to create working environments where staff feel happy, engaged and want to stay, even after the job market recovers.

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The Independent Office for Police Conduct (IOPC) said that, having reviewed all aspects of the ongoing investigation, the evidence indicates that both officers – who were the first to arrive at the scene late in the evening of 3 December 2025 – may have potentially breached the professional behaviour standards of duties and responsibilities, use of force, and discreditable conduct.

The IOPC said these relate to potential failures to recognise that Nowak needed urgent medical attention, to immediately act after he said he had been stabbed and he couldn’t breathe, and the decision to arrest and handcuff Henry rather than provide immediate first aid.

It added that one of the Hampshire and Isle of Wight Constabulary’s officers may have breached the standard relating to authority, respect and courtesy, for appearing to dismiss the teenager when he said he had been stabbed.

IOPC director of engagement Derrick Campbell said: “We continue to extend our deepest sympathies to Henry’s family and friends.

“Our investigators met with Henry’s family earlier this month, where we were able to discuss our investigation with them in depth, now that criminal proceedings have concluded.

“We are obliged to constantly review the evidence obtained throughout our investigations and assess any indications of potential misconduct for officers involved. As a result, two officers will now face gross misconduct investigations.

“There is clear evidence that public confidence in the force may have been seriously harmed by this incident, and that is a factor we must consider when assessing the evidence.

“The serving of gross misconduct notices does not necessarily mean that disciplinary proceedings will follow. At the end of our investigation, we will decide whether any officers should face disciplinary proceedings.”

The IOPC said it had expanded its investigation following recent discussions with Henry’s family, who have made formal complaints about the force.

Campbell added: “It is also an important part of our role to identify whether any changes are needed to national or force policies or procedures, to improve police practice.”

When bodycam footage of Nowak’s arrest was released after Digwa was sentenced for his murder, politicians criticised a national commitment to racial equity, published a year ago by the National Police Chiefs’ Council (NPCC) and the College of Policing.

The document states: “Producing equality of policing outcomes for people from different ethnic groups by responding to individuals and communities according to their specific needs, circumstances and experiences, with understanding that these will be racialised and with the aim of reducing harm. It does not mean treating everyone ‘the same’ or being ‘colour blind’ (racial equality).”

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Businesses taking on new hires aged 18 to 24, who have been on universal credit and looking for work for six months or more, can apply for the grant.

Employers in England, Scotland and Wales can complete an online application and receive funding in two instalments, once employment and earnings have been verified by the Department for Work and Pensions.

The first payment of £1,800 is made after six weeks, followed by a second payment of £1,200 after 18 weeks, provided grant conditions are met. Up to 60,000 grants are available between now and October 2028. Guidance on the application process is available here.

Yesterday, the prime minister and work and pensions secretary Pat McFadden hosted a roundtable with hospitality businesses supporting the scheme.

Merlin Entertainments, which operates tourist attractions including Alton Towers and Chessington, confirmed its support and committed to create 300 jobs for young people over the next three years as part of the Youth Guarantee scheme.

Work and pensions secretary Pat McFadden said: “The government is backing employers large and small with a £3,000 grant to take a chance on young people who are ready to work and need that first step on the ladder, and subsidised work for those who face more challenges.

“Working with employers, we can turn young people’s lives around and that’s why I’m delighted to see Merlin’s commitment to create 300 roles, and I urge others to join our Youth Guarantee.”

Merlin chief executive Fiona Eastwood said: “We’ve long championed opportunities for young people across our UK attractions, with many starting their careers with Merlin every year – so we know the difference that early opportunity can make.

“Across our sites, young people help bring joy to life for our guests and each other, creating spaces where teamwork, imagination and play thrive. For many, that first role with us is only the beginning of a much longer journey, with colleagues going on to build varied and rewarding careers within Merlin.”

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Making his first major policy speech before, as is widely expected, he becomes prime minister on 20 July, Burnham said: “Where young people need mental health support, it should be provided as part of in-work support.

“And we will answer the call from the mayors, and particularly the mayor of the North East, for devolution of employment support and changing the way we support and sustain people in employment, working much more through our community and voluntary sector at a grassroots level, working with organisations people trust to help them, rather than going to places that they fear.”

The former mayor of Greater Manchester, and new MP for Makerfield, said his government would require “a much greater supply of 45-day work placements and apprenticeships for young people”, adding that he took the findings of Alan Milburn’s recent report on young people and work “very seriously”.

“We need a complete rethink of how we support the next generation to succeed, and it has to start with the education system,” said Burnham.

