Happy New Year from the employment and pensions team here at AC! 

So, what will employment law bring in 2026? A good deal of consultations and draft regulations courtesy of the Employment Rights Act. But away from that, we want to highlight two key themes we think will be important.  

Theme #1 - AI in HR

Loathe its very mention or love it and all it has done for you in your role, artificial intelligence is here to stay, whether welcomed or not. In HR over the last year, we’ve seen our clients use it in a wide variety of ways. To generate first draft policies and documentation, speed up recruitment and onboarding, generate more interactive and focused training materials and draft investigation reports and paperwork for performance reviews and/or disciplinary meetings.  Without a doubt, it's a time-saving tool for most HR practitioners.

But it’s not without considerable risks. The risk of a data breach is a pressing one if sensitive employee data is shared via an AI tool and runs alongside potential employment law issues. 

How can you effectively use AI in 2026?

• Ensure consent mechanisms, data subject rights and secure data handling practices are embedded within your HR workflows – protect the data!
• Conduct Data Protection Impact Assessments (DPIAs) when introducing any new AI technologies.
• Remember, AI isn’t always right – always check generated material for accuracy and relevance.
• Be aware of algorithmic bias; AI tools can replicate or even amplify existing inequalities – but they do it subtly and often hiding behind seemingly neutral practices.   The discrimination risk is high and so needs to be recognised and guarded against.
• Don’t say hello AI and goodbye trust and confidence – an over-reliance by an employer on AI can undermine a good working relationship.  Automated messages or ones clearly drafted by AI and not a human, are not appropriate in many circumstances e.g. well-being messages, feedback, performance summaries. They can result in staff feeling undervalued and even alienated by a manager who will not take the time to draft them a personal email. 

How can we help you use it effectively use AI in 2026?

• We have supported clients in making AI training part of onboarding for new HR staff and running refresher sessions
• We can help develop transparency policies, so staff are aware where and when AI is being used in the HR function and processes
• We can assist you in the introduction of policies for all AI-generated content, including checklists to assess accuracy and legal compliance
• We can advise on statements for job applicants to ensure transparency and disclosure of when AI has been used in the application processes. 

Theme #2 - Mental health and well-being

The statistics from 2024/2025 of days lost from employees suffering from mental health issues, such as depression and anxiety, are alarmingly high: 22.1 million working days lost. 

The numbers are not in a downward trend and so it is going to be increasingly important in 2026 that all organisations assess how they are addressing the mental health and well-being of staff.  Essentially, there are two strands to this assessment. 

• Strategic - what strategies are in place already to help staff who are suffering with their mental health? Whether that be supporting staff, so they can stay at work or working with absent staff to provide appropriate strategies for them to return to work.
• Operational - what are your absence management processes? Are they effective in encouraging staff back to work when they are well enough or is more work needed?  You may see gaps in procedures or a lack of understanding of the process amongst certain managers.  The latter can be addressed with better training and the former with a policy review. This may be especially important given the changes to SSP from April 2026 (payable from day one without a waiting period). 

How can we help?

• We can assist in updating policies and procedures, ensuring they are up to date with legislative changes and are clear in your organisation’s approach and strategy.
• We can train your managers where necessary in sickness absence issues – see here for more details.