The Employment Rights Act 2025 marks one of the most significant shifts in UK employment law in recent years. With changes being introduced in phases throughout 2026, employers will need to prepare for updates affecting industrial action, statutory payments, payroll processes, family leave entitlements, enforcement activity and workplace protections.
Some changes will take effect shortly after Royal Assent in early 2026, with further major reforms planned for April 2026 and additional measures later in the year. Below, we break down what’s changing and what this means for your organisation.
Early 2026: Changes Following Royal Assent
Around two months after the Bill becomes law, several reforms linked to industrial action and trade union activity are expected to come into force. These changes are designed to rebalance protections for workers and simplify industrial action rules.
Key Changes Expected in Early 2026
Removal of Minimum Service Level Rules for Strikes
Rules requiring minimum service levels during strike action are expected to be repealed. These provisions were originally introduced to maintain certain service levels during industrial action and their removal may increase operational disruption during strikes.
Increased Dismissal Protection for Industrial Action
Dismissal for taking part in industrial action is expected to become automatically unfair, removing the current 12-week qualifying limit. This significantly strengthens protection for workers who participate in lawful industrial action.
Trade Union and Industrial Action Reforms
Employers should prepare for the following changes:
• Notice of industrial action reduced from 14 days to 10 days
• Industrial action ballots requiring only a simple majority
• Removal of the requirement for picket supervisors
• Industrial action mandates extended from 6 months to 12 months
• Simplification of industrial action and ballot notice requirements
• Changes to political fund rules for trade unions
What This Means for Employers
These reforms are likely to make industrial action easier to organise and sustain. Employers should review their industrial relations strategies, update policies and ensure leadership teams are trained on lawful engagement with trade unions.
April 2026: Major Payroll, HR and Compliance Changes
April 2026 represents the most substantial phase of reform, with significant implications for payroll systems, HR policies and compliance risk.
Statutory Payment Increases
From April 2026, statutory payment rates are expected to increase:
• Statutory Sick Pay (SSP): From £118.75 per week to £123.25 per week
• Statutory Maternity Pay, Adoption Pay, Paternity Pay, Shared Parental Pay and Parental Bereavement Pay: From £187.18 per week to £194.32 per week (or 90% of average weekly earnings if lower)
• Statutory Neonatal Care Pay and Parental Bereavement Pay: Increasing to £194.32 per week (or 90% of earnings if lower)
• Lower Earnings Limit: Rising from £125 per week to £129 per week
Note: The lower earnings limit is likely to be removed for SSP eligibility in 2026.
National Minimum Wage increases (from 1 April 2026)
New hourly rates are expected to be:
• Age 21 and over: £12.71 (previously £12.21)
• Age 18 to 20: £10.85 (previously £10.00)
• Under 18s and apprentices: £8.00 (previously £7.55)
Payroll impact: Employers must ensure that all pay rates are updated in payroll systems and that compliance checks are in place to mitigate underpayment risks. Utilising PeoplePay Global for payroll processing guarantees compliance, thereby eliminating underpayment risks.
Statutory Sick Pay (SSP) Reforms
From April 2026:
• SSP will become payable from day one of illness
• The lower earnings limit will be removed
• Lower earners may receive 80% of weekly earnings (or SSP, whichever is lower)
What This Means:
This represents a major payroll change. Employers will need to update SSP policies and absence management processes. Using PeoplePay Global ensures the payroll calculations comply with the changes.
‘Day One’ Rights for Family Leave
From April 2026:
• Paternity leave will become a day one right (removing the 26-week qualifying period)
• Ordinary parental leave will also become a day one right (currently requires one year’s service)
• The restriction on taking paternity leave after shared parental leave is likely to be removed
HR Impact: Contracts, handbooks and onboarding processes should be updated to reflect immediate eligibility for these leave entitlements.
Fair Work Agency: A New Enforcement Body
A new Fair Work Agency is expected to launch in April 2026, acting as a single enforcement body with wide-ranging powers to:
• Inspect workplaces
• Carry out targeted and proactive enforcement
• Bring civil proceedings
• Act against labour exploitation and modern slavery
The Agency will enforce rights relating to:
• National Minimum Wage
• Holiday pay
• Statutory Sick Pay
• Employment tribunal penalties
• Labour exploitation and modern slavery
It will have powers to:
• Recover underpayments going back six years, uprated to current rates
• Issue penalty notices of 200% of underpayments (minimum £100, maximum £20,000 per worker)
• Bring or support employment tribunal claims
• Recover enforcement costs from non-compliant employers
What Employers Should Do Now
This significantly raises the compliance stakes. Employers should use this lead-in time to audit compliance with holiday pay, minimum wage and SSP rules.
Enhanced Whistleblowing Protections for Sexual Harassment
Sexual harassment disclosures are expected to become qualifying disclosures under whistleblowing law. This will give whistleblowers protection from detriment and unfair dismissal when raising concerns about sexual harassment.
Implication:
Employers will need to ensure reporting channels, investigations and anti-harassment policies are robust, well-communicated and properly enforced.
Higher Penalties for Collective Redundancy Failures
The maximum protective award for failure to consult properly on collective redundancies will increase from:
• 90 days’ pay to 180 days’ pay, with tribunals able to apply an additional 25% uplift.
Risk impact: Collective redundancy exercises will carry significantly higher financial risk for non-compliance, making early legal and HR planning essential.
How Employers Can Prepare Now
• With these changes approaching, employers should take proactive steps:
• Audit payroll systems for SSP, statutory payments and minimum wage compliance.
• Review employment contracts and HR policies
• Train HR teams and managers on new rights and enforcement risks
• Strengthen processes for industrial relations, redundancy consultation and whistleblowing
• Plan for Fair Work Agency inspections and enforcement activity
Final Thoughts
The Employment Rights Act 2025 signals a new era of worker protection and regulatory enforcement in the UK. For employers, the key challenge will be operational readiness, ensuring payroll systems, HR policies and leadership practices are aligned well ahead of the 2026 deadlines.
PeoplePay Global is here to support you with payroll readiness, compliance planning and policy updates as these reforms take effect. If you would like a tailored readiness checklist or an impact assessment for your organisation, our team is happy to help.