Archives 2026

The world of work is changing, fast. And look, we know we’re not telling you something you don’t already know; but it’s the reality. If you caught our last rundown of HR trends, you know just how much is changing and how fast. So for business owners and HR professionals, it can be really tricky to keep up. 

As easy as it might feel to continue with the tried and tested methods of running your business, it’s getting to a stage where ignoring upcoming workplace trends is no longer an option. For businesses in 2026, staying ahead of emerging HR trends is a surefire way of moving away from your business surviving, to it thriving. 

We’re cutting through the noise to bring you some of the HR trends that actually matter for 2026. No fluff, just the insights you need to build a resilient, future-ready business. 

Ready to see what’s coming? Let’s dive in.

AI and automation

Starting off strong with Artificial Intelligence (AI) and automation. Over the last couple of years, AI and automation are things you’ve probably heard a lot about. And with Employment Hero’s Work That Works report showing that 44% of employees use AI tools or apps in their job, it’s becoming harder to ignore the fact that AI and automation are no longer futuristic concepts that sit alongside flying cars, instead they’re practical, everyday tools businesses can harness. 

It’s no secret that the rapidly growing workplace trend of AI and automation has caused many people to feel concerned for their jobs. However, to get the most out of these tools, it’s not about replacing people, it’s about empowering them to achieve more. What’s not to like?

But the real magic happens when you strike the perfect balance between automation and human judgement. 

These tools are best when thought of as a sidekick for your team. Let AI handle the tedious, repetitive, time consuming tasks that bog down your employees so they can focus on strategic initiatives, client relationships and innovating. You know, all the things that require a bit of human touch.  

But let’s be real, adopting AI isn’t without its hurdles. It’s easy to become dependent on these tools, which can lead to a decline in critical thinking skills or a loss of that essential human touch. This is something you definitely want to avoid. 

So if you want to stay ahead of the curve in 2026 by utilising AI and automation, while also navigating the challenges successfully, you need a plan: 

• Set clear guidelines: Define how and when AI should be used.
• Prioritise ethics: Establish protocols to ensure fairness, transparency and accountability.
• Invest in training: Equip your team with the skills to work alongside AI effectively, not just depend on it.

By tackling these challenges head-on, you can harness the power of automation to not only streamline operations but also to build a more dynamic, forward-thinking and human-centric workplace.

Upskilling through micro-learning

Off the back of the AI and automation workplace trend, we will be seeing a shift in not only how people work, but what they do. For many businesses, the most valuable employees will be the ones who can adapt, learn and grow alongside technology. 

So instead of losing your best people to change, upskill them through micro-learning. Business owners and HR professionals should think of micro-learning as their secret weapon in a world moving at AI speed. Instead of long, drawn-out courses, employees get bite-sized, focused lessons that fit into the flow of work, where and when they need it most… handy, right? 

With micro-learning, you’re equipping your people to adapt, stay ahead of AI-driven change and keep pushing your business forward, without missing a beat. 

Here’s how you can champion your team and get ahead of the curve:

• Make learning bite-sized: Break down complex topics into quick, focused modules your team can complete in moments—not hours. Replace marathon training sessions with five-minute videos, interactive quizzes or simple checklists tailored to your day-to-day business challenges.
• Meet people where they are: Use mobile apps and on-the-go platforms to put learning in your team’s pocket. Whether they’re on a break or heading between jobs, they can access training when it suits them—no more waiting for a scheduled session.
• Keep skills relevant: Regularly update your micro-learning content to reflect current skills needs, trends, or changes in your industry. Focus on high-impact areas like problem solving, creative thinking and communication that help your team stay ahead of tech shifts.

By empowering your team with the skills of tomorrow, you’re not just preparing for the future—you’re building it. You’re creating a resilient, capable, and loyal workforce that will be your greatest asset in the AI era.

Psychological safety and trust

Let’s get really honest for a moment; trust is the glue that holds any successful business together. Without it, you might have people working for your business, but you don’t have a team. As we move into 2026, an important HR trend we will be seeing more of is building a culture of psychological safety. 

But before we dissect what this actually means for your business, it’s important to make sure everyone is on the same page about what psychological safety at work actually is. 

