Last Updated: 20 August 2026 I Reading Time: Approx. 6 minutes
Summary
Running a business in the UK means dealing with a wide range of legal responsibilities, from company and employment law to health and safety, contracts, tax and data protection.
Keeping up with legal changes is particularly important in 2026. New requirements affecting businesses include the phased implementation of the Employment Rights Act 2025, changes to data protection law under the Data (Use and Access) Act 2025, and mandatory identity verification requirements for company directors and people with significant control (PSCs).
The good news is that compliance does not have to be complicated. A proactive approach to monitoring legal changes, maintaining accurate records, reviewing contracts and training employees can help businesses identify risks before they become expensive problems.
Quick answer
The five key steps for business compliance in the UK are: stay up to date with changes in the law, keep accurate business records, use clear and appropriate contracts, carry out regular compliance reviews, and train employees on their legal responsibilities. Businesses should also pay particular attention to employment law, data protection, health and safety and Companies House requirements.
In this article
- Why business compliance matters
- 1. Stay updated with changes in the law
- 2. Keep accurate and organised records
- 3. Use clear and comprehensive contracts
- 4. Carry out regular compliance reviews
- 5. Train employees on legal compliance
- Important legal changes businesses should know about in 2026
- How GLP Solicitors can help
- Frequently asked questions
Key takeaways
- Legal compliance is an ongoing responsibility, not a one-off exercise.
- Businesses should regularly monitor changes affecting their industry and workforce.
- Accurate financial, employment and corporate records can help demonstrate compliance.
- Clear contracts can reduce uncertainty and help prevent commercial disputes.
- Data protection compliance remains essential, with the Data (Use and Access) Act 2025 now fully implemented in relation to data protection provisions.
- Employers need to prepare for continuing changes under the Employment Rights Act 2025.
- Company directors and PSCs should be aware of the Companies House identity verification requirements introduced from November 2025.
- Regular legal reviews can help businesses identify potential problems before they develop into disputes, penalties or claims.
Why is legal compliance for UK businesses?
Every business has legal obligations. The exact requirements will depend on factors such as the type of business, its size, industry, employees, customers and the information it handles.
For example, a business with employees will have employment and workplace obligations. A company handling customer information will need to consider data protection law, while a business selling goods or services to consumers may need to consider consumer protection legislation.
Compliance is therefore not simply about avoiding fines. It can also help you:
- Protect your reputation.
- Reduce the risk of disputes.
- Protect employees and customers.
- Make business relationships clearer.
- Avoid unnecessary legal costs.
- Demonstrate that appropriate procedures are in place.
- Identify legal risks before they become more serious.
There is also a practical reason to review compliance regularly: the law changes.
In 2026, businesses are already dealing with significant changes to employment rights and data protection, alongside the continuing rollout of Companies House reforms.
1. Stay updated with changes in the law
One of the biggest compliance risks for a business is simply not knowing that the law has changed.
Legal requirements can change through new legislation, regulations, Government guidance, court decisions and regulatory developments.
Businesses should identify the areas of law that are most relevant to them and have a system for monitoring changes.
What should businesses monitor?
Depending on your circumstances, this could include:
- Employment law
- Company and corporate law
- Data protection
- Health and safety
- Consumer protection
- Tax and accounting requirements
- Intellectual property
- Environmental regulations
- Industry-specific regulations
- Commercial contracts and trading terms
This is particularly important for employers in 2026.
The Employment Rights Act 2025 is being introduced in stages. Changes already implemented include changes to Statutory Sick Pay, day-one Paternity Leave and Unpaid Parental Leave, collective redundancy protections and the creation of the Fair Work Agency.
Further changes are scheduled for later in 2026 and 2027. For example, the Employment Tribunal time limit is due to increase from three to six months from 1 October 2026, while further changes to sexual harassment protections are due from 30 October 2026.
Businesses should therefore avoid relying on an old employee handbook, contract or policy simply because it has worked in the past.
Practical tip: Set aside time at least quarterly to check whether important legal requirements affecting your business have changed.
2. Keep accurate and organised records
Good record-keeping is an important part of business compliance.
Depending on your business, you may need to retain records relating to:
- Accounts and transactions
- Tax and VAT
- Employees and payroll
- Contracts
- Company decisions and resolutions
- Shareholders
- Health and safety
- Data protection
- Complaints and incidents
- Policies and training
For example, HMRC states that businesses must keep sufficient records to make complete and accurate tax returns and allow their tax position to be checked. Companies also have specific accounting record requirements under company law.
For limited companies, company and financial records must also be maintained separately from the personal finances of owners and directors.
Why does record-keeping matter?
