Dom Horton – Associate Director, Private Equity & M&A

The Employment Shake-Up PE Investors Can’t Afford to Ignore

The Employment Rights Act 2025 is now law. The EU Pay Transparency Directive lands in June. Here’s every date your portfolio companies need in the diary – and why your insurance DD should already be covering this.

Are your portfolio businesses ready for the most significant overhaul of employment law in a generation?

The Employment Rights Act 2025 received Royal Assent in December and is now rolling out in phases across 2026 and 2027. And that’s not the only thing on the horizon — the EU Pay Transparency Directive must be transposed into member state law by 7th June 2026, and its ripple effects are already reaching UK boardrooms.

There are plenty of experts prepared to tell your portcos what to do. Most of them are looking to sell expensive advisory retainers.

We take a different view.

At Vista, we understand that following every rule to the letter isn’t always possible. No matter how many systems and procedures you’re expected to embed, sometimes the hard choice is the right choice.

During insurance due diligence we always include an assessment of your investee’s employment practice risk, whilst providing a solution that protects their bottom line giving them the freedom to act decisively when the situation demands it.

Timeline to Toe the Line

IMPORTANT DATES PE INVESTORS AND PORTFOLIO COMPANIES NEED TO KNOW

April 2026

START OF TAX YEAR 2026/27

Protective award for collective redundancy failures doubles (90 days → 180 days)

Day one rights to paternity leave and unpaid parental leave

Sexual harassment reporting becomes a protected whistleblowing disclosure

Fair Work Agency established (7th April) - single enforcement body for employment rights

Statutory Sick Pay reformed: lower earnings limit removed, payable from day one of absence

Trade union recognition process simplified; electronic and workplace balloting introduced

Gender pay gap and menopause action plans introduced on a voluntary basis

7th June 2026

EU PAY TRANSPARENCY DIRECTIVE – TRANSPOSITION DEADLINE

Salary range disclosure required for all roles advertised across EU member states

Employers banned from asking about candidates’ pay history

New gender pay gap reporting obligations for employers with 100+ workers in the EU

This isn’t just about putting salary bands on job adverts. The Directive demands a new level of transparency around how jobs are valued, how pay is set, and how pay progresses. For many organisations, that means rethinking the foundations of compensation and talent management. While it doesn’t directly apply to UK-only employers, many with EU operations are choosing to treat their UK workforce no differently and those who don’t, risk falling behind in the talent market.

October 2026

AUTUMN BUDGET WINDOW

Strengthened tipping laws

Employer duty to take ‘all reasonable steps’ to prevent sexual harassment (detailed regulations to follow in 2027)

Employer duty to inform workers of their trade union rights

Time limit to bring an employment tribunal claim extended to 6 months

January 2027

MAJOR RIGHTS EXPANSION

Unfair dismissal protection after just 6 months’ service (down from 2 years)

Fire-and-rehire becomes automatically unfair dismissal

2027

FURTHER MEASURES THROUGH THE YEAR

Mandatory gender pay gap and menopause action plans for larger employers

New protections for pregnant workers

Flexible working rights strengthened

Bereavement leave expanded

Restrictions on zero-hours contracts; obligations around shift notice and cancellation

Umbrella company regulation

A note for deal teams: Employment tail risk is routinely overlooked by advisers — both on acquisition and on exit. Ensuring this is properly examined alongside D&O run-off can make the difference between a clean deal and an expensive surprise. We offer both as part of our standard insurance DD scope.

What Vista Does Differently

We include employment practice risk as standard in every insurance due diligence engagement – assessing exposure, quantifying the downside, and structuring cover that gives your investees room to make tough decisions without betting the balance sheet.

Independent of insurers. Contingent fee. 5–7 day turnaround. Over 100 transactions a year.

If you’d like to talk through how this applies to a live deal or your portfolio more broadly, drop me a message or book a quick call.

Deal Risk Radar | Employment Law Special