In its simplest form, psychological safety means your team feels safe to speak up, make mistakes and bring their whole selves to work, knowing they’ll be supported. It’s about creating a space where “I don’t know” is an acceptable answer and “I made a mistake” is the start of a learning opportunity. It’s essential for open communication, learning and high performance. These are all good things for businesses, right?

We get it, you’re probably thinking that this is how every business wants their team to feel. But for many companies, psychological safety isn’t just something that happens, it’s intentionally improved by business owners and HR professionals. So for SMEs with a million things on their to-do list, it might sound like another heavy lift, or perhaps something to focus on later down the line.

But here is the reality; you can’t afford a silent workforce. Innovation dies in silence. And improving psychological safety in your organisation isn’t as time consuming as you might think. Here is how you can rebuild trust and foster genuine safety in 2026:

• Normalise vulnerability: Leaders need to go first. Admit when you are wrong. Share your challenges. When you show you’re human, you give your team permission to be human too.
• Radical transparency: Be open about company decisions, even the tough ones. Uncertainty breeds anxiety; clarity builds trust.
• Listen to understand, not to respond: Create meaningful feedback loops where employees feel heard, valued and understood.

Lifting the conversation around trust doesn’t just make people feel better, it makes them work better. When your employees know they are safe and valued, they stop looking over their shoulders and worrying about making mistakes. Instead they begin to look forward and come to you with new ideas which could drive your business towards success. 

Your people feel safer and your business is innovating. It’s a win-win. 

Recognition culture

Let’s talk about one of the most overlooked, yet powerful, tools in your arsenal; saying “thank you.” It sounds almost too simple, but when everyone is busy hitting targets, it’s often the first thing to fall by the wayside. And we have proof of this, the Work That Works report found that half of all employees don’t feel recognised enough in their jobs. But it has a huge impact on performance with the report showing that when employees feel their work is recognised, they are 33% more likely to go ‘over and above’ what is expected. On top of this, businesses who rate themselves well for employee recognition are 40% less likely to have retention problems.

So as we look to 2026, recognition culture should be front of mind. But don’t panic, this doesn’t have to be expensive. It’s just about acknowledging the daily wins and the hard work that moves your business forward.

The data we mentioned above doesn’t lie, when your people feel seen and valued, something shifts. Morale goes up, collaboration improves and people stick around. For you, this means a more stable, motivated team that requires less hand-holding and delivers better results. It’s the cheapest, fastest way to boost your bottom line. What could be better?

Here’s how to start without overcomplicating recognition:

• Make it public and peer-to-peer: Create a dedicated method for recognition, such as a Slack channel, a section in your team meeting or a board in the breakroom, for employees to give each other shoutouts. Recognition from peers often means more than from the top down.
• Equip your managers: Your managers are on the front line. Train them to give specific, timely and genuine feedback. Ditch the annual review as your only feedback point and encourage them to catch people doing things right…right now.
• Keep it simple: Recognition doesn’t have to be complicated or monetary. A LinkedIn recommendation, shout out in a meeting, or even an extra hour off on a Friday can have a huge impact. The goal is to show you’re paying attention.

Recognition costs little, but delivers a huge impact. It turns your workplace into somewhere people want to be and proves their effort matters…and in doing so, makes your business stronger from the inside out.

Employee driven culture

As a business owner or HR professional, you know better than anyone that your employees are your company’s biggest asset. For too long, teams were treated as replaceable. But if you want to attract and retrain top talent, it’s time for a shift. 

But what’s the best way of doing this? Through creating an employee driven culture. This might sound daunting for business owners, but focusing on employee engagement and an employee driven culture  is going to change your business for the better. 

This shift is full of opportunity for business owners who are ready to harness it. When employees are empowered to share their ideas, drive improvements and advocate for what matters, your business gets better—smarter, faster and stronger. 

But when it comes to this workplace trend, how can you harness the opportunity to supercharge your business as a whole? It starts with changing your mindset from feeling intimidated by it, to being excited about it. By working with, not against, your employees’ passion and ideas, you unlock new energy and innovation across your business. 

