Top 3 HR Financial Risks (2026/27)
The Employment Rights Act 2025 has created exposures that most boards have not yet quantified. Three risks that belong on your corporate risk register now.
Emma-Jayne Perez Chies
Executive HR & Transformation Director | Founder, Optima Prep Lab
The “180-Day” Redundancy Liability
The Risk
Effective 6 April 2026, the maximum “Protective Award” for failing to follow collective redundancy consultation rules doubles from 90 to 180 days’ gross pay per affected employee.
The Exposure
For a business making 100 employees redundant (avg. salary £40k), a procedural error could increase potential liability from £1 million to £2 million overnight.
Board Action
Mandate centralised tracking of all exits. The “Establishment” test has tightened; 20 redundancies anywhere in the UK (not just one site) may now trigger this 180-day risk.
The Removal of the Unfair Dismissal Cap
The Risk
Effective 1 January 2027, the statutory cap on unfair dismissal compensation (previously ~£118,000 or one year’s pay) is abolished.
The Exposure
Awards will now be based on actual financial loss. For senior hires or long-tenured staff who struggle to find equivalent roles, tribunals could award 2, 3, or 5 years of salary, plus pension loss. This brings ordinary unfair dismissal into the same “uncapped” territory as discrimination.
Board Action
Review the “Day 1 to Month 5” performance management process. With the qualifying period also dropping to 6 months, the window to exit underperforming senior staff without uncapped risk is significantly narrower.
Has your board quantified these exposures?
Strategic HR consultancy for boards navigating the Employment Rights Act 2025.
The Fair Work Agency (FWA) Audit Penalty
The Risk
The new Fair Work Agency has the power to issue civil penalties of 200% of the sum due (up to £20,000 per employee) for underpayments of NMW, holiday pay, or Statutory Sick Pay (SSP).
The Exposure
Unlike individual tribunals, the FWA can audit your entire payroll history for the last 6 years. A systemic error in holiday pay for 500 shift workers could result in a multi-million-pound settlement plus a public “Naming and Shaming” by the regulator.
Board Action
Commission a “Pre-emptive Audit” of holiday pay and NMW compliance. Ensure the Fair Work Agency’s new “Right to Inspect” is included in the corporate risk register.
menu_bookReferences & Data Sources
- checkHSE Annual Report 2025/26: 17.1 million days lost to stress; productivity loss estimated at £28bn annually.
- checkDBT Economic Analysis: The Employment Rights Act 2025 is estimated to transfer £1 billion annually from businesses to workers via enhanced rights and benefits.
- checkLow Pay Commission 2026: National Living Wage confirmed at £12.71 (4.1% increase).
- checkFCA PS24/17: Non-financial misconduct (bullying/harassment) now a conduct breach as of September 2026.
Related Articles
Related Reading
- April 2026: The Biggest Employment Law Changes in a Generation — The legislative context behind these financial risks.
- Fire and Rehire: The Cultural Cost — Why legal compliance alone does not protect organisational health.
- HR Consultancy Services — Board-level workforce strategy to quantify and mitigate HR financial exposure.
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