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With the first major reforms under the Employment Rights Act 2025 due to take effect on 6 April 2026, employers should now be reviewing policies, procedures, and payroll systems to ensure they are prepared. While much attention has focused on new “day one rights,” several additional reforms will also have significant operational and compliance implications.
Key takeaways for employers coming in April 2026
- Day one rights are expanding to include paternity leave, parental leave, and statutory sick pay.
- The Fair Work Agency will introduce stronger enforcement powers relating to pay and holiday compliance.
- Maximum collective redundancy protective awards will double to 180 days’ pay per affected employee.
- Trade union recognition processes will be simplified, with further access rights expected in October 2026.
- Sexual harassment will be introduced as a protected disclosure under whistleblowing.
- Employers should review policies, payroll systems, and internal processes now to reduce risk and ensure compliance.
These changes will impact leave entitlements, pay administration, employee relations, and workplace compliance.
Parental leave
Paternity leave will become a day one right, removing the current 26-week qualifying period. This applies to babies born on or after 6 April 2026, or where the expected week of birth begins on or after that date, even if the baby is born early.
Statutory paternity pay will also become a day one entitlement, and employees who adopt will gain the same rights where the placement begins on or after this date.
Employees can now take paternity leave after shared parental leave, which was previously prohibited.
In addition, parental leave will also become a day one right, replacing the prior one-year service requirement.
Although these changes extend eligibility, parental leave remains unpaid, meaning the practical impact may be limited for some employees.
Steps to take:
- Update policies now on Paternity Leave and Parental Leave.
Statutory sick pay reforms
Statutory sick pay (SSP) will also become a day one right, and the lower earnings threshold will be removed, making all workers eligible regardless of income. Employees on low wages who cannot work due to sickness will receive either 80% of normal weekly earnings or the SSP rate, whichever is lower.
New national minimum wage rates will also apply from 6 April 2026
- Age 21+ – £12.71 per hour
- Age 18–20 – £10.85 per hour
- Age 16–17 and apprentices – £8.00 per hour
- Statutory maternity, paternity, and adoption pay – £194.32 per week
Employers must ensure payroll systems, contracts, and policies are updated to reflect these changes.
Steps to take:
- Review your Sick Pay policies and contractual provisions on Statutory Sick Pay.
- Review Record Keeping in respect of annual holidays and holiday pay to ensure and demonstrate compliance. This will be more complicated where there are provisions for overtime or commission that need to be included in the holiday pay calculations.
- Update Pay Roll for the new Minimum Wage and Statutory Rates.
- Be aware that the Fair Work Agency once established will have new powers to enforce non-payment or inaccuracies in pay in respect of SSP and National Minimum Wage which are discussed below.
Fair Work Agency
Responsibility for enforcing minimum wage and related pay obligations will transfer from HMRC to the Fair Work Agency. The Agency will have broad powers, including:
- Investigating underpayments, issuing penalties, and enforcing statutory rights in respect of National Minimum Wage, holiday pay and sick pay.
- Recovering unpaid tribunal awards and issuing penalties up to 200% of wage shortfalls
- Entering premises to carry out investigations
- Bringing claims on behalf of employees unable to act themselves
Steps to take:
- Employers should ensure pay practices and record-keeping are fully compliant to minimise risk and contracts and policies are updated with changes.
- Diary reminders for employees to take holidays
Increase in protective awards
Where employers fail to comply with collective redundancy consultation requirements, affected employees can currently claim up to 90 days’ pay. From April 2026, this will increase to 180 days per affected employee.
Steps to take:
- Employers must carefully plan and manage collective consultations to reduce financial risk.
- Guidance from the government is expected, and managers involved in redundancies should familiarise themselves with these requirements.
Trade union recognition
- From April 2026, trade union recognition processes will be simplified, paving the way for further reforms in October 2026. At that point, unions will gain the right to apply for access to workplaces, including those where no union is currently recognised.
Steps to take:
- Employers should anticipate short response times once a union approaches
- They should also consider employee engagement strategies, such as representative groups or forums.
Whistleblowing protections extended
Sexual harassment will be added as a protected disclosure, strengthening protections for employees who report concerns.
Steps to take:
- Employers should ensure whistleblowing policies and reporting channels reflect these changes.
Looking ahead to October 2026
Further reforms expected later in 2026 include:
- Duty to inform workers of their right to join a trade union
- Stronger trade union access rights
- Requirement to take all reasonable steps to prevent sexual harassment
- Additional trade union-related protections
- Possible changes to employment tribunal time limits
A round up of what employers should do now
Employers should focus on five priority areas:
Update employment documentation
Review and revise employment contracts, policies, and procedures, particularly regarding paternity and parental leave, SSP, and whistleblowing.
Review payroll and compliance systems
Ensure payroll systems reflect new minimum wage and statutory rates. Review holiday pay calculations, particularly where overtime or commission are involved.
Audit pay practices
Conduct an internal review of minimum wage, SSP, and holiday pay compliance in preparation for the enhanced powers of the Fair Work Agency.
Prepare managers and HR teams
Ensure HR and management teams understand the changes and maintain clear documentation on performance, conduct, and decisions.
Plan for future reforms
Review recruitment, probation, and performance management processes to prepare for potential changes to unfair dismissal qualifying periods.
Staying informed
As the Employment Rights Act 2025 continues to evolve, staying proactive is essential. Reviewing policies, payroll systems, and internal processes now will help organisations manage risk and ensure compliance. Our team will continue to provide updates via blogs, newsletters, and seminars.
For tailored advice on how these reforms may affect your organisation, or to ensure your policies and procedures are fully up to date, please email me via: [email protected]
