Employment Rights Act 2025: UK Employment Law Changes SMEs Need to Prepare For in 2026
What is the Employment Rights Act?
The Employment Rights Act 2025 is new UK Employment Law, which introduces the biggest changes in decades for employers. From April 2026, employers will see new rules around statutory sick pay, parental leave and trade union recognition. Later reforms in October 2026 will introduce stronger protections against sexual harassment and tighter restrictions on “fire and rehire”. Read below how you can prepare for these changes.
For HR leaders and business owners, preparing early will help reduce compliance risks and ensure policies, payroll processes and management training are ready for the new rules.
What these changes mean for employers
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Absence policies may need updating for day-one SSP
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Payroll systems must calculate sick pay from the first day
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Manager training will be needed around whistleblowing and harassment prevention
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Businesses should review redundancy consultation procedures
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HR teams should prepare for greater union engagement
The Employment Rights Act signals a significant shift in the UK employment landscape. With changes being phased in across 2026 and 2027, employers will need to prepare for stronger employee protections, increased enforcement, and new compliance expectations.
While the legislation is wide-ranging, below are the key changes most likely to affect employers, along with what they mean in practice.
From April 2026: strengthening baseline rights
The first phase focuses on improving access to core employment rights and tightening compliance.
Key changes expected include:
• Statutory Sick Pay reforms
The removal of the Lower Earnings Limit and waiting period will make Statutory Sick Pay available to more workers from day one of absence. Employers should review absence policies and payroll processes in advance.
• Day-one family-related leave
Paternity leave and unpaid parental leave will no longer require qualifying service, increasing early-stage employment rights and the need for clear onboarding processes.
• Enhanced whistleblowing protections
Workers raising concerns will benefit from stronger safeguards, placing greater importance on robust whistleblowing policies and manager training.
• Introduction of the Fair Work Agency
A new enforcement body will bring together oversight of key employment rights, increasing the likelihood of investigations and enforcement action.
• Higher penalties for collective redundancy failures
The cap on protective awards will double, significantly raising the financial risk where consultation obligations are not met.
• Simpler trade union recognition processes
Changes designed to make union recognition more accessible may lead to increased union activity in some sectors.
From October 2026: greater focus on fairness and enforcement
The second phase introduces more far-reaching obligations, particularly around consultation, transparency and workplace culture.
Expected changes include:
• Restrictions on fire and rehire practices
Employers will be required to demonstrate that alternatives have been properly explored and that consultation has been meaningful.
• Fair Pay Agreement for adult social care
Sector-specific pay standards will be introduced, affecting employers operating in or contracting with the care sector.
• Stricter rules on tips and gratuities
Additional protections will ensure tips are distributed fairly and transparently.
• Duty to inform workers of trade union rights
Employers will be required to provide clearer information to workers about their rights.
• Expanded trade union access rights
Making it easier for unions to engage with workers in the workplace.
• New duty to prevent sexual harassment
Employers will be expected to take proactive steps to prevent harassment, not simply respond once issues arise.
• Ban on third-party harassment
Employer responsibility will extend to harassment by customers, clients and other third parties.
• Extended employment tribunal time limits
Employees will have more time to bring claims, increasing long-term risk exposure for employers.
What employers should do now
Although many of these changes are not due until 2026, early planning will be key. Employers should begin reviewing policies, training programmes and people management practices to ensure they are well-positioned ahead of implementation.
Employer readiness checklist for 2026
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Review sick pay policies and payroll processes
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Update family leave policies
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Review whistleblowing procedures
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Train managers on harassment prevention
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Audit redundancy consultation procedures
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Prepare communication for employees
Employment Rights Act Timeline:
April 2026
– SSP day-one rights
– Day-one parental leave
– Fair Work Agency launched
October 2026
– Fire and rehire restrictions
– Harassment prevention duty
– Tribunal time limit extensions
FAQs
When does the Employment Rights Bill take effect?
The reforms are being introduced in phases from April 2026, with further changes expected in October 2026 and additional measures into 2027.
What is changing with statutory sick pay?
Statutory Sick Pay will be available from day one of absence, and the lower earnings threshold will be removed.
Will parental leave become a day-one right?
Yes. Paternity leave and unpaid parental leave will no longer require a minimum service period.
About the Author
Helen Scullion, Assc CIPD is HR Client Manager at Limelite HR & Learning and an experienced HR consultant, supporting organisations across the UK with employment law compliance, HR Consultancy support and workplace improvements.
