Why this matters in 2026

Local government is managing sustained structural change at the same time as it faces tight labour markets, evolving employment law, and rising absence. In 2025, local government employment reached a record low (c. 1.97–1.98 million) as the continuing conversion of schools to academies shifted staff out of local authority headcount and into central government tallies. That decreases the direct workforce footprint even as demand for statutory services remains stubbornly high, and it complicates benchmarking and capacity planning for HR and service leads alike. Despite some improvement in vacancy rates in 2024, councils still report significant recruitment and retention challenges particularly for social workers across adults’, children’s and mental health services.

On pay, the NJC settlement for 2025/26 delivered a 3.2% uplift across pay points with SCP 2 set to be deleted from April 2026, raising practical questions about compression at the lower spine and progression for the lowest‑paid staff. Legally, HR must manage both what already changed and what’s about to: day‑one right to request flexible working took effect on 6 April 2024, alongside the Carer’s Leave Act; a new preventative duty on employers to stop sexual harassment came into force on 26 October 2024; and the Employment Rights Bill is expected to phase in major reforms through 2026–2027 (including day‑one unfair dismissal, more predictable hours, stronger family rights, and enhanced enforcement).

Absence has climbed sharply. The CIPD Health and Wellbeing at Work 2025 report indicates UK employees were off sick for an average of 9.4 days in the prior 12 months up from 7.8 days in 2023 with mental ill health (41%) the leading driver of long‑term absence.

Against that backdrop, the most useful thing HR can do in 2026 is ask and answer nine hard questions. Each question below pairs quantitative evidence with qualitative insight, and finishes with action prompts and metrics to track. Use this as a roadmap for your Cabinet, CMT and service leads.

1) Are we resourcing critical roles sustainably without normalising agency as “business as usual”?

What the data says

• Adult social care vacancy rates in councils were around 16% in late 2023, with reported agency staff spend c. £292m in 2023/24 expensive, disruptive and risky.

• Social work remains the biggest recruitment/retention challenge across adults’, children’s and mental health services, even where vacancy rates have eased.

What good looks like (qualitative)A sustainable model goes beyond pay premia. It balances workload, supervision, flexible work design, return‑to‑practice pathways, and “grow‑your‑own” talent (e.g., apprenticeships; step‑up schemes; advanced practitioner routes). It also sets clear limits on agency reliance and backs them with a credible pipeline.

Action prompts

• Build a vacancy heat‑map by service and role; set quarterly targets to reduce the top five hotspots.

• Cap agency staffing at agreed thresholds per service; require a conversion plan (temp‑to‑perm) for long‑term cover.

• Co‑design retention bundles for social workers and planners with the service tie benefits to workload norms and supervision quality.

• Expand return‑to‑practice and international recruitment only where supervision capacity and induction are robust.

Metrics to track

• Vacancy rate (monthly), time‑to‑hire, 90‑day retention, 12‑month retention, agency spend trendline, and proportion of agency assignments exceeding 12 weeks.

2) What is our pay and reward strategy given the 2025/26 NJC award and affordability?

What the data says

• The NJC 2025/26 pay award uplifted all pay points by 3.2% and confirmed deletion of SCP 2 from April 2026.

What good looks like (qualitative)A sustainable reward strategy protects internal fairness while staying externally competitive where the market demands it. Rather than broad‑brush market supplements, prioritise skills‑based progression, multi‑skill allowances, and career pathways especially at lower grades where compression may bite.

Action prompts

• Model compression risk at the lower spine; identify roles where progression steps are too narrow.

• Use targeted market premia with sunset clauses and review points; avoid permanent distortions.

• Strengthen non‑pay elements of the EVP (development, flexible working, wellbeing, recognition).

Metrics to track

• External competitiveness benchmarks for scarce roles; internal pay‑gap movements by grade; progression rates; and supplement spend vs. retention outcomes.

3) Are we legally ready both for “already live” changes and the Employment Rights Bill’s phased reforms?

