Employment Law Shakeup: What UK Employers Need to Know in 2026 and Beyond

2026 is shaping up to be a pivotal year for workplace law in the UK, with some of the most significant changes to employment law in a generation set to roll out. These reforms, many stemming from the Employment Rights Act 2025, bring substantial new rights for workers and corresponding responsibilities for employers. Here’s your guide to what’s coming, when it’s happening, and how businesses should be preparing now.

1. The Big Picture: Why Changes Are Happening

At the end of December 2025, the UK Parliament passed the Employment Rights Act 2025 (ERA 2025) — a landmark package of employment law reforms that will be phased in through 2026 and 2027. The Act arises from the Government’s “Plan to Make Work Pay,” aiming to strengthen employee protections, modernise workplace rights and address long-standing gaps in UK employment law.

Experts have described the scale of these reforms as the biggest employment law change in a decade, with impacts across sectors and business sizes.

2. Key Changes Employers Should Expect

The ERA 2025 introduces a wide menu of reforms. Whilst some changes are already under way, the most impactful are still to come.

?? April 2026: First Wave of Major Reforms

From April 2026, a suite of employer obligations and employee entitlements come into force:

• Statutory Sick Pay (SSP) reform

  • Elimination of the three-day waiting period.

  • SSP payable from day one of sickness.

  • Removal of the lower earnings limit for SSP eligibility — increasing coverage to low-paid staff.

• Day-One Rights

  • Paternity leave and unpaid parental leave entitlements become effective from the first day of employment, rather than after a qualifying period.

• Enhanced whistleblowing protections for workers.

• Protected awards for collective redundancy consultation

  • Employers face higher financial penalties if mandatory consultation isn’t conducted properly.

• Fair Work Agency

  • The creation of a new body to oversee and enforce aspects of workplace fairness.

These changes will require updates to HR policies, employee contracts, payroll systems and communications with staff to ensure compliance from day one of April 2026.

?? October 2026: Second Wave of Reforms

Later in October 2026, further employer duties are expected to kick in, including:

• Restrictions on “fire and rehire” practices — making it harder to change terms and conditions without agreement.

• New legal duties to prevent workplace sexual harassment, including incidents involving third parties.

• Changes to tipping and gratuities handling.

These measures underscore a growing focus on fair work practices and protective cultures — not just legal compliance.

?? 2027: Tribunal Rights and Unfair Dismissal

Some of the most consequential reforms — including changes to unfair dismissal rights — are set to take effect in 2027:

• The qualifying period for unfair dismissal claims is being reduced from two years to six months — a major shift that broadens access to these claims.

• The statutory cap on unfair dismissal compensation is also due for review, with a potential removal or significant change under the ERA roadmap.

These changes could increase employers’ exposure to tribunal claims, making careful performance management, probationary processes, and documentation more important than ever.

3. What This Means for Your Business

? Compliance and Policy Overhaul

Businesses will need to review and update employment contracts, handbooks and HR policies to reflect changes to:

• Parental leave and sick pay entitlements

• Redundancy consultation requirements

• Disciplinary and dismissal procedures

• Harassment and anti-bullying standards

• Flexible working rights (still under development)

? HR & Payroll System Upgrades

With SSP and parental leave changes affecting payroll from April 2026 onwards, system audits and vendor discussions should be a top priority. If your current setup can’t automatically manage day-one sick pay or parental leave tracking, now is the time to fix that.

? Train Managers and People Leaders

Because the qualifying period for dismissal claims will shorten significantly, managers will need training on:

• Performance reviews

• Probation management

• Handling grievances and misconduct fairly and consistently

? Budget Forecasting

Improved worker entitlements (especially SSP and paid leave) may mean higher short-term employment costs. Finance teams should be looped in early to model impacts.

? Employee Communication

Clear, proactive communication about changes will reduce confusion and help build trust — particularly around day-one rights, new protections and policy updates.

4. Final Thoughts

The employment law changes rolling out through 2026 and into 2027 represent the most comprehensive overhaul in UK workplace law in decades. For employers, this isn’t simply about ticking compliance boxes — it’s a chance to modernise HR practices, strengthen employee engagement and embed fairness at the heart of your people strategy.

The lead-up to April 2026 is a critical window for preparation. Early action will not only keep your business compliant but also avoid costly corrections once new rights take effect.

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