Insights and Analysis

Employment in the news | June 2026

17 June 2026

Insights and Analysis

Employment in the news | June 2026

Chapter
Chapter 1
Unfair dismissal – changes from 1 January 2027 Check this option
Chapter 2
Consultation on guaranteed hours offers Check this option
Chapter 3
Consultation on employment rights for unpaid carers Check this option
Chapter 4
Think before you speak – discretionary bonuses Check this option

The normal pre-summer flurry of activity started early this year. Unfair dismissal changes will take effect in January 2027 as expected. The government launched consultations on guaranteed hours for zero and low-hour workers and employment rights for unpaid carers. A decision on discretionary bonus entitlements reminds employers about the risks of changing the goalposts on incentive pay.

Chapter 1 Unfair dismissal – changes from 1 January 2027

The reduction in the unfair dismissal qualifying period and the removal of the compensation cap will apply to dismissals with an effective date of termination falling on or after 1 January 2027.

From that date, any employee with six months’ service will be able to bring an unfair dismissal claim and in principle recover their full financial loss in a successful claim. Tribunals can still reduce compensation to reflect contributory fault, an employee’s failure to mitigate their loss, or the chance that a dismissal would have happened anyway.

You can hear more about the changes and what they mean for employers here.

Next steps

Review probationary periods and processes to reflect the shorter qualifying period.
Ensure that dismissal procedures are fair and consistent and that managers understand how to operate them properly to mitigate the risk of uncapped compensation awards.

Chapter 2 Consultation on guaranteed hours offers

The government’s “Ending one-sided flexibility” consultation gives the first indication of how widely the new right to guaranteed hours may operate in practice. Under the Employment Rights Act 2025, employers must offer qualifying zero or low-hour workers a guaranteed hours contract reflecting the hours they have worked over a reference period. Regulations will contain the detail.

Key questions in the consultation relate to when workers will be outside the scope of the new right, for example because they are already guaranteed a threshold number of hours, the length of the reference periods for calculating hours, and how regularly individuals must work to qualify for an offer.

You can read our more detailed analysis of the proposals here.

Next steps

The consultation closes on 25 August 2026.
Responding to the consultation may help employers who use zero-hour or low-hour workers influence government thinking on the scope of the new right.

Chapter 3 Consultation on employment rights for unpaid carers

As part of its review of the rights of carers, the government has launched a consultation on whether these remain fit for purpose, and what more the government could do to support unpaid carers and parents of seriously ill children. The consultation seeks views on a range of approaches that might help carers remain and progress in work, including:

Increasing the amount of unpaid carer’s leave;
Introducing a right to an element of paid carer’s leave; or
Giving employees who need extended time off work to care for a dependant a right to return to work.

The government also asks for views on whether parents of a seriously ill child should be entitled to an additional period of paid time off, suggesting a period of between one and 12 weeks.

There are no firm policy decisions yet. Any reforms would need to be affordable, proportionate and represent value for money for taxpayers.

You can read our more detailed analysis here.

Next steps

The consultation closes on 1 September 2026.
Responses will help the government understand which approaches would be most effective in helping carers remain and progress in work.

Chapter 4 Think before you speak – discretionary bonuses

The EAT upheld an unlawful deduction from wages claim when an employer reduced a bonus award after telling the employee the terms of the scheme and exercising its discretion over the relevant amount.

In Chandrashekarappa v Wipro Ltd, the employer announced a variable pay plan in March under which employees could receive a bonus of up to 1% of new client revenues, subject to sector lead approval. The employee’s line manager recommended him for a 1% bonus on a contract, which the sector lead approved. In July, the manager told the employee that the sector lead had approved the bonus. The final amount would depend on the contract’s annual revenue figures.

Two weeks later, a more senior manager said that bonuses were subject to a $150,000 cap, in line with other incentive plans. The employer told the employee in December that his bonus would be $150,000. Without the cap, the award would have been £516,082. He claimed that the difference was an unauthorised deduction from wages.

The EAT overturned the employment tribunal’s decision that the right to a bonus only crystallised when the company communicated the bonus amount in December. In fact, the company had communicated the terms of the bonus scheme in March and the only condition for payment was sector lead approval. The sector lead approved the bonus, and the employer could not "move the goalposts" by later introducing conditions that were not part of the original scheme.

Next steps

The decision highlights the risk of breach of contract and unauthorised deduction claims if an employer seeks to impose additional conditions or caps on awards retrospectively.
Employers should record and communicate all relevant conditions, caps, and approval requirements for incentive schemes at the outset.

Authored by Ed Bowyer, Stefan Martin, and Jo Broadbent.