HR in 2026: What UK Startups and Scale-Ups Need to Get Ready For

Written By Hayley Castiglione

If you’re running or scaling a business in the UK, 2026 is shaping up to be a year where HR decisions get a lot more visible -  and a lot more consequential.

Employment law is tightening, AI is quietly embedding itself into everyday people decisions, and the margin for “we’ll sort that later” is shrinking fast. The good news? None of this needs to be over-engineered. But it does need to be intentional.

Here are six things founders, People leads and leadership teams should have firmly on their radar for 2026.

1. Employment law is getting stricter - and startups won’t fly under the radar

2026 brings some of the most significant UK employment law changes in years, with expanded day-one rights and stronger worker protections becoming the norm.

For startups and scale-ups, this matters because:

  • Informal practices that worked at 10 people (fuzzy probation periods, “let’s see how it goes”) won’t hold up

  • Changes to unfair dismissal (coming in 2027) and day one leave rights (expected April 2026) mean process matters earlier

  • Sloppy documentation and inconsistent manager decisions become real risks, not theoretical ones

Don’t panic! This isn’t about creating bureaucracy -  it’s about putting just enough structure in place so growth doesn’t expose you.

Reality check: HR debt compounds fast. The earlier you tidy it up, the cheaper it is.

2. The Fair Work Agency will change how enforcement works

From 2026, the new Fair Work Agency will centralise enforcement of key employment rights like minimum wage, sick pay and holiday pay.

Why this matters for scale-ups:

  • Enforcement becomes more proactive and joined-up

  • “We didn’t know” or “we’re only small” won’t carry much weight

  • Fast-growing SMEs are very much in scope -  not just big corporates

For well-intentioned founders, this is actually good news. It rewards companies that want to do the right thing and removes some of the ambiguity around enforcement.

Translation: Compliance is becoming more visible, so foundations matter.

3. AI in HR: advantage if intentional, risk if informal

By 2026, most startups will be using AI in people processes -  whether they’ve labelled it as such or not.

Think:

  • AI-supported hiring tools

  • Performance summaries generated from tools like Slack or Notion

  • Chatbots answering people questions

  • AI inputs shaping decisions about performance, pay or even exits

The risk isn’t using AI. The risk is letting it quietly influence decisions without governance, oversight or bias checks.

For scaling teams, early adoption can be a genuine advantage, but only if:

  • Humans stay accountable for decisions

  • You’re clear where AI informs vs decides

  • Managers understand what tools are actually doing - and choosing the right ones for your business

What’s seen too often: Founders moving fast, then having to retroactively justify People decisions shaped by opaque tools. Ensure you know what your systems are doing and how they’re supporting.

4. Culture doesn’t scale accidentally

At an early stage, culture is personality-led. At 30 - 50+ people, that stops working.

In 2026, employee expectations around:

  • Wellbeing

  • Psychological safety

  • Inclusion

  • Leadership behaviour

…are only getting stronger - and culture gaps tend to appear during growth, not before it.

For scale-ups, the shift is from:

“We’ve got a great culture”
to
“We’ve designed how we want work to feel here.”

That doesn’t mean ping-pong tables, free pizza and Beer Thursdays - it means clarity, consistency and leadership capability.

The reality: If you don’t design culture, growth will design one for you.

5. Skills shortages will force smarter hiring and development

Talent scarcity - particularly in speciality tech, data and AI-adjacent roles - isn’t easing.

What is changing is how companies respond:

  • More skills-based hiring

  • More internal development

  • More focus on capability, not just throwing headcount at solving a need

For startups, this often shows up as:

  • Early hires becoming accidental managers

  • Brilliant individual contributors struggling with leadership expectations

  • Attrition when growth outpaces development

By 2026, scale-ups that invest early in learning, feedback and progression will retain talent far more effectively than those that keep hiring reactively.

What matters: Hiring for speed without development is expensive.

6. Flexible work is no longer a perk - it’s an expectation

2025 has thrown up lots of ‘return to the office’ policies for some of those big players (and some SMEs). But flexible and hybrid working are now embedded expectations from our teams particularly for experienced talent (and often rated higher in workplace benefits than high salaries!)

The challenge for scale-ups isn’t whether to offer flexibility - it’s how to do it fairly and consistently as you grow.

Common pitfalls:

  • Early promises that become impossible to honour at scale

  • Different rules for different teams

  • Managers defaulting to presenteeism under pressure

In 2026, the strongest teams will be those that:

  • Focus on outcomes, not optics

  • Train managers properly

  • Make flexibility explicit rather than informal

Key shift: What felt “nice and flexible” at 12 people needs structure at 30 - or it becomes messy fast.

Final thought: 2026 is the year HR maturity meets growth

The most successful startups in 2026 won’t have '“perfect HR” (who does?)

They’ll have:

  • Clear, compliant foundations

  • Thoughtful use of technology

  • Leaders equipped to manage people, not just output

  • Enough structure to scale without losing momentum or trust

I’ll keep banging the drum on this - HR isn’t about slowing growth down. Done well, it’s one of the things that makes sustainable growth possible.

A simple 2026 readiness checklist for startups & scale-ups

You don’t need to tackle everything at once - but if you’re scaling in the UK, these are the questions worth asking now.

Employment law & compliance

☐ Do we have clear probation, performance and dismissal processes that would stand up to scrutiny from day one?

☐ Are our contracts, policies and handbook up to date with upcoming employment law changes?

☐ Do managers understand how to manage people fairly, not just what outcomes they want?

Pay, sick leave & core rights

☐ Are holiday pay, sick pay and wages calculated correctly for all roles (including part-time and variable hours)?

☐ Would we feel confident explaining our approach to an external enforcement body like the Fair Work Agency?

☐ Is compliance knowledge sitting with one person, or spread safely across the business?

AI & people decisions

☐ Are we using AI tools in hiring, performance or engagement - formally or informally?

☐ Is it clear where AI informs decisions vs where humans decide?

☐ Have we considered bias, transparency and data risks?

Culture & leadership

☐ Can we clearly articulate “how we do things here” beyond the founding team?

☐ Are managers equipped to lead growing teams, not just deliver output?

☐ Do we actively design culture, or assume it will look after itself?

Skills, growth & retention

☐ Are we hiring only for today’s needs, or also for where the business is heading?

☐ Do early hires have development paths as the company grows?

☐ Is learning and feedback built into how work happens?

Flexible & hybrid working

☐ Are our flexible working practices clear, consistent and fair?

☐ Do managers know how to manage performance in flexible environments?

☐ Are early flexibility promises documented - or relying on memory and goodwill?

If you’re answering “not sure” to several of these, you’re not behind - you’re normal.

But 2026 is a good moment to move from well-intentioned to intentional when it comes to HR foundations.

If you’re scaling and want support putting people foundations in place for 2026 (without over engineering) Cast HR Solutions is here to support you on that journey.

Email: hayley@casthrsolutions.com

Hayley Castiglione