Here’s how you can turn this momentum into real growth for your business:

• Democratise communication: Move beyond the suggestion box. Create open forums where feedback is actually addressed, not just acknowledged.
• Prove your equity: Be transparent about pay, promotion pathways and decision-making. Trust is the currency of 2026, and you earn it by showing your work.
• Walk the walk: If your team flags a values misalignment, take it seriously. Authenticity matters more than PR statements.

When you empower your people to help shape your culture, you transform your workforce into champions for your business. Suddenly, you’re not just leading a team, you’re rallying passionate advocates who will drive your company forward. 

Empowering your team in 2026

The world of work is moving at lightning speed and there are lots of HR trends to keep on your radar. However, there’s one thing that connects all of the workplace trends we’ve discussed; the future is built by people, for people. 

From harnessing AI and automation to navigating the return-to-office debate, the common thread is putting your team at the center of your strategy. The rise of employee-driven culture, the demand for psychological safety and the need for genuine values alignment aren’t just passing fads—they are fundamental shifts in how great businesses are built.

For you, as a business owner or HR professional, this should be seen as the ultimate opportunity. By embracing these changes, you can stop reacting and start leading. It’s your chance to build a magnetic culture where people are empowered to do their best work, driving innovation and growth. 

Looking for support navigating employment in 2026?

London, 11 August 2025 – The traditional summer hiring surge is much slower this year than previous years, according to Employment Hero’s latest Jobs Report, which analyses employment and wage data for 105,000 workers at UK small businesses. 

The report shows that UK employment grew by 2.7% year-on-year in July, a sharp decrease from the 8.3% growth seen in the same period in 2024. This slowdown signals a cooling of the summer job market as businesses grapple with higher labour costs.

Despite slower job growth, wages continue to rise. Salaries increased by 2.7% year-on-year in July, a noticeable jump from the 0.7% growth recorded in July 2024. This increase in pay comes as employers contend with inflationary pressures which is leading to higher wage offers to attract and retain workers.

Gen Z sees the biggest wage jump

Wage growth is particularly pronounced among younger workers, with Gen Z (aged 18-27) seeing the largest increase. Gen Z wages grew by 5.6% year-on-year in July, the highest of any age group. This surge is likely attributed to National Minimum Wage increases, which have impacted younger workers more significantly.

While higher wages are beneficial, they also pose challenges. The data suggests a shift in the labour market, as companies face difficulty balancing the need to attract talent with the rising cost of wages.

For jobseekers, particularly Gen Z, this means higher pay but potentially fewer opportunities compared to previous summers.

Commenting, Kevin Fitzgerald, UK Managing Director at Employment Hero, said:

“This summer slowdown highlights the growing challenges small businesses face. While wage growth is encouraging, especially for younger workers, the slowdown in job growth shows the pressure employers are under from rising costs. Higher wages may help attract talent, but they also limit businesses’ ability to hire more staff. We’re at a critical juncture. To sustain positive growth, we need to make hiring easier for small businesses and avoid policies that could prompt reactionary measures. But with another Autumn Budget looming, is this the calm before the storm? Only time will tell.”

You might think holiday entitlement would be straightforward.

An employee gets a certain amount of days and they take those days, but what about when an employee works irregular hours?

 Or, an employee is leaving the company partway through a holiday?

Holiday entitlement calculation has a lot of nuance and complexity. It’s possibly one of the more complicated parts of payroll or human resources.

Believe it or not, a lot of companies unintentionally get holiday entitlement calculations wrong.

In this article, we include a holiday entitlement calculator, so you can calculate how much time off your employee is entitled to.

We also include an option to calculate holiday pay final payments for when an employee leaves.

We run through the formula for calculating holiday entitlement and walk you through examples of different employee scenarios.

This will help you to have a better understanding of holiday entitlement to know when a calculation might be wrong.

Here’s what we’ll cover:

Holiday Entitlement Calculator

The calculator has two parts:

Holiday entitlement calculator to calculate the statutory leave entitlement for an employee.

Holiday pay calculator will calculate how much payment in lieu of notice is to be paid if an employee is leaving.

Information you will need to complete the calculators includes:

• Number of days of holiday entitlement, excluding public holidays.
• Days in the work week
• Days per week worked by this employee
• If your employee is part time, the number of hours worked per day
• Number of days per working week (this is usually five working days per week for full-time roles)
• The holiday year start and end dates, which are usually 1 January to 31 December

Note: The calculator doesn’t include a provision for overtime and is to be used as a guide only.