What the data says

• Flexible working became a day‑one right from 6 April 2024, with faster employer decision times and a duty to consult before refusal.

• A preventative duty to take reasonable steps to prevent sexual harassment came into force on 26 Oct 2024.

• The Employment Rights Bill (expected Royal Assent late 2025; staged implementation to 2027) will introduce day‑one unfair dismissal, predictable hours rights, strengthened family rights, limits on fire and rehire, changes to collective redundancy, and a new Fair Work Agency.

What good looks like (qualitative)Policy, templates and manager training aligned to practice. HR should simulate case scenarios (e.g., probationary dismissals under day‑one unfair dismissal; flexible working refusals with consultation records; harassment risk assessments and “reasonable steps” evidence).

Action prompts

• Audit contracts, handbooks, and manager guidance for alignment with flexible working and harassment duties.

• Build a legal change roadmap for 2026–27: prioritise dismissal processes, predictable hours, family rights, redundancy thresholds.

• Train line managers on consultation standards, investigations, and documentation.

Metrics to track

• Time to resolution for flexible working requests; upheld/overturned decisions; harassment risk assessments completed; and grievance/ET claim rates.

4) How are we measuring and improving attendance, wellbeing and workload at scale?

What the data says

• UK employers reported 9.4 sickness days per employee in 2025; top long‑term causes: mental ill health (41%), musculoskeletal (31%), and other long‑term conditions.

• ONS publishes annual sickness absence rates by region and employment type use this to benchmark your council against national and regional trends.

What good looks like (qualitative)HR leads redesign work to lower job strain, improve manager confidence, and make early support routine. Focus on workload caps, admin relief, digital tools, OH access, and quality of return‑to‑work plans not just speed.

Action prompts

• Run stress risk assessments for high‑pressure teams; use findings to adjust caseload norms and admin support.

• Train managers in wellbeing conversations, reasonable adjustments, and OH referrals.

• Pilot role redesign (task bundling, digital triage, flexible patterns) with clear pre/post measures.

Metrics to track

• Sickness days per FTE; mental‑health incidence; OH wait times; return‑to‑work sustenance (recurrence within 90 days); and manager completion of stress risk assessments.

5) Is our use of AI in HR compliant, ethical and productive?

What the data says

• The UK Government published an AI Playbook with 10 principles for safe and effective AI use in the public sector, plus free training and a cross‑government AI community of practice.

• Responsible AI in recruitment guidance warns of bias and digital exclusion risks and stresses assurance, transparency and contestability.

• The ICO updated guidance on fairness, transparency and accuracy in AI systems and signalled further measures to support government growth while safeguarding privacy.

What good looks like (qualitative)A council‑wide AI assurance framework: clear use cases, DPIAs, fairness/bias testing, human‑in‑the‑loop decision controls, candidate explainability statements, and contestability routes. HR should lead on policy and training and partner with data/IT.

Action prompts

• Create an AI register (tools in use or proposed) and mandate DPIAs for each.

• Publish fairness testing protocols and explainability guidance for candidates.

• Train HR and hiring managers on Article 22 GDPR safeguards (solely automated decision‑making) and escalation pathways.

Metrics to track

• Number of AI use cases approved with DPIA; bias test outcomes; candidate complaints resolved; and time saved per process vs. quality measures (e.g., diversity of shortlists).

6) Are our equality outcomes improving year‑on‑year beyond compliance?

What the data says

• The LGA publishes summary data on councils’ gender pay gaps (mean, median, quartile distribution) to support benchmarking.

• Local examples show progress: Lancashire County Council reported reductions in mean/median gender pay gap and improved female senior representation in 2024/25.

What good looks like (qualitative)Equality strategy that targets specific cohorts (gender, ethnicity, disability, social mobility), links actions to promotion pipelines and development access, and transparently publishes progress. Move from broad statements to measurable annual improvements.

Action prompts

• Conduct a barrier audit for socio‑economic background, disability and ethnicity (e.g., access to acting‑up, secondments, flexible working that enables study).

