Employment, IP, and sustainability: UK regulatory reforms for fashion and retail

The UK regulatory landscape is evolving rapidly, and 2025 has seen a series of changes that will shape how fashion and retail businesses operate in 2026. From employment and apprenticeship reforms to intellectual property, sustainability and cyber security, these updates impact staffing, supply chains, product claims, and compliance obligations.

Staying ahead is essential for managing flexible workforces, complex sourcing networks, and growing online operations. In this article, FashionUnited highlights key regulatory shifts, what they mean for businesses, and how to prepare for the year ahead.

Employment rights reforms

The UK’s Employment Rights Act has been dubbed by the current government as the biggest shake-up of workplace law rights in a generation. Designed to modernise protections for workers and adapt to new ways of working, the changes are important for businesses that heavily rely on part-time, flexible and seasonal roles. The government said these reforms will bring workplace law into the 21st century by improving job security, clarifying rights and strengthening protections surrounding redundancy and dismissals.

The act received Royal Assent this month, after the House of Lords agreed to extend the previously controversial one-day unfair dismissal period to a six-month qualifying period. The government confirmed this move will take effect January 1, 2027, alongside the removal of the compensation cap. Further reforms to UK employment law will roll out in phases starting April 2026. Detailed regulations and guidance will be provided by the Advisory, Conciliation and Arbitration Service (Acas) alongside other industry bodies.

Retail trade groups have broadly welcomed the changes but have warned of potential increased administrative demands. Understanding the changes early, however, may allow employers to manage compliance without disruption as reforms take effect across the year.

Apprenticeship reform

The UK government has also overhauled the apprenticeship system to make it more flexible and relevant for today’s job market. The aim is to encourage more young people into training and to help industries, including fashion and retail, fill skills gaps in areas such as design, digital, sustainability, and supply chain management. Under the new plans, a 725 million pound investment package into apprenticeship funds intends to allow employers more flexibility, while they are also encouraged to engage with more modular training programmes.

The reforms themselves are not tied to a single new law, but will be introduced through updates to existing education and skills legislation and funding rules. Many details were announced in the latter half of 2025, and 2026 is expected to bring further guidance and regulatory updates as the system transitions. Employers should expect overlapping rules during this shift and are encouraged to plan ahead to make the most of new funding opportunities.

UKIPO design law consultation

The government’s consultation on design law reform reflects growing concern that existing intellectual property protections have not kept up with modern design-led industries. For fashion brands, issues such as fast copying, digital design tools and the overlap between registered and unregistered rights have pointed to gaps and uncertainties in the current framework.

The proposals aim to clarify and possibly strengthen protection for designers, particularly in regards to unregistered design rights, disclosure rules and enforcement. There is further focus on making the system easier to navigate for SMEs, which make up a large proportion of the UK fashion sector. The reforms are intended to support innovation while maintaining balance between protection and competition.

The consultation itself came to an end in November, and the UKIPO will now review and analyse responses from industry, legal experts and trade bodies. Any legislative changes would require amendments to existing IP legislation, meaning draft proposals are likely to take shape gradually in 2026 onwards.

Spring and Autumn statement implications

While not a piece of legislation, the UK government’s fiscal announcements in its Spring and Autumn Statements set the financial landscape for fashion and retail employers in 2026. The Autumn Statement for 2025 introduced a mix of support and cost pressures due to play out over the next year. A package of business rates reform was confirmed, including lower permanent rates aimed at high street stores, which may ease occupancy costs.

However, planned increases to the National Living Wages and Minimum Wage in April 2026 will raise labour costs for retailers, a key concern for employers heavily reliant on shop floor and warehouse staff. At the same time, new investment incentives, such as an enhanced first-year capital allowance, intend to encourage spending on technology and sustainability upgrades to boost efficiency and competitiveness.

Cyber Security and Resilience Bill

Concerns over cyber security mounted this year, after a slew of retailers, from Marks & Spencer to Louis Vuitton, tackled various degrees of cyber attacks, resulting in stolen customer data and temporarily unavailable online stores. Prompted by a rise in high-profile incidents, the UK’s Cyber Security and Resilience Bill marks a notable update to digital risk rules that will impact businesses with online stores and complex supply chains. The bill expands an existing regime to cover more types of service providers, such as data centres, underlining the importance of digital infrastructure.

Under the new scheme, businesses subject to the rules will have to report significant cyber incidents quickly, with the first alert within 24 hours and a fuller report within 72. Penalties for breaches are also set to rise sharply, potentially reaching up to 4 percent of global turnover. The bill was introduced in late 2025 and, throughout 2026, employers should expect the law to progress through parliamentary stages before more detailed legislation is published, setting out specific compliance obligations.

Consumer protection and green claims enforcement

In April 2025, the UK’s Digital Markets, Competition and Consumer Act 2024 implemented an overhaul of consumer protection law that strengthened the Competition and Markets Authority’s powers to act directly against misleading environmental or “green” claims. Under the updated rules, the watchdog can decide whether such regulations are broken without going through the courts.

The CMA can now require companies to stop or change misleading terminology, and impose fines of up to 10 percent of global turnover for serious violations. The organisation has also published guidance on the types of green claims that could face scrutiny, such as vague labels like “eco-friendly”. Claims must be accurate, backed by evidence and not liable to mislead the average consumer. The CMA has said enforcement of environmental and unfair practices is to be a priority in early activity of enforcement.

Packaging Extended Producer Responsibility

The revised UK Packaging Extended Producer Responsibility (pEPR) scheme began rolling out in April 2025, impacting businesses that place packaged products on the UK market. As part of the updated system, brands and producers are now responsible for the full cost of collecting, sorting, recycling and disposing of household packaging waste. The changes come in response to criticism that the prior law saw producers cover only a small portion of waste management costs.

In the first year, from 2025 to 2026, fees are set at flat base rates per material type. From 2026 to 2027, fees will be adjusted to reward more recyclable packaging and penalise more hard-to-recycle formats.

Modern slavery and supply chain transparency

In March 2025, the UK Home Office published an update to its Transparency in Supply Chains (TISC) guidance under the Modern Slavery Act 2015. The core law requires businesses with an annual UK turnover higher than 36 million pounds to publish an annual modern slavery statement, outlining steps taken to identify and address risks across operations.

The updated guidance gives clearer expectations on what meaningful disclosure looks like, emphasising detailed reporting on organisational structure, risk assessment and due diligence.