What is the statutory holiday entitlement in the UK?

In the UK, employees are entitled to 5.6 weeks’ paid annual leave, which may include public and bank holidays depending on the employment contract.

Known as statutory leave entitlement, it means workers are financially protected when they take annual leave.

For full-time workers who work a 5-day week, this is a minimum of 28 days per year.

As a note, holiday entitlement is limited to 28 days.

Therefore, staff working a 6-day week are still only entitled to 28 days per year.

This protection sits within the Working Time Regulations 1998 (WTR), introduced in 1998. The entitlement was originally set at four weeks (20 days for a five‑day week), increasing in 2007 and again in 2009.

This increased to 24 days in 2007 and to 28 days in 2009.

Although there is a minimum requirement, employers can choose to offer a package that includes more holiday entitlement, but they cannot offer less than the minimum.

Large companies will often use a generous holiday policy as part of a package to tempt top talent. However, unlimited holiday policies might not cover full salary beyond the basic 28 days.

Does holiday entitlement include public and bank holidays?

Whether an employee gets paid for public holidays as part of their statutory leave entitlement, an enhanced allowance, or at all, depends on the employer’s policy and their employment contracts.

Annual leave in addition to bank and public holidays

For example, some contracts state, “in addition to bank and public holidays, annual leave entitlement is 20 days”, which means that bank holidays are paid for, and are included in the 28 days of holiday entitlement.

Annual leave inclusive of bank and public holidays

Sometimes, employers can enforce that their employees take holiday entitlement on public holidays if:

• The public holiday falls on a day they would normally work
• The office shuts down on the day.

However, these conditions must clearly be outlined in the employment contract, or the employee must be given adequate notice in advance.

Typically, these contracts outline annual leave entitlement using the wording “inclusive of bank and public holidays”. 

On the other hand, an employee may ask to work on the public holiday, they don’t have a legal right to work on a public holiday, so it’s up to you as their employer to either accept or refuse the request.

It’s important to note that the employee is not automatically entitled to extra pay or a day off in lieu of working on a bank holiday, unless this is agreed in the employment contract or by custom. However, all statutory annual leave must be paid.

Holiday entitlement leave year

The annual leave year is usually aligned with the calendar year from 1 January to 31 December.

Although, some companies might use an alternative start date such as the start of their financial year.

As an employer, you must tell your staff the dates of this statutory leave year when they start working with you.

When someone joins your company partway through the leave year, this will need to be factored into their holiday entitlement.

For example, if they start on 10 June and the usual annual leave start/end date is January to December, their holiday entitlement will be calculated on a pro-rata basis from 10 June onwards.

There is an option to create a new holiday year, but this is uncommon.

For example, if a new employee starts on 13 June, the start date for their annual leave year will be 13 June and the end date would be 12 June of the next year.

What happens in a leap year?

For salaried employees, there’s no automatic entitlement to another day of holiday entitlement due to a leap year.

If employees are accruing holiday pay, the extra day of work counts towards this accrual.

How to calculate holiday entitlement for part-time employees

Those working part-time hours are still entitled to the part-time equivalent of 5.6 weeks of statutory leave entitlement (or more, as contracted).

Importantly, if you as an employer give more than the minimum holiday pay to full-time employees, you’ll have to give these benefits to part-time employees to avoid discrimination.

Part-time employees receive holiday entitlement on a prorated basis. This means that their statutory leave entitlement is proportionate to the hours they work.

To calculate this, you’ll need to know:

• Number of hours worked in the pay period
• Number of full-time hours.

The formula is:

Number of hours worked per week / full-time hours per week x contracted days entitlement x full-time hours per day = hours of holiday entitlement

Example, for an employee working 25 hours per week:

25 / 37.5 x 28 x 7.5 = 140 hours of holiday entitlement

Note, a typical full-time employee works 37.5 hours per week, 7.5 hours per day, 5 days per week.

