HR compliance flies up the agenda in 2026

As you will well know, HR is a broad business function. It ranges from all day-to-day line management to strategic thinking about the direction of business; from matters of remuneration to the very culture of your company.

While some things are “nice to haves” or, for creative business owners, may differentiate you from competitors; there are many aspects of HR that are mandatory. And this is what we are talking about when we say HR compliance. These are things like minimum wage, the Equality Act and so on.

As they are mandatory, they have always been important. So why are we talking about this today?

Well, two issues are converging in 2026 that raise the stakes for SME business owners like you:

• The introduction of the Employment Rights Act, and particularly the Fair Work Agency.
• The proliferation of AI, and the way employees are using it to (whether rightly or wrongly) challenge employers on certain issues.

Let’s explore these two dynamics in a little more detail.

The Fair Work Agency

The Fair Work Agency is all about compliance. Launching in April it amalgamates several former agencies; agencies like HMRC’s National Minimum Wage Enforcement Team. They will have a compliance hit list on matters like sick pay and holiday pay, and substantial powers.

These include comprehensive investigatory powers, like entitlement to enter premises and seize documents and equipment. And the ability to bring employment tribunal claims directly, without the need for one of your employees to raise it themselves.

Moreover, they will have legal backing, the ability to impose fines and make criminal prosecutions where warranted, for things like failing to keep holiday records.

Compliance is your best defence against their powers (as well as being the right thing to do).

AI and employment grievances

We wrote about this a few months ago. There is a trend for employees being much bolder in raising employment grievances. Sometimes direct to you, sometimes to an employment tribunal. The driving force? Their new friend ChatGPT (or other AI software).

While they are, of course, perfectly entitled to raise a grievance if you have done something wrong, part of the trend is that their AI buddy is giving them bad advice. Whether it be applying some employment law from another jurisdiction, relying on outdated information, or just plain hallucinating, it can sound very convincing to them – and if you are not careful, you. Worse still, they are often verbose, meaning you can be drawn into spending a lot of time going through all the bumph, just to understand what they are getting at.

The best defence again? Having the confidence that you are HR compliant. It reduces the chance of them making a formal complaint, but also puts you on the front foot in your response.

What does HR compliance look like?

HR compliance takes some work – don’t worry, we can help. It means tailored employment contracts, well-written policies, staying abreast of employment law changes, good systems and good records. It requires regular reviews of documentation and procedure. 

As well as the defensive reasons outlined above, good HR compliance will leave your business in a better place. It’s one of the hallmarks of a well-run operation. If you would like to get started, and we recommend you do if you feel you are behind, get in touch with us. We can carry out an in-depth audit and provide a report that will guide you on any changes that you need to make.