Rethinking Recruitment Risk
As employment law reforms, fraud prevention duties, and AI regulation converge, businesses face heightened scrutiny over who they hire and how decisions are made in the UK. Caroline Smith, VP Deputy General Counsel at HireRight, discusses the impact of the raft of new and updated employment laws that were introduced in 2025.
The legal landscape surrounding recruitment is undergoing its most significant transformation in years and there is a lot to get to grips with. Between sweeping employment law reforms, new corporate fraud obligations and AI regulation coming into force, pre-employment screening has shifted from a compliance checkbox to a strategic necessity.
The legislative perfect storm
Four major pieces of legislation are converging to reshape how organisations approach hiring:
Data (Use and Access) Act 2025
This Act potentially brings good news for recruiters. After two previous attempts at GDPR reform, the government has delivered a measured approach that maintains EU adequacy while modernising key areas. Under the Act, digital ID now has a statutory footing, which means we should see continued investment into this sector, with the technology allowing for faster hiring. Additionally, it relaxes rules around automated decision making, making it less of a risk for recruiters to use tools, such as those used to sift through CVs, provided proper safeguards remain in place.
The bill is likely to come into force throughout 2026 and 2027 and aims to deliver one of the biggest overhauls of workers’ protections in a generation. It includes day-one protections for employees and changes to unfair dismissal, which will fundamentally change the stakes of every hire. These reforms mean that correcting a bad hire will be significantly more difficult and costly, making background screening even more critical to the recruitment process. The bill also creates a proactive duty to prevent workplace harassment, including by third parties such as clients or contractors, raising questions about how screening might identify behavioural red flags before they become workplace risks.
Economic Crime and Corporate Transparency Act
This Act, which came into force on 1 September, made the failure to prevent fraud an offence for large organisations. If an employee or ‘associated person’ commits fraud intending to benefit the organisation, the company may be held criminally liable unless it can demonstrate ‘reasonable’ fraud prevention procedures. Official guidance explicitly highlights pre-employment vetting as a frontline defence, as well as recommending ongoing checks for high-risk roles. It also encourages organisations to consider similar checks for their extended workforce, such as contingent workers, contractors and vendor representatives, to help manage their third-party risk.
EU Artificial Intelligence Act
The EU’s AI Act brings additional responsibilities for employers. While most provisions are now in effect, obligations around high-risk AI systems, including those used in recruitment, are yet to come into force. Although the EU has delayed the in-force date of these obligations via its ‘digital omnibus’, organisations still need to give due consideration to how they use AI to screen CVs, rank candidates or support hiring decisions. Companies need to ensure those systems are explainable, fair and properly documented.
A political shift in risk perception
Beyond the legislation itself, there's been a notable shift in governmental philosophy around employment laws. The current Labour government has pivoted away from the previous administration’s emphasis on flexibility and market efficiency, instead prioritising fairness, accountability and worker dignity. This signals a rebalancing of risk and responsibility, placing greater expectations on employers to demonstrate due diligence around who they hire and how they make those decisions.
The implications of these new and updated pieces of employment legislation are clear. Screening is no longer just a compliance tick-box exercise, it's about assessing reliability, trustworthiness and long-term organisational fit of candidates before they start working for a business.
In sectors such as defence and infrastructure, robust screening helps prevent insider threats. In financial services, it protects against fraud and reputational damage. In public services, it reinforces trust. And across all industries, it supports fundamental workplace safety. The key is proportionality. Not every role requires the same depth of scrutiny, but every role requires clarity about what's being assessed and why.
In order to prepare for upcoming changes and remain compliant, HR leaders should clearly define their screening criteria and align them with roles. High-risk positions warrant more comprehensive checks, while lower-risk roles can follow more streamlined processes.
Being transparent about the screening process with candidates can also build trust. Employers should consider adding these details to their job descriptions.
Screening programmes must continue to be reviewed as laws evolve, technologies advance and organisational risks shift. Particular attention should be paid to AI tools and third-party providers.
Lastly, don't overlook your extended workforce. The Economic Crime and Corporate Transparency Act guidance specifically highlights the importance of ensuring contractors and outsourced workers are vetted to appropriate standards.
Pre-employment screening in 2025 and beyond isn't about gatekeeping, it's about protection for your organisation, your people and, ultimately, your reputation.
With day-one employment rights, corporate fraud liability and AI accountability all coming into sharper focus, the cost of a poor hire has never been greater. A well-designed screening programme, however, doesn't just mitigate risk – it can accelerate hiring, enhance the candidate experience and support a culture of trust.
Looking ahead to 2026, employers should focus on establishing adaptable, forward-thinking screening policies and practices to help them stay agile and support their recruitment needs during this period of technological change.
Release Date: January 13, 2026
Caroline Smith
Caroline is a UK qualified lawyer with over 18 years’ experience and currently serves as HireRight’s Deputy General Counsel for the EMEA and APAC regions. When not “lawyering” or writing blogs, Caroline can be found striking yoga poses in remote locations such as Mongolia and Bhutan.