• Launch sponsorship and talent pathways tied to senior‑level accountability.

• Publish an annual EDI outcome report with narrative and numbers include quartile shifts, progression, and pay gaps.

Metrics to track

• Pay gaps (gender, ethnicity, disability); representation by grade; progression rates; development participation; and adjustments made/maintained.

7) Are we using apprenticeships and the Growth & Skills Levy transition to build scarce skills?

What the data says

• Government intends to transition the Apprenticeship Levy to a more flexible Growth & Skills Levy from April 2026, broadening eligible training and targeting priority sectors; the LGA is pressing for local government involvement to maximise impact.

• Funding rules for 2025/26 introduce foundation apprenticeships and streamline assessment, enabling faster, more proportionate pathways to competence.

What good looks like (qualitative)A clear skills‑to‑standards map: social work, planning, environmental health, housing, digital/cyber, finance linked to apprenticeship standards and progression. Managers should view apprenticeships as strategic workforce planning tools, not just entry‑level schemes.

Action prompts

• Establish a Levy Steering Group co‑chaired by HR and Finance; set starts, completions, and retention targets.

• Pool levy transfers across local employers to address place‑based priorities (construction, digital, care).

• Simplify manager processes: pre‑approved providers, fast onboarding, and tutor‑supported learning time.

Metrics to track

• Starts, completion rates, post‑qualification retention at 12/24 months, and reduction in agency reliance for roles aligned to apprenticeship pipelines.

8) Are we fully IR35‑compliant and ready for the enforcement dynamics of 2026?

What the data says

• HMRC’s off‑payroll (IR35) rules for public bodies require status determination statements (SDS), reasonable care, and status disagreement processes; failures can trigger debt transfer and significant settlements.

• From 6 April 2025, thresholds defining “medium/large” entities were raised over time, fewer clients will be caught by off‑payroll obligations (subject to two consecutive financial years test).

• Expert commentary suggests the first wave of tax determinations for misclassification could begin around early 2026, reinforcing the need to tighten controls.

• A double‑taxation fix took effect from 6 April 2024, but councils must still show reasonable care and robust records.

What good looks like (qualitative)An IR35 framework embedded in procurement, HR, and budget management: clear SDS standards, dispute processes, supply‑chain diligence, and routine audits of high‑risk engagements.

Action prompts

• Reissue policies and standard SDS templates; ensure reasonable care evidence (role analysis, control, substitution, MOO).

• Audit supply chains transfer of debt provisions can drag councils into liability when intermediaries fail.

• Train managers and buyers on status factors, documentation, and timelines.

Metrics to track

• SDS quality checks, disputes resolved within 45 days, proportion of engagements outside vs. inside off‑payroll, and any HMRC compliance findings closed.

9) Do we have a single workforce “truth” combining hard metrics with lived experience?

What the data says

• Public sector employment and sickness datasets (ONS) and workforce surveys (LGA) provide comparable trend data you can align to your council dashboards.

• CIPD Labour Market Outlook (Autumn 2025) flags public sector employment intentions at −8 and median basic pay uplift at 3% useful external context for planning.

What good looks like (qualitative)A Workforce Outcomes Dashboard that everyone trusts Cabinet, CMT, service heads, unions and staff paired with stay interviews, focus groups, and line‑manager capability reviews. This blends numbers (where we are) with narratives (why we are there), producing EVP stories grounded in real experiences.

Action prompts

• Define golden metrics (below) and publish them monthly/quarterly, with a short “what we changed” note each cycle.

• Pair the data with qualitative inputs (focus groups per service; stay interviews in hotspots).

• Embed line‑manager standards for wellbeing, flexibility and performance conversations aligned to legal duties.

Golden metrics

• Resourcing: vacancy rate; time‑to‑hire; 90‑day and 12‑month retention; agency spend; offer‑acceptance rate.

• Attendance & wellbeing: sickness days per FTE; cause breakdown; OH referral times; return‑to‑work quality (recurrence rates).