Records can help you demonstrate what happened if there is a disagreement, investigation or compliance check.
For example, imagine a customer alleges that your business agreed to provide a service on particular terms. A properly stored contract, correspondence and payment record may help establish what was actually agreed.
Good records can also make it easier for your accountant, solicitor or other professional adviser to identify potential problems.
Practical tip: Use secure digital systems where appropriate, create consistent naming and storage procedures, and regularly review who has access to sensitive information.
3. Use clear and comprehensive contracts
A verbal agreement might sometimes be legally binding, but relying on informal arrangements can create unnecessary uncertainty.
Businesses should consider whether their important commercial relationships are properly documented.
This could include:
- Supplier agreements
- Customer contracts
- Terms and conditions
- Partnership agreements
- Shareholder agreements
- Employment contracts
- Consultancy agreements
- Distribution agreements
- Commercial property agreements
- Confidentiality agreements
A good contract should clearly establish the parties’ responsibilities, payment arrangements, timescales and what happens if something goes wrong.
Where appropriate, it should also address issues such as:
- Termination
- Liability
- Confidentiality
- Intellectual property
- Dispute resolution
- Governing law
- Changes to the agreement
If your business deals with consumers, contract terms also need to comply with applicable consumer protection legislation. The Consumer Rights Act 2015, for example, provides protections against unfair consumer contract terms.
Why should contracts be reviewed regularly?
Your business may have changed significantly since a contract was first drafted.
You may have introduced new services, started working with different suppliers, expanded into new markets or changed the way you process customer information.
A contract that was appropriate several years ago may no longer adequately protect your business.
Practical tip: Do not wait until a dispute arises before reviewing your contracts.
4, Carry out regular compliance reviews
A compliance review is essentially a health check for your business’s legal processes.
It can help you identify areas where your current procedures may no longer reflect your legal obligations.
What should a compliance review cover?
The areas you review will depend on your business, but could include:
Employment
- Are employment contracts up to date?
- Are workplace policies accurate?
- Are holiday, sickness and family leave procedures compliant?
- Are managers following appropriate disciplinary and grievance procedures?
Data protection
- Are you collecting only the personal information you need?
- Are privacy notices up to date?
- Are appropriate security measures in place?
- Do you have appropriate contracts with organisations processing personal data for you?
The ICO states that the accountability principle requires organisations to take responsibility for complying with data protection law and to be able to demonstrate that compliance.
The Data (Use and Access) Act 2025 has also introduced changes to the UK’s data protection framework, with all data protection provisions now in force as of June 2026.
Health and safety
Employers have legal duties to protect employees and others from harm. This includes identifying hazards, assessing risks and taking appropriate steps to eliminate or control those risks.
Corporate compliance
If you operate through a limited company, make sure Companies House filings and company information are kept up to date.
There is an additional issue businesses need to consider in 2026: identity verification for directors and PSCs.
Mandatory identity verification began on 18 November 2025, with a 12-month transition period. New directors need to verify their identity when incorporating or being appointed, while existing directors and PSCs must complete the process according to their individual deadlines.
How often should a business conduct a compliance review?
There is no universal timetable that works for every business.
A higher-risk or heavily regulated business may need more frequent reviews, while a smaller business may carry out a proportionate annual review alongside additional checks when laws change or the business undergoes a significant change.
5. Train employees on legal compliance
Your policies are only useful if your employees understand them and know how to follow them.
Training should be appropriate to the employee’s role and the risks associated with your business.
Depending on your organisation, training could cover:
- Data protection
- Cybersecurity and information handling
- Health and safety
- Equality and discrimination
- Sexual harassment
- Anti-bribery
- Confidentiality
- Conflicts of interest
- Company policies and procedures
- Employment responsibilities
For example, the UK Government’s anti-bribery guidance recommends that businesses have an appropriate anti-bribery policy where there is a risk of bribery and ensure staff understand it.
Training should not necessarily be a once-a-year tick-box exercise. New employees should receive relevant information as part of their induction, while existing employees should receive refresher training when necessary.
This is particularly important when the law changes.
What legal changes should UK businesses know about in 2026?
There are several developments businesses should have on their compliance radar.
Employment Rights Act 2025
The Employment Rights Act 2025 is being implemented in stages throughout 2026 and 2027.
Businesses should already have considered changes introduced in April 2026, including:
- Changes to Statutory Sick Pay.
- Day-one Paternity Leave and Unpaid Parental Leave.
- Stronger whistleblowing protections relating to sexual harassment.
- Changes to collective redundancy protections.
- The establishment of the Fair Work Agency.
- New holiday pay record requirements.