Part-time holiday entitlement based on 28 days holiday equivalent

Hours worked per week	Annual holiday entitlement hours
5	28
10	56
15	84
20	112
25	140
30	168

How to calculate holiday pay for irregular working patterns or those working for part of the year

For seasonal workers, temporary workers, or those who work irregular hours, calculating their holiday entitlement used to be complicated.

The Working Time Regulations 1998 were amended by reforms effective January 2024, introducing new rules on holiday entitlement and pay for irregular‑hours and part‑year workers

These workers now accrue statutory holiday entitlement using an accrual method

For an employee who works only part of the year, or works irregular hours, their holiday entitlement is calculated at 12.07% of the hours they worked in the pay period. 12.07% is based on the statutory minimum holiday entitlement of 5.6 weeks.

For example, if they worked 25 hours and are paid weekly:

25 × 12.07 ÷ 100 = 3.02 or 3 days

For example, if a zero-hours employee works for 25 hours in June, they will receive 25 x 12.07%= 3.02 hours, rounded to 3 hours of holiday leave entitlement.

This will accrue until they want to take a holiday, or if they leave.

From 1 January 2024, rolled-up holiday pay is permitted again for irregular hours and part-year workers, provided it is clearly stated in their contract and shown separately on their pay slip.

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If you consider making changes to how holiday pay is to be calculated, you should communicate any changes to staff before changes are implemented to allow them to lodge a complaint or rejection if they don’t agree with the proposal.

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How to calculate holiday entitlement in the first year of employment

For all “regular” employees, holiday entitlement is accrued over the period the employee works.

Because full‑time workers (five‑day week) are entitled to a minimum of 28 days of statutory annual leave, which may include public and bank holidays depending on the contract, you can calculate accrual at the end of each month worked.

For part-time employees, calculate this on a pro-rata basis.

To calculate, use the following formula:

(Holiday entitlement divided by months in the year) x months worked so far

An important note is that many employment contracts are for 20 days entitlement, plus public holidays this means that only 20 days accrue and not the public holidays.

Public holidays are dependent on what is outlined in an employment contract as they are not automatically paid, and there is no statutory right to paid public holidays.

For example, a full-time worker (who works 5 days per week) will accrue five days of holiday after three months: (20 days/12 months) x 3 months worked = 5 days.

Since statutory holiday entitlement exists from the first day of employment, there’s no minimum waiting period.

For employees who have taken more holiday than they have accrued at that point in the year, this will be made up later in the year.

And if an employee leaves, you can claim any overpaid entitlement days back in their final payslip.

How to calculate holiday entitlement when an employee leaves?

If an employee leaves before they have taken all their paid holiday entitlement, they may be owed payment in lieu of any holiday days they have accrued but not taken.

For example, an employee’s annual holiday year commences on 1 January, and they are on a salary of £52,000.

They work for four months without taking any holiday and then leave at the end of April.

Their contracted holiday entitlement is 20 days per year, plus public holidays.

Calculate the holiday days accrued:

Days of contracted holiday entitlement per year divided by 12 months of the year x number of months worked so far

(20 / 12) x 4 = 6.7 days accrued (rounded up to 7 days).

What if an employee doesn’t take their statutory holiday entitlement? (days in lieu)

If an employee doesn’t take their full 28 days of statutory holiday entitlement, there are a couple of different possible outcomes.

Use it or lose it

The first is if you operate on a “use it or lose it” policy, which means that employees must forfeit the pay and days that they don’t take.

Under these policies, you must show that you have actively encouraged your staff to take their statutory holidays.

There are risks for the employer if staff are unable to take their holidays either due to illness, lack of encouragement or a high workload.

This means that a written policy is not enough.

You must be able to demonstrate that you have actively encouraged staff to take their holiday entitlement and that you have reiterated the deadline, either by way of email or by using notes on payslips.

Payment in lieu

Those employers who don’t operate a ‘use it or lose it’ policy will most likely carry over their holiday entitlement.

An employer can allow the carry-over of up to 1.6 weeks of leave into the next leave year, and more if contractually agreed.

Up to 4 weeks of statutory leave may be carried over if an employee was prevented from taking leave due to reasons such as long-term sickness.

For employees entitled to an enhanced leave policy, it’s up to the employer to determine how many extra days may be carried over.

