The start of 2026 brings with it a significant shift in the UK employment landscape, following the passage of the Employment Rights Act 2025 (the “Act”). This legislation marks one of the most substantial updates to workplace rights in a generation.
For employers, the message is clear, while most of the changes will be phased in over the next two years, early awareness and preparation will be critical. Whilst the Act is designed to modernise employment protections, improve job security and strengthen enforcement it also introduces new compliance and financial obligations on employers. We firstly look at the reforms expected in April this year.
April 2026 changes:
- statutory sick pay payable from day one of absence and removal of the lower earnings limit
- statutory paternity leave and unpaid parental leave becoming a day one right
- doubling of the maximum protective award from 90 to 180 days’ pay per affected employee for collective redundancy consultation failures
- protected disclosures will be expressly extended to include sexual harassment concerns
- simplified processes introduced for trade union recognition
- introduction of the Fair Work Agency.
Sick Pay
Significant changes are coming to Statutory Sick Pay (SSP). From April 2026 SSP will be payable from day one of sickness absence (removing the current three-day waiting period) and the lower earnings limit for SSP eligibility (currently £125 per week) will be abolished entirely.
To avoid the rate of SSP being more than the actual earnings of eligible employees, the weekly rate of SSP will be the lower of the prescribed weekly rate (see rates further below) and 80% of normal weekly earnings.
This is undoubtedly a positive step for employee welfare: employees will no longer face the choice between attending work while unwell or losing income during the first three days of illness and, further, the removal of the earnings threshold extends protection to those on lower pay who were previously left without support. On the other side of the coin, however, is the increase in financial burden placed on employers. The cost of SSP is no longer recoverable from the government and amending payment to commence on day one will invariably swell employers’ overheads.
It’s vital that employers review and update their sickness and absence management policies now. If your business operates ‘waiting days’, and this is set out in employment contracts and absence policies / staff handbook, these will need to be amended to reflect the incoming changes.
Paternity leave and unpaid parental leave
Currently, employees must meet minimum service requirements to qualify for paternity and unpaid leave: these being 26 weeks’ continuous service for paternity leave and one years’ service for unpaid parental leave.
From April 2026, this service requirement will be removed. Subject to the other eligibility criteria, employees will be entitled to both types of leave from the first day of their employment. Plus, employees won’t be prevented from taking paternity leave after shared parental leave, giving them greater flexibility in how they arrange their leave.
Removal of the qualifying periods for paternity and unpaid parental leave will entitle many more employees to take these types of leave. However, since paternity leave is for a maximum period of two weeks, and many employees do not take parental leave because it is unpaid, it seems unlikely that there will be a significant impact on employers from this change. Statutory paternity pay will remain conditional on having 26 weeks’ service, remaining in line with other statutory parental payments.
Increase to the protective award – collective consultation
Stronger collective redundancy rights will see the introduction of tighter requirements on consultation. Currently, if businesses fail to comply with their collective consultation obligations, employees can claim a protective award of up to 90 days’ pay. From April 2026, this maximum award doubles to 180 days’ pay. The increase in the maximum penalty means the costs of failing to inform and consult properly on large scale redundancies will increase significantly.
This significant increase makes it even more critical for employers to comply fully with their obligations to collectively consult staff where there is a proposal to make 20 or more employees redundant within 90 days, or (when in force – which is expected to be 2027) at least the ‘threshold number of employees’.
Whistleblowing and sexual harassment
Disclosing sexual harassment is to be added to the list of what counts as a qualifying disclosure. Workers who make a disclosure of information about sexual harassment that has occurred, is occurring, or is likely to occur will now be explicitly covered by whistleblowing protections (such as protections from detriment or dismissal), if they have a reasonable belief that their disclosure is in the public interest.
Employers are advised to update whistleblowing policies and procedures before April 2026 and ensure that HR and relevant managers receive training on dealing with reports of sexual harassment as protected disclosures.
Fair Work Agency
A new Fair Work Agency is set to launch in April 2026. In time, it will take over certain existing enforcement functions for national minimum wage, the employment tribunal penalty scheme, labour exploitation and modern slavery, and employment agencies rules. It will also include a new enforcement function for holiday pay and statutory sick pay; giving it the power to be able to charge higher penalties for not paying correct holiday and sick pay.
For employers, this signals a more proactive enforcement environment and reinforces the importance of compliance across pay, working time and contractual arrangements.
The power to enforce holiday pay is potentially significant as this is a complex area and one which is not often litigated currently. Employers should review their holiday pay compliance proactively, particularly where there has been historic non-compliance, and consider remedial strategies where applicable.
Unions
The Government’s plans are likely to mean trade unions will have a much greater role to play in employee relations.
From April 2026, the strike ballot and notice requirement will be relaxed, electronic balloting will be introduced, the trade union recognition process will be simplified and the thresholds reduced.
Other non-Employment Rights Act April changes
April will see the usual annual increases as follows:
- the weekly rate of SSP will increase from £118.75 to £123.25 or 80% of the employee’s normal weekly earnings, whichever is lower.
- the weekly rate of statutory maternity, adoption, paternity, shared parental, neonatal care and parental bereavement pay, will increase to £194.32 (up from £187.18)
- save for SSP (where this is abolished from April) the lower earnings limit (the weekly earnings threshold for qualifying for the above payments) will rise to be £129 (up from £125).
- maternity allowance, the threshold remains at £30 a week.
- the National Living Wage (payable to workers aged 21 and above) will from £12.21 to £12.71.
- The National Minimum Wage will increase:
- for 18-20-year-olds, from £10.00 to £10.85
- for apprentices, from £7.55 to £8.00; and
- for 16-17-year-olds, from £7.55 to £8.00.
The next steps for employers
Employer reaction to the Employment Rights Act has been mixed, with concerns around cost, administration and flexibility needing to be balanced against the government’s aim of creating a more secure and productive workforce. What is clear, however, is that the scale of change warrants early engagement.
This is not a single reform but a package of changes that will reshape how employers manage risk, people and processes over the next few years. The phased timetable gives businesses breathing space, but those that wait until changes are live may find themselves on the back foot.
Employers should be starting their review of sickness absence policies and payroll systems, whistleblowing and harassment procedures, collective consultation frameworks, family leave policies and industrial relations strategy.
Manager training will also be particularly important. Several of the changes increase exposure not because of the law itself, but because of inconsistent or poorly documented decision-making at line manager level.
For guidance on how prepare your organisation for the upcoming changes please do get in touch with our employment team here.