Employment Law is Changing in 2026: Here's How.

Employment law in the UK is changing with widespread reform coming in 2026 and some changes already live. If you’re an SME employer or an HR professional, you should familiarise yourself with these reforms to ensure your business is prepared.

Announced in 2025, the Employment Rights Act 2025 is bringing changes to key rights that employees have, and responsibilities of employers. Further changes are taking place gradually, but it’s important to understand what’s happening and when, and how to ensure you’re not caught out.

If you’re unfamiliar with the act, here’s a summary of the headline changes taking place in 2026 and some actions we recommend you take – if you haven’t already done so.

Waiting period for sick pay removed

From 6 April 2026, qualifying days for Statutory Sick Pay (SSP) have been removed, together with waiting days, meaning SSP is now payable for all employees (provided they are eligible) from the first day of sickness.

There are also some changes to the way SSP is calculated, and to eligibility:

Previous Rules	Rules after 6 April 2026
Statutory sick pay only payable on the fourth day of consecutive sickness. No payment is required for the first 3 days of sickness.	Statutory sick pay payable from the first day of sickness, with the waiting period removed entirely.
Employees must meet the Lower Earnings Limit of £125 per week before tax to qualify for Statutory Sick Pay.	The Lower Earnings Limit removed increasing employee eligibility for Statutory Sick Pay.
Statutory Sick Pay must be paid at a weekly rate of £118.75 per week.	Statutory Sick Pay must be paid at 80% of an employee’s average weekly earnings or a weekly flat rate of £123.25, whichever is lower.
Employees must have completed some work for their employer before they are eligible for Statutory Sick Pay.	No change.
Employees must tell their employer they are sick within contracted deadlines, or within 7 days to receive Statutory Sick Pay.	No change.
Employees must be classed as employed for tax purposes to be eligible.	No change.

Action for employers:

Make sure you pay particular attention to:

• Ensuring all policies related to sickness and absence reflect new legislation from 6 April 2026, including SSP calculations and amendments to any references to qualifying periods.
• Communicating any policy changes to people managers and those affected by policy changes. Triggering a mandatory policy review can be helpful.
• Checking that your payroll team or service provider and pay systems are set up to manage new SSP payment and average weekly earning calculations.
• Familiarising yourself with your SSP payment responsibilities for any employees whose period of sickness begins before 6 April 2026 but continues after.

Minimum wage increases

From 1 April 2026, as is standard for the time of year, the National Minimum Wage will increase. While not strictly a change to employment law, it’s important to review pay for staff in lower paid or entry-level roles to ensure salary compliance:

1. the National Living Wage will increase from £12.21 to £12.71 per hour
2. the rate for 18 to 20-year-olds will increase from £10 to £10.85 per hour
3. the rate for 16 to 17-year-olds will increase from £7.55

Importantly, enforcement of the minimum wage will be transferred to a newly-created body, the Fair Work Agency, with expectations that there will be stricter monitoring of its payment.

Action for employers:

• Review pay levels for staff paid at, or just above minimum wage, including taking corrective action for anyone identified to be receiving less the minimum.
• Amend any internal pay banding scales or documentation that make reference to minimum wage figures.
• Review any working practices that may mean staff unintentionally fall below minimum wage.

Paternity and unpaid parental leave become day 1 rights

Again, from 6 April 2026, paternity leave and unpaid parental leave have now become rights for all employees from the first day of employment, provided they are eligible.

This is a change from previous requirements, where employees must have worked a qualifying period of 26 weeks with the same employer before they could apply for paternity leave. Shared parental leave has also changed, alongside the introduction of a new day 1 bereaved partner’s leave right:

Previous Rules	Rules after 6 April 2026
Employees must work a continuous qualifying period of 26 weeks with the same employer before they apply for paternity leave, provided they are eligible.	The 26-week qualifying period has been removed, meaning employees can apply for paternity leave from their first day of employment, provided they are eligible.
To qualify for unpaid parental leave, employees must have 1 year of continuous service with the same employer, provided they are eligible.	Unpaid parental leave is a right from the first day of employment, provided the employee is eligible.
No entitlement to bereavement leave in the event of partner’s death in connection with childbirth.	Employees entitled to up to 52 weeks of unpaid leave if their partner dies in connection with childbirth or an adoption. This is a new right.
Employees entitled to 2 weeks off if their child dies under the age of 18 from first day of employment, provided they are eligible.	No change.

Action for employers:

Make sure you pay particular attention to:

• Removing any references to qualifying periods for paternity and unpaid parental leave from policies and employee handbooks.
• Review any new starter documents such as contracts, offer letters, email templates and onboarding materials and update any outdated language.
• Creating a new bereaved partner’s policy to enable affected partners that clearly defines how the new leave will be applied and its eligibility.
• Training and people and process managers on updated policies and how they will be practically applied.

Penalties for improper collective redundancies increases

The penalty for an employer who fails to comply with collective consultation during redundancy will double from 90 days’ full pay per employee to 180 days, payable to each affected employee. This is effective from 6 April 2026.

There is no change to the scope of when collective consultation is legally required, which remains a minimum of 20 redundancies within 90 days at a single establishment.

Action for employers:

• If you are making redundancies at this scale for the first time, ensure you prepare a detailed plan and timeline of the actions you will take and when.
• Make sure HR teams and senior decision-makers are familiar with the collective redundancy process and with the financial risks of failing to comply with the process.
• Create a process that enables employees to elect representatives
• Fast track settlement for individuals who make an outsized contribution to the UK or who work at a senior level in its public sector
• Delay settled status for those deemed a net detractor from society or those who enter the UK illegally

Launch of the Fair Work Agency

A new government body known as the Fair Work Agency (FWA) will be established on 7 April 2026 with the aim of investigating and enforcing workplace payment issues, amongst other matters, dating back to December 2025.

While there hasn’t been a timeline set out on when the agency will begin acting, the agency’s powers will be far reaching and employers are expected to pay an enforcement fee to the agency should it be required to intervene.

The government has announced that the FWA will have the ability to:

1. Impose penalties for statutory underpayments
2. Investigate and enforce sick pay, holiday pay and minimum wage
3. Oversee modern slavery and gangmasters licensing
4. Bring employment tribunal claims

Action for employers:

• Monitor government updates for when the FWA is set to formally launch
• Review and implement fixes for any statutory pay issues and holiday pay calculation issues in particular

Summary

While it may seem there are many changes that have launched, with the introduction of the Fair Work Agency, it’s important that businesses address any process and policy weaknesses to prevent falling foul of new requirements.

While some changes may seem simple to implement, any supporting processes and documentation will also require a thorough review or re-drafting to ensure ongoing compliance.

Lastly, businesses should take care to review practical business elements, such as reinforcing escalation channels between people managers and HR in the event of any uncertainty. As with any widespread changes, best practice is always to hold training sessions on changes for all people managers to raise awareness.

While this article sets out changes that many SMEs will need to be mindful of, additional changes have launched that affect larger business. In particular, there has been reform to the way unions are recognised, how sexual harrassment is treated in whistleblowing issues, the requirements of larger businesses to disclose equality action plans and the way umbrella companies share employee PAYE/NIC burdens.

Our employment law team are on standby should you need any assistance in understanding or implementing the changes set out by the Employment Rights Act 2025.