Further reforms are scheduled for later in 2026 and 2027, including changes to unfair dismissal protection. From 1 January 2027, the qualifying period for ordinary unfair dismissal protection is due to reduce from two years to six months, subject to the legislation and implementation timetable.
Employers should therefore review contracts, policies and HR procedures in advance rather than waiting for a problem to arise.
Data protection changes
The Data (Use and Access) Act 2025 has changed aspects of UK data protection law.
The ICO confirmed in June 2026 that all data protection provisions under the Act are now in force.
Businesses should review their data protection procedures and make sure they understand how the changes affect their particular activities.
The core principles of the UK GDPR remain important, including lawfulness, fairness and transparency, purpose limitation, data minimisation, accuracy, storage limitation, security and accountability.
Companies House identity verification
Identity verification for company directors and PSCs became a legal requirement from 18 November 2025.
The process is being phased in over 12 months. Existing directors and PSCs should check their individual deadlines rather than assuming that the November 2025 start date was their personal deadline.
Businesses should make sure the people responsible for company administration understand these requirements and have completed the necessary steps.
Is business compliance a one-off task?
No. Business compliance is an ongoing process.
A business can be compliant today and fall out of compliance later because:
- The law changes.
- The business starts offering new services.
- The workforce grows.
- New technology is introduced.
- Customer information is collected in a different way.
- Contracts are updated.
- The business enters a new market.
- Company ownership or structure changes.
For this reason, businesses should build legal compliance into their normal operations rather than treating it as an emergency exercise.
A simple approach is to maintain a business compliance checklist, assign responsibility for different areas and schedule periodic reviews.
How GLP Solicitors Can Help
Legal compliance can involve several different areas of law, and the appropriate approach will depend on the nature and circumstances of your business.
GLP Solicitors’ Corporate & Commercial Team advises businesses on matters including company formation, commercial contracts, sales agreements, partnerships, terms and conditions and other commercial dealings.
Legal advice can be particularly useful when:
- You are starting or restructuring a business.
- You are entering an important commercial agreement.
- You need contracts or terms and conditions reviewed.
- You are concerned about a potential breach of contract.
- You are dealing with a business dispute.
- You need advice about your commercial rights and obligations.
- Your business is affected by changes in legislation.
GLP Solicitors also has specialist teams covering areas such as employment law, dispute resolution and debt collection, allowing businesses to obtain advice on related legal issues where required.
For businesses considering their wider legal requirements, see GLP Solicitors’ Corporate & Commercial services and Services for Business.
Frequently Asked Questions
The five main steps are to keep up with legal changes, maintain accurate records, use clear contracts, carry out regular compliance reviews and train employees. The exact requirements will vary depending on the business and its industry. Businesses should also pay attention to areas such as employment law, data protection, health and safety, company law and tax.
There is no single review period that applies to every business. An annual legal compliance review can provide a useful baseline, but businesses should also review their procedures when the law changes, they introduce new products or services, take on employees, change their corporate structure or enter significant new commercial relationships.
The records required depend on the type and structure of the business. They may include accounting and tax records, company records, contracts, employment records, health and safety documentation and data protection records. Companies have specific accounting record requirements, while businesses must also retain sufficient information to meet their tax obligations.
Employers should keep track of the staged implementation of the Employment Rights Act 2025. Changes already introduced include reforms to Statutory Sick Pay, day-one Paternity Leave and Unpaid Parental Leave and the Fair Work Agency. Further changes are scheduled for later in 2026 and 2027, including changes to Employment Tribunal time limits, sexual harassment protections and unfair dismissal rights.
Yes. Data protection responsibilities can apply to businesses of all sizes if they process personal data. The requirements will depend on what information the business collects and how it uses it. Small organisations should still consider matters such as lawful processing, security, data retention, privacy information and accountability. The ICO provides specific guidance for small organisations.
Yes, identity verification requirements for company directors and people with significant control began on 18 November 2025. The requirements are being phased in over a 12-month transition period, so existing directors and PSCs have individual deadlines. New directors must verify their identity when incorporating or being appointed.
Contracts establish the agreed rights and responsibilities of the parties. Clear contracts can reduce uncertainty, help manage expectations and provide a framework for dealing with problems such as late payment, poor performance or termination. Where consumer contracts are involved, businesses must also consider applicable consumer protection rules, including rules relating to unfair terms.
A solicitor can review areas of your business that fall within their expertise and identify potential legal risks. This might include reviewing commercial contracts, corporate arrangements, employment documentation, terms and conditions or dispute risks. The scope of a review can be tailored to the size, structure and activities of the business.
Related Services
For businesses looking for legal support, relevant GLP Solicitors services include: