Finance teams of all sizes are integrating AI into the core of their functions.

And Sage Copilot is right there at the heart of it, trusted not just to transform organisations. It’s also trusted to be secure and trustworthy.

Why? That’s what we discuss in this blog, as follows:

Where businesses use AI today

CFOs and controllers are using simple prompts to get live numbers as part of the feedback.

Finance operations are tracking close progress without digging through files.

Accountants are reviewing exceptions with the supporting entries easily in view.

Small business owners are getting quick answers on cash, invoices, and spending.

Partners and firms use in-product assistance to prepare client reviews faster.

If you see yourself or your needs in these scenarios, this article explains how Sage Copilot addresses your challenges with simple, streamlined solutions.

We’ll cover what Sage Copilot is, the outcomes it delivers, and the common security questions that come with exploring AI assistance in business finance.

Then we’ll end with how Copilot’s secure-by-design approach protects sensitive customer data so you can deploy it with confidence, even in strict environments.

What is Sage Copilot?

Sage Copilot is the AI assistant built into Sage products. It’s the experience for users that’s a core part of Sage Ai, the intelligence engine under the hood.

Sage Copilot lets you ask clear questions about your financial data, and in return, it reviews your live records and returns the numbers or actions you need within the workflow you already use.

It understands ledgers and subledgers, approvals, purchasing, receivables, payroll, and tax, so responses align with how you work.

Integrating Sage Copilot into your workflow has been proven to:

• Improve the smoothness of the month-end process by surfacing mismatches early and nudging you before deadlines slip.
• Speed up daily decisions because answers come from the system of record.
• Give you time back because first-pass summaries and supporting entries happen together.

What security by design looks like in daily practice

Sage Copilot is built into Sage products, so if you use single sign-on and multi-factor, Copilot follows suit.

There is one place for admins to grant and remove access.

Your assigned roles still control what people see.

If a user doesn’t have permissions to view an entity, project, supplier, or report in the core product, Copilot won’t override those permissions.

Least-privilege stays intact, and accident exposure drops.

Copilot works best where teams already draw hard lines around data.

Multi-entity groups keep access split by region or legal entity, while finance leaders still see what they need. Your data stays inside a governed boundary.

Customer environments remain separate, and firms that serve regulated clients get a clear audit trail for every prompt, response, and action.

Teams that handle payroll, customer, or supplier data keep those records in the system of record while moving on to faster reviews and approvals. IT and auditors have a clear line of sight with this setup.

Encryption applies in transit and at rest, reducing the risk of interception or loss without adding extra tools.

Every step leaves an accessible trail.

Sage Copilot links prompts, responses, and actions to users and data sources, so reviewers can trace what was asked, what was returned, and what was changed.

And every answer comes with context. When Copilot flags a variance or suggests a next step, it points to the entries, transactions, or documents behind the call.

Sage and AI risk management

Sage approaches risk as any other financial control: Document it, publish it, and maintain consistency. Three public sources support this approach:

First are the corporate commitments.

Sage’s five AI commitments set expectations for safety, transparency, and customer control, and they include an explicit promise from CTO Aaron Harris to protect trust.

Next is product-level clarity.

The Copilot pages and knowledge-base articles explain how data is protected, including encryption in transit and at rest, and access governed by your existing sign-in and roles.

For reviewers who want something concise, Sage publishes a Copilot Data Protection Statement that is a helpful resource.

Third, independent transparency is at the forefront.

The AI Trust Label explains, in simple terms, how Sage features handle data, comply with regulations, and implement safeguards against bias and harm. It’s currently available in the US and UK for Sage Intacct, making it easier for IT and compliance teams to access the information they need at a glance.

For deeper due diligence, Sage’s Trust & Security site lists security controls, subprocessors, and regional privacy notes so you can complete third-party reviews without guesswork.

Moving forward: Implementing Sage Copilot

Sage Copilot keeps data where it belongs, carries your identity and permissions into every interaction, and records a trail for audits.

It’s security by design in action, which is why you can use it in teams that handle payroll, customer, and supplier data without loosening standards.

Start by focusing on a specific use case, such as close orchestration or exception reviews. Name the people involved, the records they oversee, and the decisions needed to move faster. Give the pilot two to four weeks to maintain momentum.

Define what success looks like before activation.

Most teams track three signals that move quickly in finance: close duration, number of exceptions, and average time to clear flagged items. Capture a simple baseline from the last month.

Instead of a lengthy manual, craft a concise introduction with illustrative prompts that show how to make the most of Copilot. A brief 30-minute training session can make a significant difference, and recording it will be a valuable resource for the future.

Designate clear decision-makers for actions Copilot can handle independently versus those that require human oversight, integrating this smoothly into your existing workflows. Collaborate with IT and Security by sharing information on the pilot’s scope, access requirements, and success metrics.

Share one page with links for reviewers: Copilot product page, Data Protection Statement, Trust & Security hub, and the commitments. Include who has access during the pilot, the datasets in scope, and how long you’ll keep prompt logs. Clear documentation speeds sign-off and keeps everyone aligned.

Close the pilot with numbers and a plan. Share the metrics, a few real examples where Copilot saved time or flagged risk earlier, and any policy tweaks you made. If the results hold, add the next finance pod and repeat the cycle.

You get faster decisions, fewer surprises, and confidence that your guardrails stay intact.

Final thoughts

Sage Ai is more than artificial. It’s accounting software built with over 40 years of experience supporting British businesses. Sage has spent nearly a decade delivering AI solutions already.

Our AI platform brings everything together. Sage Copilot works with intelligent agents on a powerful platform, all guided by authentic intelligence.

Few other companies make such bold and transparent claims about their use of AI, but for Sage, it’s unthinkable to not harness the transformative potential of AI responsibly, embedding strict security practices to remain leaders in delivering advanced, secure, and ethically sound AI systems.

If you’re a sole trader or private landlord then, right now, you’ll probably use the Self Assessment system to provide HMRC with yearly tax returns.

The big news is that, as of April 2026, this will change for millions of sole trader and landlord Income Tax payers. And by the end of the decade, it’ll have changed for the vast majority of them.

That’s because Making Tax Digital for Income Tax is being introduced. It replaces Self Assessment as the way you do your tax accounting and communicate with HMRC.

That’s what this e-book is about. Consider it a translation guide, explaining how you do things now—and how you’ll have to do them in April 2026 (or 2027, or 2028).

This incredibly useful e-book covers the following:

• What is MTD for Income Tax? A short but thorough introduction to the legal requirements and what you need to do.
• How MTD affects your choice of accounting software—what you can and can’t use for your accounting, and what features are required to stay compliant.
• Registering for MTD—how to get yourself onboarded, and what to do if you’re just starting a business or have been in business for some time.
• Taxes under MTD—what changes about how you tell HMRC what it needs to know, and more.
• Receipts, bills, and expenses—the importance of ensuring the way you capture data fits with the legal requirements of Making Tax Digital for Income Tax, plus how to go about it.
• Invoices and income—ensuring you get paid in ways that are compliant with Making Tax Digital for Income Tax, and ensuring the data is always digital—in ways that are easy.
• Working with accountants and bookkeepers—how to let your accountant and/or bookkeeper do most or all of Making Tax Digital for Income Tax on your behalf, and how to work with them to make it seamless.

This is one of the most important e-books you’ll read this year, and it’s a vital download for anybody who’s approaching Making Tax Digital in April 2026, April 2027, or April 2028.

Get ahead now. Get this guide.

Let’s turn Blue Monday into Blew-through-my-to-do-list Monday. 

The New Year is an opportunity for everyone to turn over a fresh leaf and for businesses to hit the ground running. It’s all really exciting, right? Well… kind of. 

There is one thing getting in the way of the back-to-work buzz and it’s known as Blue Monday at work. The third Monday of January has earned a not-so-fun reputation of being the most depressing day of the year. 

But here’s the thing; it doesn’t have to be that way.

For business owners and HR professionals, Blue Monday is an opportunity to meaningfully support your team. So rather than letting the mid-January gloom take over, use this day as a springboard for connection, motivation and genuine wellbeing. It’s your chance to show your team you’re in their corner and to spark a more positive, people-focused culture that carries through the rest of the year.

Not sure how? Employment Hero, alongside Gill Wetherill, Founder, Full Circle HR has a few suggestions.  Let’s dive in. 

What is Blue Monday?

We’ve all heard of it, but what is Blue Monday? It sounds simple, but before you, as a business owner or HR professional can combat it, you need to understand it. 

So let’s get one thing straight: Blue Monday at work isn’t based on hard science. It was actually created in 2005 as part of a marketing campaign by a UK travel company to sell more holidays. They even came up with a formula to pinpoint the most depressing day of the year, mixing variables like debt, weather and low motivation. Crazy, right?

Regardless of where it came from, the concept struck a chord for a reason. It gives a name to a very real dip in mood that many people experience in mid-January. This is especially true in the UK, where the term “Blue Monday UK” trends every year as short, gloomy days and post-holiday realities set in.

But, what’s really behind the slump? Well, it’s a combination of factors:

• The holiday hangover: The festive season is officially over and your team are realising that it’s time to get back into their normal routine… and back into work mode. 
• Financial strain: December is expensive, but no one thinks about that until January’s bills start coming in. And facing the employee financial strain of December’s splurge can hit you like a freight train. For many employees, this pressure is made even worse by the long gap between being paid in December and receiving their next pay in January. That extended break between pay cycles can leave budgets stretched thin and financial stress at an all-time high.
• Winter blues: In the UK, the lack of sunlight can be a real struggle throughout the winter. Having less sunlight can lead to lower energy levels and for some, contribute to Seasonal Affective Disorder (SAD), a type of depression related to seasonal changes. 
• Broken resolutions: The initial burst of motivation for New Year’s resolutions can start to fall off the wagon and it’s easy to fall back into old habits and feel demotivated. 

But stay with us, it’s not all doom and gloom. And Blue Monday at work isn’t a problem to be ignored. It’s an opportunity, a chance to show your team that you understand the human side of work and to proactively boost morale when they need it most.

Why Blue Monday at work matters

So, a marketing stunt gave a name to a feeling many people already had. But you’re probably wondering how this relates to the work life of your employees. 

The simple answer is because these feelings are rarely left at home. They walk right into the workplace, impacting everything from team morale to your bottom line. And it’s important to remember that Blue Monday isn’t about one person having an off day. It’s a collective dip that can ripple through your entire team. 

As a result, focus, motivation and business results take a hit. Before you know it, Blue Monday at work is causing: 

• Productivity slumps: An employee worried about bills or feeling drained and uninspired isn’t going to do their best work. Engagement drops, deadlines might slip and the overall quality of work can decline.
• Team morale: Negative energy is contagious. One person’s low mood can quickly spread, creating a flat and demotivated atmosphere for everyone. This makes collaboration harder and can strain team relationships.
• Increased absenteeism: When people feel mentally and emotionally drained, they’re more likely to call in sick, leading to an increase in employee absenteeism. But ‘presenteeism’, being physically at work but mentally checked out, is just as costly.

We get it, it isn’t your job as a business owner or HR professional to manage the emotions of your team and it’s easy to brush off this slump as “just a case of the Mondays”. But what if you flipped the script and turned the most depressing day of the year into the happiest working day of the year? 

How to make Blue Monday the happiest day of the year

Blue Monday reminder: It’s okay if your KPI today is Keeping People Inspired.

We’ve said it enough times already, Blue Monday 2026 could be a real downer but let’s focus on using your skills and expertise to turn it into a positive.

It’s not about grand, expensive gestures. It’s about being intentional and showing your people you’re in their corner. Let’s shift the mindset for 2026; Blue Monday isn’t something to get through,  it’s a chance to help your team thrive.

Gill highlights the importance of goal setting to combat the Blue Monday morning slump: 

“On Monday morning identify your 3 main goals for the week – whether they’re big or small, these are the key things that you must make sure you tackle this week – no excuses! Next, put a note in your calendar for Wednesday morning to ‘Review progress against goals’ – this gives you a reminder – Don’t ignore it, take 10 minutes to review and get back on track if needed. Now think about which of those 3 goals feels the hardest one, the one you’re most likely to put off – and tackle it first instead! Then give yourself a little reward by doing something nice for you.”

Here are some other practical ways to transform it into the most positive day of the year.

Kick things off with good energy

The mood of the morning sets the tone for the entire day. But instead of leaning into this, push back against the beginning of the year blues. It’s time to bring the energy. 

Some of our suggestions for setting the tone are: 

• Create a playlist: Lift the mood from the get-go by putting on upbeat music or for remote teams, sharing a link to a playlist. Music is a powerful mood booster, so keep it lively without being distracting. 
• Fuel them up: Everyone loves a freebie…and free food? Even better. So start the day on a high with a team breakfast. Whether it’s pastries, fruit or bacon sandwiches, it’s a great way to bring everyone together.
• Virtual morning boost: Don’t worry, the fun isn’t reserved for in person teams. If you’re remote, kick start the day with a short, energetic video call. Think ice-breakers or games. The goal? Help everyone to start strong, together.

Create moments of genuine connection

When your team members feel low, they often pull back and isolate themselves. The problem is, this only makes things worse. The World Health Organization found that people who are lonely are twice as likely to experience depression, creating a tough cycle to break. None of this is ideal for your team or for your business. 

The positive spin on this, however, is that as a business owner or HR manager, you can disrupt this pattern. How? By creating moments of connection at work. 

Making it easy for genuine conversations and small bursts of fun throughout the day can make a huge difference to your team’s wellbeing. Here are a couple of easy ideas: 

• Schedule a “no work” lunch: Lunch should be a time for your team to reset and return refreshed for the afternoon, it’s also a chance to create moments of connection. Encourage your team to socialise by providing a catered lunch or by giving everyone a voucher for a local spot and insist they take a full hour. The only rule? No talking about work.

Gill’s tip: With the dark nights drawing in, this time of year is more important than ever for leaders to keep their team motivated. Encourage teams to take a lunch break away from their desk to get them refreshed and motivated for the afternoon ahead.