“The days of a school system configured entirely around the university route will be brought to an end. University is great for those who want it, but when are we going to focus on the life chances of those kids who want something different?

“When the country hasn’t done that for a long, long time, people have argued over many years for an education system based on parity between academic and technical, and that is what we will build, giving every young person growing up here a clear path into a reindustrialised Britain.”

Jude Hillary, co-head of policy and practice at the National Foundation for Educational Research (NFER), said: “It was encouraging to hear Mr Burnham speak so purposefully about these issues. However, achieving this requires sustained investment, strong partnerships between education providers and employers, and a cultural shift towards a genuine and meaningful parity of esteem between technical and vocational routes and academic pathways.”

Rain Newton-Smith, CBI chief executive, said: “Business will welcome Andy Burnham’s clear focus on growth and delivery. Taking the positive, dynamic and collaborative approach that has helped public and private sectors drive growth in Manchester and applying it at UK level would give industry a practical agenda it can get behind.

“Business will welcome the commitments to sound public finances, upholding fiscal rules and maintaining investor confidence. Backing innovation and scale-ups, boosting international trade and tackling youth unemployment by strengthening apprenticeships are practical steps that can help unlock growth.”

She added: “We can’t forget that a change of prime minister does not change the economic realities facing the country. Public spending alone cannot ease the cost-of-living crisis or transform the economy; business must do much of the heavy lifting. If firms are to be the engine of growth, the government must first tackle the cost of doing business, which has already reached a tipping point.”

TUC general secretary Paul Nowak said: “Change is badly needed. Despite the progress made since July 2024, over the last decade and a half, working people have had their pay packets hammered, insecure work has exploded and Tory deindustrialisation has gutted our industrial heartlands.

“Now we need to see an ambitious programme for the first 100 days of government that delivers good, secure jobs, action on energy bills and steps towards a fairer tax system.

“This needs to be a reset moment for British politics. The public wants a government that is bold, willing to fight for them and ready to take on vested interests who have done well from the broken status quo, like bad bosses, the super wealthy and social media and crypto billionaires.”

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Dame Carol, whose recommendations included replacing the sick note with the fit note, was speaking at last week’s health and work ‘summit’ organised by the think-tank The Work Foundation at Lancaster University and the Centre for Organisational Health and Well-being.

At the same event, Sir Charlie Mayfield, author of the Keep Britain Working review, urged a future Andy Burnham-led government to see fixing workplace ill health as “one of the biggest opportunities we have to drive growth”.

Dame Carol, in a question-and-answer session with Work Foundation director Ben Harrison, argued that, while progress had been made, especially in terms of the engagement of employers with health and wellbeing, the problems she identified back in 2008 in her review of work and health were still with us.

“The structural problems have not gone away; the changes that needed to be made to our welfare system even when I did my report are still on the whole with us,” she said.

While successive administrations had attempted reforms both to benefits and workplace provision, our system remained fragmented. “We have fiddled at the edges. It has been a series of stops and starts,” she said.

Intervention when someone goes off sick still does not generally happen quickly enough, she highlighted, and the GP fit note does not work as she envisaged it back in her review. Statutory sick pay was, too often, used by employers as a way to ‘manage’ employees out of the workplace and into the benefits system.

“It is not lack of initiatives, it is not lack of people wanting to do the right thing. I fear it is lack of a determination of our policy-makers; I think they know the problems, but somehow we have not been able to do sustainable change,” she told the summit audience.

“I wanted [the fit note] to be for our general practitioners to be able to have the conversation of what might you be able to do, not what you cannot do, so I am going to sign you off from work. I think I was naïve or perhaps hopeful that we would be able to work with the Royal College of General Practitioners and enable them to find the time and the space,” Dame Carol said.

With fit note reform back on the government agenda, she was asked by the audience what her hope was for this process. “What I hope is that the learning, can it be brought together? So that we can start to have a real programme around what is the best way to keep people in work early or get them back to work,” she said.

Combined with the expected Keep Britain Working healthy standard, employers needed to be able to draw on a “basket” of interventions, she argued, backed by as much evidence as possible. “That you know you can use with confidence and get the right result,” she said.

Finally, with Andy Burnham’s expected arrival in Number 10 next month – who will be the eighth prime minister since the publication of Working for a Healthier Tomorrow – what was her hope for this new administration, she was asked.

“I hope he will appoint a very strong secretary of state in DWP [Department for Work and Pensions] who has got the courage and the vision, and also the resilience, to see that we are not going to be able to get things better in two years; the basic reforms that need to happen,” she replied.

