10:28 pm - February 4, 2026
Political uncertainty and regulatory ambiguity are preventing UK businesses from effective long-term workforce planning, according to a new survey by law firm Lewis Silkin. The study of nearly 700 organisations reveals that close to 80 per cent of employers are unable to plan beyond a year ahead, with economic pressures and legislative changes creating significant challenges for strategic decision-making.
The research, published in February 2026, highlights how shifting regulations and economic conditions are forcing companies into reactive management approaches. According to Lucy Lewis, partner and chair at Lewis Silkin, these economic pressures and political and regulatory changes narrow the planning window, resulting in reactive tactics that sideline transformation programmes and workforce redesign initiatives.
Employment Rights Bill Creates Additional Compliance Burden
One in four UK organisations identified preparing for and adhering to the Employment Rights Bill as a principal challenge. The legislation, which received final approval in December following prolonged debates in the House of Lords, introduces sweeping changes to workers’ protections that will impose additional costs on businesses across the country.
The contentious Bill sparked particular debate regarding ‘day one’ entitlements for employees. As the Act becomes embedded in law, the implications for workforce planning and business operations continue to unfold.
Rising Employment Costs Push Firms Toward Short-Term Strategies
Escalating employment costs have emerged as a key factor driving British firms towards short-term, reactive strategies rather than long-term workforce planning. The uptick in employer national insurance contributions alongside a 4.1 per cent increase in the national living wage has generated considerable recruitment challenges for organisations of all sizes.
According to Tarun Tawakley, partner at Lewis Silkin, businesses should expect cautious hiring, legally anchored policy-setting and a premium on disciplined execution over the next 12 to 24 months. These pressures are particularly acute for smaller businesses facing the cumulative burden of taxation, employer contributions and compliance requirements.
Technology Investment Outpacing Human Capital
The survey reveals that the majority of organisations expect to invest more heavily in technology than people over the coming year. However, this shift brings its own set of challenges, with nearly half of organisations anticipating cultural resistance to technological adoption.
Additionally, concerns about job losses and mistrust of artificial intelligence outputs could hinder the successful implementation of new technologies. These cultural implications represent a significant obstacle for businesses attempting to navigate economic uncertainty while maintaining workforce morale.
Training and Skills Development Under Pressure
Meanwhile, the upskilling challenge is becoming more acute as employment law rights continue to expand and employee awareness of those rights grows. Lisa Farthing, head of worksphere and HR consultancy at Lewis Silkin, noted this places greater importance on effective training, coaching and people management capabilities within organisations.
In contrast to larger enterprises, smaller businesses face particular difficulties in managing these multiple pressures simultaneously. The combination of regulatory compliance, rising costs and cultural change creates a complex environment that limits strategic planning capacity.
As the Employment Rights Bill continues its implementation phase, businesses will need to monitor further regulatory guidance and clarifications that may emerge over the coming months. The full impact of these legislative changes on workforce planning capabilities remains uncertain as organisations adapt to the new regulatory landscape.