• Organise a fun activity: Mix up the day with something light-hearted, like a quiz with a quirky prize, a board game face-off or even a paper aeroplane challenge. The goal is simple; break the routine, get people laughing and feeling connected. 

Put wellbeing front and centre

Employee wellbeing should always be a consideration, but that doesn’t mean you can’t take advantage of an opportunity to shine a light on it. 

Blue Monday is the perfect excuse to kick off a fresh wellness initiative and show your people you genuinely care—about their mental health, physical energy and everything in between. Here are a few simple ways to weave wellbeing into the day:

• Book in a bite-sized workshop: Bring in a pro for a quick session on mindfulness, stress hacks or managing money. Real, practical skills—not waffle—your team can use long after Blue Monday.
• Get moving: It’s easy to sit in the same position at work all day. But we all know this isn’t healthy. Combat this by setting aside time to get moving. It could be as simple as a lunchtime walk, walking meeting or more structured like a gentle yoga session. Getting the body moving is a powerful way to clear the mind.

Gills tip: Walking 121s are a great way for leaders to catch up with team members, either in person or on the phone. The benefits of getting fresh air, exercise and a break from the screen is priceless and it lets employees know you are invested in their wellbeing.

• Encourage proper breaks: Many people are guilty of not taking a proper break throughout the day. So as a business owner or HR professional, it’s important to lead by example. Actively encourage your team to step away from their desks, get some fresh air and recharge.

Celebrate your people

Shining a light on great work lifts everyone’s spirits. In fact, businesses who rate themselves well for employee recognition are 40% less likely to have retention problems. 

Make Blue Monday the day you go big on recognition. Let your people know they’re valued, seen and their efforts haven’t gone unnoticed. When you celebrate your team, you banish the gloom…. and that’s what we all want, right?

Some simple ways to celebrate your people include: 

• Run a rapid-fire shout-outs session: Take 15 minutes and go around the (virtual) room. Invite everyone to call out a teammate who’s gone the extra mile, made them laugh or made their job easier. These moments of recognition fuel connection and give the whole team a lift.
• Drop a thank-you note: Take the time to jot a quick, personal thank-you to each team member, shouting out a win or effort you’ve noticed. It’s low cost, big impact and lands more than you might think. It’s a small gesture that says, “Hey, I see you”. 

Offer the gift of flexibility

The pressures of January are real. A little breathing room in the form of flexibility shows you understand your team’s needs and that you have their backs. When you hand back some control, you boost morale and prove you trust your people to manage their own day.

A few ways you can support your team through offering flexibility include:

• Allow a late start or early finish: Gift your team an extra hour or two back in their day. It’s a simple gesture that says, “I trust you and I appreciate everything you’re doing.” Offering a bit of breathing room in the form of flexible working can make a big difference.
• Declare a “meeting-free” afternoon: Sometimes what your team needs is a meeting-free afternoon so they can sink their teeth into some deep work. So hit pause on the back-to-backs and give everyone a stretch of uninterrupted, pressure-free time. It’s a chance to reset, get on top of work and feel a little more human again. Sometimes the best gift is just space to breathe.

Blue Monday at work isn’t fixed by a single action, it’s changed by building a culture where people feel supported, connected and genuinely valued. Every action you take sparks bigger change. 

Sure, you’ll brighten a tough day, but the real win? Stronger connections, lasting trust and a team that’s energised and committed long after Blue Monday is over. When you invest in your people’s happiness, you’re setting your business up to thrive all year round.

It’s time to flip the script on Blue Monday at work

Blue Monday doesn’t have to be the gloomiest day on the calendar. While its origins may be a marketing gimmick, the feelings it represents—the post-holiday slump, financial strain and winter blues—are very real for your team. But as a business owner or HR manager, you have the power to change the narrative.

Ignoring this dip in morale is a missed opportunity. Stepping up is your chance to show your team that you see them as people and are invested in their wellbeing. It’s a moment to prove that you’re building a different, better kind of workplace.

By bringing the energy, fostering genuine connection and putting wellbeing front and centre, you can do more than just survive a single day. You can transform it into a launchpad for a more positive, connected and resilient company culture that lasts all year long.

So, let this be the year you don’t just let Blue Monday happen. Use it as a reason to celebrate your people, boost morale and start a conversation about what truly matters. Make it your team’s happiest day of the year and show everyone what a truly great place to work looks like.

Looking to improve your employee experience not just on Blue Monday, but every day? Discover how Employment Hero can help you build a team that thrives, all year round.

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

What is the statutory holiday entitlement in the UK?

Does holiday entitlement include public and bank holidays?

Holiday entitlement leave year

What happens in a leap year?

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.