UK Employers Face Sweeping Changes to Workplace Investigations and Conduct Rules

A wave of new legislation and regulatory expectations is reshaping how UK businesses must handle internal investigations, employee conduct, and workplace culture. From proactive harassment prevention duties to expanded fraud liability and landmark accountability laws, employers face mounting pressure to get their processes right — or risk significant financial and reputational damage.

New Duties to Prevent Harassment

The Employment Rights Act 2025 has introduced a proactive requirement for employers to take all reasonable steps to prevent sexual harassment in the workplace. This duty extends beyond protecting staff from colleagues to include safeguards against harassment by third parties such as clients or customers.

Legal experts at Squire Patton Boggs recommend that organisations conduct comprehensive culture reviews to identify and address potential issues before they escalate into formal disputes. The shift places the burden of preventative action squarely on employers, rather than waiting for complaints to arise.

Regulatory scrutiny extends beyond conduct to physical workplace safety. Missing risk assessments can leave firms exposed to HSE enforcement. A free toolkit provides 41 ready-to-use templates covering fire safety, manual handling, lone working and more — helping you demonstrate proactive compliance. Download the free Risk Assessment Toolkit

From September 2026, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) will add further pressure, particularly for financial services firms. New regulatory expectations on non-financial misconduct will require robust investigative procedures and transparent corporate cultures.

Hillsborough Law Returns to Parliament

The Public Office (Accountability) Bill — commonly known as the Hillsborough Law — returned to the House of Commons on Tuesday, July 14, 2026. The legislation seeks to establish a statutory duty of candour for public officials, requiring them to act openly and honestly during investigations.

Current parliamentary discussions involve amendments to ensure intelligence services can participate without compromising national security. The bill is expected to clear its remaining Commons stages this week before proceeding to the House of Lords.

The push for accountability comes as the UK prepares for a leadership transition, with Andy Burnham set to become Prime Minister on July 20, 2026, following 322 nominations. Campaigners have urged the incoming administration to pass the bill without significant exemptions.

Tribunal Awards Highlight Cost of Poor Procedures

Recent employment tribunal outcomes demonstrate the financial risks of failing to follow fair investigation and dismissal processes.

In a notable case, former Nuffield Health employee Beth Littlewood was awarded £149,000 in compensation after the tribunal found unfair dismissal, unauthorised wage deductions, and "contemptuous treatment." Evidence showed she was required to travel 800 miles for a meeting that her manager ultimately did not attend. Nuffield Health has indicated it will appeal the decision.

In Scotland, the government admitted to an unlawful investigation into sexual harassment claims against Alex Salmond. A court ruled the investigation was tainted by apparent bias because the investigating officer had prior contact with the complainants.

Meanwhile, a seven-year legal battle involving the Church of England concluded with a confidential settlement for Reverend Bernard Randall. He was dismissed from Trent College over a sermon regarding LGBT ideology, but safeguarding concerns against him were later overturned, with no ongoing issues found.

Expanded Powers for Fraud and Tax Compliance

The tightening of workplace and business regulations extends to new enforcement powers and oversight regimes:

• Critical Third Parties: The UK's Critical Third Parties regime goes live on Monday, July 13, 2026. Major technology providers including Amazon Web Services, Google Cloud, Microsoft, and Oracle have been designated as the first entities subject to direct oversight by the Bank of England, the PRA, and the FCA to ensure the resilience of systemic services.

• Tax Compliance and Fraud: HM Revenue and Customs (HMRC) has expanded its powers to combat Construction Industry Scheme (CIS) fraud. A new "should have known" test makes businesses and directors liable for supply chain fraud, with potential penalties including a five-year loss of gross payment status and fines of up to 30%. HMRC reported that its use of AI and big data helped recover £10 billion in extra tax over the last year, and the agency plans to add 5,500 compliance officers by the end of the decade.

The same proactive approach to compliance should apply to health and safety law. A free toolkit helps you meet your duties under the Health & Safety at Work Act 1974 with training tools, risk assessments and checklists — all designed for UK businesses. Get the free Health & Safety at Work Act 1974 Toolkit

• Worker Rights Reforms: Employment Minister Kate Dearden has defended the government's broader reform agenda, which includes enhanced sick pay, stricter regulations on zero-hours contracts, and potential equalisation of youth minimum wage rates. The government has also commissioned a study to evaluate the impact of artificial intelligence on the workforce.

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