Zero-hours workers are about to gain enforceable rights – and the consultation window is closing
On 2 June 2026, the UK Department for Business and Trade launched a consultation on implementing provisions of the Employment Rights Act 2025 aimed at ending one-sided flexibility in zero-hours and similar contracts. The proposed reforms would introduce a right to guaranteed hours based on a worker's regular working pattern, require employers to provide reasonable notice of shifts, and mandate compensation for shifts cancelled, curtailed, or moved at short notice. The proposals extend to agency workers. Responses are invited until 25 August 2026.
Many organisations have built their operational model around the flexibility of zero-hours arrangements. The shift to guaranteed hours based on actual working patterns is not a marginal adjustment – it is a structural change to the employment relationship. CEOs who are not engaged with this consultation risk having their workforce model reshaped by a framework that was designed without the specific dynamics of their sector in mind. The deadline for influencing the detail is 25 August 2026.
Holiday pay is about to become a state-enforced obligation – with 200% penalties
On 30 June 2026, the UK Department for Business and Trade launched a consultation on a proposed holiday pay compliance and enforcement framework under the Employment Rights Act 2025. From 2027, the Fair Work Agency would be empowered to investigate and enforce statutory holiday pay rights alongside the existing Employment Tribunal process. Key proposals include a six-year enforcement period for holiday pay claims, civil penalties of up to 200% of arrears owed and £20,000 per affected worker, and targeted enforcement for lower-paid and vulnerable workers. The consultation also seeks views on rolled-up holiday pay arrangements.
Holiday pay has historically been an area of quiet non-compliance across many sectors, particularly those reliant on variable-hours workers. The introduction of state-backed enforcement with penalties set at 200% of arrears changes the risk calculus fundamentally. For CEOs of businesses in hospitality, retail, logistics, and care, the financial exposure from historic underpayment – now enforceable over six years – is a balance sheet risk that needs to be quantified and addressed before the Fair Work Agency opens its doors.
Right-to-work obligations are expanding well beyond direct employees – with penalties up to £60,000
On 30 June 2026, the UK Home Office published a draft Code of Practice on Preventing Illegal Working, reflecting changes introduced by the Border Security, Asylum and Immigration Act 2025 and due to take effect on 1 October 2026. The draft expands right-to-work compliance obligations beyond traditional employees to include worker contracts, individual subcontractors, online matching platforms, and certain subcontracting arrangements. Non-compliance may result in civil penalties of up to £45,000 per illegal worker for a first breach and £60,000 for repeat breaches.
The extension of liability across contractual chains is the detail most businesses are missing. A business that outsources work to a subcontractor – and that subcontractor employs workers without the right to work – may now find itself within scope of a civil penalty. Procurement, HR, and legal teams need to review supplier and contractor engagement practices before 1 October 2026, and due diligence frameworks need to be updated accordingly.
The EU's tax simplification package is more complex than it sounds
On 24 June 2026, the European Commission adopted a tax simplification package comprising a Direct Taxation Omnibus proposal and a recast of the Directive on Administrative Cooperation. The package proposes to simplify EU direct tax rules and reduce compliance burdens across the Single Market. Key measures include simplifying withholding tax procedures for certain cross-border payments, revising interest limitation rules under the Anti-Tax Avoidance Directive, removing overlaps between Controlled Foreign Company rules and Pillar Two requirements, reducing reporting obligations for multinational groups, and introducing a taxpayer identification number verification tool.
"Simplification" does not mean reduced obligation – it means reconfigured obligation. For multinationals operating across EU member states, the interaction between revised CFC rules, Pillar Two requirements, and amended interest limitation rules will require careful modelling. Tax structures that were designed around the current framework may produce different outcomes under the revised one. CEOs and CFOs who are not engaging their tax advisers on the implications of this package now are likely to encounter surprises when it moves closer to adoption.
Mandatory payrolling of benefits in kind is coming – and payroll systems need updating now
On 15 June 2026, HMRC updated its interim guidance and draft legislation on the mandatory payrolling of benefits in kind, introducing a phased real-time reporting approach for Income Tax and Class 1A National Insurance contributions. Phase 1 begins on 6 April 2027, mandating payrolling for company cars, car fuel, vans, van fuel, and employer-provided medical benefits. Phase 2 extends from April 2028 to cover most other benefits in kind, while loans and accommodation remain voluntary. HMRC confirmed that 94 real-time information data fields will be removed and that further guidance will be issued by July 2026.
This is a fundamental change to how employment taxation is administered in the UK. The existing P11D process – familiar to HR and payroll teams across the country – is being replaced. The technology, data collection, and payroll system changes required to implement mandatory payrolling are not trivial. April 2027 for Phase 1 is not a distant deadline, and the lead time to update payroll systems, retrain staff, and communicate changes to employees is substantial. Businesses that have not yet begun their implementation planning are behind schedule.