• Reward & equality: pay gaps (gender, ethnicity, disability); representation by grade; progression rates; apprenticeship starts/completions/retention.

• Legal & risk: flexible working decision times; harassment risk assessments completed; IR35 SDS quality/dispute resolution times.

Practical Next Steps

A) 90‑day sprint framework (for any of the nine questions)

Week 0 (set‑up): Appoint an Exec Sponsor (Director/AD), a Delivery Lead, and a small cross‑functional team (HRBP, service lead, finance analyst, IT/Insights).Weeks 1–3 (baseline): Pull the golden metrics, run 6–8 stay interviews, map 3 blockers.Weeks 4–8 (interventions): Launch three changes (e.g., admin support pilots; progression steps; SDS audit).Weeks 9–12 (measurement): Re‑pull metrics; publish a short “what we changed” note to staff and Cabinet.

B) Agency reduction compact (children’s/adults’ services)

• Thresholds: Agency use capped at x% of establishment and y weeks maximum per assignment.

• Conversion: All long‑term agency roles require a conversion plan (timescale, offer package, induction plan).

• Pipeline: Agree apprenticeship/return‑to‑practice targets per service; track post‑qualification retention.

• Governance: Monthly dashboard to DLT; quarterly Cabinet briefing.

C) Flexible working and harassment compliance checklist

• Flexible working: Updated policy; manager consultation script; two requests per 12 months; decision within 2 months unless extended; documented rationale.

• Harassment duty: Harassment risk assessment; reasonable steps plan (training, policies, reporting channels, supervision expectations); audit of lone/remote working risks; monitor outcomes.

  
  

D) AI assurance (HR and recruitment)

• Register & DPIA: Catalogue AI tools, complete DPIAs, log fairness testing and accessibility checks.

• Explainability: Candidate‑facing statement on what AI is used for and how decisions are reviewed by humans.

• Contestability: Route to challenge decisions; SLA for responses.

  
  

E) IR35 governance essentials

• SDS standards: Template with clear reasoning (control, substitution, mutuality).

• Disagreement process: Respond within 45 days; record outcomes.

• Supply‑chain due diligence: Confirm intermediaries’ compliance; understand debt‑transfer risk.

Common pitfalls and how to avoid them

1. Treating agency use as a strategy.

   Agency is a tool, not a plan. Cap, convert, and pipeline then measure.

   Evidence: High agency spend correlates with churn and continuity risk in social care.

2. Underestimating legal change “humanside” risk.

   Policies alone won’t prevent harassment or mishandled flexible working refusals manager training and consultation quality do.

   Evidence: New duties and day‑one rights raise process expectations.

3. Launching AI tools without assurance.

   Without DPIAs and fairness testing, councils risk discrimination, reputational harm and GDPR breaches.

   Evidence: Government/ICO guidance emphasises fairness, transparency and human oversight.

4. Publishing equality data without targeted action.

   Progress requires sponsorship, pipeline design and adjustments that stick.

   Evidence: LGA gender pay gap summaries encourage actionable comparisons.

5. Treating apprenticeships as an HR‑only issue.

   Levy impact depends on service leadership, provider quality, and line‑manager support for learning time.

   Evidence: Funding rule changes and levy reform aim to unlock skills in priority sectors.

6. 
   

Step 1: Choose four questions.

Pick the four most pressing for your council (e.g., resourcing social work; harassment compliance; AI assurance; apprenticeships).

Step 2: Set targets and timelines.

Define one numerical target per question (e.g., “reduce agency use in children’s services by 20% in two quarters”), and one qualitative target (e.g., “all managers trained on flexible working consultation scripts”).

Step 3: Report and learn publicly.

Publish a quarterly workforce note to Cabinet and staff with the golden metrics, the interventions, and what changed. Transparency builds trust and keeps momentum.

Final word

If you do four things in Q1/Q2 2026 cap and convert agency use, prepare for legal change with manager training, build your AI assurance framework, and publish a genuine workforce dashboard with “what we changed” notes you’ll feel the system start to move. The rest is consistency and transparency.