Work/Life - international employment news update

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Issue 125

Welcome to the latest edition of our international employment news update.

In this edition we look at:

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UK government slashes business cost estimate of worker reforms by 80%

The UK Government has dramatically revised down its impact assessment of the Employment Rights Act, cutting the estimated annual business cost from £5 billion to £1 billion. The flagship legislation, which received Royal Assent last month following protracted House of Lords negotiations, introduces sweeping reforms to zero-hour contracts, fire-and-rehire practices, paternity leave, statutory sick pay, and unfair dismissal compensation and qualifying periods.

Ministers attribute the reduced estimate to phased implementation and refined evidence gathering: critics argue that the figure reflects significant government concessions during parliamentary passage. Opposition MPs have repeatedly cited the £5 billion projection as proof that the reforms would harm British enterprise.

The £1 billion estimate primarily captures administrative costs rather than long-term business model impacts, which are difficult to quantify. The government describes the anticipated cost as a 'modest increase' against a backdrop of the UK's total employment costs of £1.4 trillion.

UK tribunals brace for surge as Employment Rights Act takes effect

The Employment Rights Act will pile thousands of additional cases onto an already overstretched tribunal system, according to newly published government analysis. The new legislation cuts the qualifying period for unfair dismissal claims from two years to six months and removes the cap on compensation entirely.

These reforms are projected to generate 21,000 extra early conciliation notifications to Acas, 6,900 more employment tribunal cases, and 1,300 additional cases requiring judicial time annually, all of which represents a 17% overall increase. The anticipated surge arrives at a critical moment. The tribunal backlog has reached unprecedented levels, with 52,000 open cases as at Q3 2025, a 33% year-on-year increase surpassing the previous 2020/2021 peak. Many cases take over a year to come to hearing.

US job market slumps to weakest performance since Covid pandemic

The US labour market ended 2025 on a subdued note, with employers adding just 50,000 jobs in December, significantly undershooting economist expectations and marking the weakest performance since the Covid-19 pandemic.

The December figure caps a challenging year for US job creation, with employers adding an average of 49,000 roles monthly throughout 2025, down sharply from 168,000 per month in 2024. However, the unemployment rate unexpectedly fell to 4.4%, reflecting a structural labour shortage as the American workforce shrinks alongside cooling recruitment.

The slowdown unfolds against President Trump's significant policy shifts, including tariffs, immigration restrictions, and government spending cuts. Experts have suggested that the market has entered a "low-hire, low-fire" equilibrium that may shape the economic landscape for 2026.

Czech Republic enhances unemployment benefits

The Czech Republic has introduced significant improvements to its unemployment benefit scheme, increasing initial support levels to 80% of previous earnings and extending eligibility periods based on a claimant's age. Workers under 52 will now receive benefits for up to five months, whilst those aged 52-57 qualify for eight months of support. Claimants over the age of 57 can access benefits for up to 11 months. The reforms also enhance support for individuals undertaking retraining programmes, raising their benefits to 80% of the national average wage.

Authorities have abolished reduced benefit rates previously applied to workers who voluntary left employment. Under the new system, benefit entitlement depends solely on age rather than the circumstances surrounding job departure. These changes represent a substantial expansion of the Czech social safety net, providing enhanced financial security for job seekers whilst encouraging workforce retraining and skills development

UK government consults on non-compete clause reforms

With all eyes on the passing of the Employment Rights Act at the close of 2025, the government has quietly published of a working paper proposing significant reforms to non-compete clauses in employment contracts. Framed as measures to boost labour market dynamism and innovation, the proposals could fundamentally reshape the balance between competitive protection and employee mobility.

Non-competes currently affect approximately five million workers in the UK. Whilst they must protect legitimate business interests and extend no further than is reasonably necessary to be enforceable, the government argues that they may unnecessarily restrict worker movement and stifle entrepreneurship.

The consultation therefore explores five alternative models, including a statutory duration cap of three months, varying the cap by company size, banning non-competes entirely, prohibiting them below a salary threshold of £125,140, or combining salary thresholds with duration limits.

The consultation is open for responses until 18 February 2026.

Czech Republic strengthens work-life balance rights for parents

The Czech Republic has amended its Labour Code to enhance work-life balance protections, making it easier for parents of young children to combine employment with caring responsibilities and return earlier from parental leave. The reforms strengthen employees' rights to request flexible working arrangements, reduced hours, and remote working options, whilst also bolstering protections for workers with caring responsibilities more broadly.

The changes leave existing maternity, paternity and parental leave entitlements unchanged, focusing instead on facilitating smoother transitions between work and family life. The reforms reflect the growing recognition across European jurisdictions that supporting working parents benefits labour market participation whilst also helping employers to retain experienced staff.

NHS Trust to pay £450,000 to director following flawed disciplinary process

An employment tribunal has awarded £450,000 to a senior NHS director after finding he was unfairly dismissed and subject to race discrimination following a fundamentally flawed disciplinary process. In its judgment, the tribunal criticised the Trust's investigation for failing to interview key witnesses, relying heavily on historic allegations, and ignoring extensive contradictory documentary evidence.

Employment advisers have emphasised that common employer failings include delayed responses, investigatory bias, inadequate documentation, and taking actions beyond investigation report recommendations. This case underscores the importance of prompt and impartial investigations, independent oversight, regular training, and robust disciplinary policies.