For employees that have more than the statutory 28 days, they could be paid in lieu of any of those additional days to the statutory 28 that they don’t take as holiday.

FAQs

Does a 28-day holiday include bank holidays?

It can. Many contracts include UK bank holidays within the 28‑day allowance, while others offer 20 days plus bank/public holidays.

Check the employment contract to confirm what applies.

At the company’s discretion, some workers may be entitled to enhanced holiday entitlement, where they are offered, for example, 25 days of holiday plus public holidays, which is a total of 33 days.

What is the average UK holiday allowance?

In contrast to the statutory holiday entitlement of 28 days, a report found that in 2023 the average employee in the UK took 33.9 days of annual leave.

 This demonstrates a decline from 36.7 days in 2022, and 38 days in 2020.

It’s uncertain as to why this decline might be happening.

Possible explanations include people being too busy or not being able to afford to take holidays abroad.

Holiday allowance in the rest of the world

As a comparison, in the rest of the world, Iran has the most statutory days of holiday at 53 days. Andorra has 45 days and Malta 41.

The UK is a long way down the list for days of holiday entitlement compared to other countries.

But at the bottom, Nigeria has only five days and the US does not offer any statutory holiday and holiday entitlement is at the employer’s discretion.

What happens if an employee leaves part way through a holiday?

An employee only gets holiday pay for days accrued of entitlement and not for all the days of their holiday.

As an example, an employee hasn’t taken any other holidays in a year, then decides to leave.

Just before they leave, they decide to also take a two-week holiday.

However, their final day of employment falls on day four of their holiday.

This means that they have only taken four days of their holiday entitlement and not two weeks.

Their final entitlement should be calculated based on the actual number of days holiday taken whilst employed, which in this case would be four days.

Note: as an employer, you are entitled to reclaim days of holiday from an employee if they have taken more days of holiday than they are entitled to.

You may do this automatically by deducting the amount from their final salary, but this must be shown in the payslip.

How do illness, maternity or paternity leave affect holiday pay?

If employees go on long-term sick leave, they are eligible to carry over 20 days of their statutory entitlement once they return to work.

Those who have been prevented from taking their holiday due to maternity or paternity leave, are eligible to carry over a full year’s statutory holiday entitlement into the next annual leave year.

Legal entitlement to holiday pay

Holiday pay should be calculated at the same rate as an employee’s normal compensation, on either a daily or hourly basis.

However, following a ruling in a court case, there are a number of situations where payments above basic pay are required to be included in holiday pay:

• Workers who have a contract that includes a set commission are entitled to have their commission included in any holiday pay calculation.
• Workers who receive extra pay according to their professional status, length of tenure, or qualifications, also receive the extra payment in their holiday pay.
• Where employees have regularly worked overtime within the past year, they are entitled to include those hours in their holiday entitlement calculation.

How to calculate holiday pay for a monthly salary

Monthly salary calculations require you to calculate the daily pay rate of the employee.

1. Annual salary divided by 52 = weekly pay
2. Weekly pay divided by number of days in a workweek = daily pay
3. Daily pay times by number of days holiday entitlement = holiday pay

A member of staff earns £52,000 per annum and works five days per week.

1. £52,000 / 52 = £1,000
2. £1,000 / 5 = £200
3. £200 x 12 = £2,400

Their daily rate is £200. If they have 12 days of holiday untaken, that will equate to £2,400 holiday pay owing at the time of leaving.

Final thoughts

Holiday entitlement and holiday pay are essential aspects of payroll and HR, yet they can be surprisingly complex.

By using the holiday entitlement calculator and following the guidance outlined, employers can help ensure compliance and fairness for their teams.

However, as employment law and payroll regulations can change, it’s important to stay up to date and seek professional advice when needed.

This article is not exhaustive and can only be used as a guide.Please check with your HR director/consultant or with a qualified accountant.

Getting holiday pay right supports both your business and your employees. It helps to build trust and helps staff take the holiday that they’re entitled to.

Sage Payroll enables you to auto sync your payroll data to accounting, keeping payslips up to date even when holiday entitlement is taken and holiday pay is required to be added.

Editor’s note: This article has been reviewed and verified by a CIMA accountant.