“That they could set out a programme that won’t disadvantage people who are in the benefits system at the moment but will allow us, with confidence, to move forward sensibly so we don’t have so many people out of work,” Dame Carol added.

Separately, the summit saw the Work Foundation publish a report analysing employer views on workplace health.

The Unequal Support report argued that, while health-related exits from work are slowing, practical provision and support still remains limited. Moreover, support is often lowest where health risks are greatest.

It recommended the need to embed prevention and healthy job design as a core employer responsibility. It called for the establishment of local ‘work and health’ hubs for small and medium-sized enterprises.

It argued for the piloting of ‘supported workdays’ that allow workers to remain in work during period of reduced capacity. And it called for government to undertake a consultation on the appetite for a new statutory right to paid time off for medical appointments.

As the report concluded: “Given timely access to healthcare – without requiring employees to use annual leave or absorb income loss – supports earlier intervention and faster recovery.

“Government should consult with employers and employees on the introduction of a new right to paid time-off for medical appointments. A similar entitlement is already available to pregnant employees, recognising its importance to sustaining workforce participation during that period.”

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Nearly 33,000 resident doctors voted in a referendum called by the British Medical Association after it cancelled a nationwide strike at the eleventh hour on 13 June and put the government’s latest offer to its members. Almost 53% of members voted in favour of the offer, on a turnout of 57%.

Dr Jack Fletcher, chair of the BMA’s resident doctors committee, said: “Resident doctors have spoken. They have decided that the current offer is sufficient to continue on the road to pay restoration and sufficient to address the absurd lack of jobs in the NHS. The strikes will now end.

“These strikes did not need to happen. We spent far too long at loggerheads with the Government when a solution in everyone’s interest was waiting for us: more jobs for doctors, better pay for doctors, and a better-staffed NHS secured for patients well into the future. This is what constructive negotiations can achieve. Next time we hope they can be done without a single picket line having to form – all it takes is a Government willing to think ahead and think creatively.”

Dean Royles, interim chief executive of NHS Employers, said: “After such a long-running dispute that has caused so much upset and disruption to patient care, all parties will be pleased that a resolution now seems to have been found and there will be no further strike action.

“As always, following the conclusion of negotiations, the hard work of implementation will now begin. The timescales in the deal are ambitious and NHS Employers are committed to continuing to work with the govenment, NHS trusts and the BMA to work through the complexities of the deal as quickly as possible to help bring stability of services and certainty to patients.”

Sir Ciarán Devane, chief executive of the NHS Alliance, said: “This agreement has been a very long time coming and the vote to accept the latest offer will be greatly welcomed by health leaders.

“The resolution of this dispute is particularly timely as the health service looks to build on progress in reducing waiting lists and improving productivity.

“It has now been almost a year since the government published its 10-Year Health Plan to put the NHS on a more sustainable, long-term footing. We must now focus on moving forward and delivering the reforms needed.”

Health secretary James Murray said the end of the industrial dispute was good news for resident doctors, patients and the NHS as a whole. Resident doctors, formerly known as junior doctors, have walked out 15 times since March 2023 in a long-running dispute over pay restoration, with the union claiming their members had seen salaries fall 35% in real terms since 2008.

The previous health secretary, Wes Streeting, offered a 22% pay increase when Labour came to power, which BMA members accepted in September 2024. However, since then, pay recommendations have not met medics’ expectations, and the dispute widened to cover a shortfall of jobs available in the NHS.

The offer accepted by resident doctors includes:

• 4,500 specialty training places over the next three years to tackle the jobs bottleneck
• All locally employed doctors to be offered the terms and conditions of the standard 2016 resident doctor contract
• In combination with this year’s recommendation of the Review Body on Doctors’ and Dentists’ Remuneration (DDRB), an average 6.6% pay uplift, fully delivered by April 2027, with a further uplift in April 2027 following the next DDRB recommendation.
• This would be achieved by faster nodal point reform and pay uplifts twice a year, contingent on career progression
• Exam, portfolio and membership fees covered
• Guaranteed annual career progression for doctors who work less than full-time and meet their competencies
• Increased pay premia for medical academics.

Fletcher added: “This is by no means the end of the road for pay restoration: even with our progress in the last few years, we are still nearly a fifth behind 2008 levels of pay. It will need determination from government to keep this journey going.

“We are putting the pay review process on notice – if it cannot deliver continued pay improvements, then we risk once again falling back into dispute in future. And without genuine delivery on the jobs front, we will once again see training bottlenecks throttling our careers and with it, further discord.”

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Controlling for factors like pay and benefits, the U.S. Bureau of Labor Statistics found that engagement in the work is key.

Source: www.hrdive.com

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