As you may be aware, there have been a number of key changes brought in by the Employment Rights Act. Below is a summary of the legislative updates and changes coming into force over the following 12 months.
National Minimum & Living Wage Increase
The National Living Wage will rise from 1 April 2026 as follows:
- 21 and over – from £12.21 to £12.71
- 18-20 – from £10 to £10.85
- 16-17 and apprentices – from £7.55 to £8.00
This will immediately raise payroll costs. In advance of this, we would recommend a review of pay structures to ensure compliance and anticipate knock-on effects on wage differentials and pay equity.
Statutory Rates
- From April 2026, the weekly rate of Statutory Maternity Pay, Maternity Allowance, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Leave Pay, Parental Bereavement Pay, and Statutory Neonatal Care Leave Pay is expected to increase to £194.32 (currently £187.18).
- Significant changes are coming to Statutory Sick Pay (SSP). From April 2026, the lower earnings limit will be abolished. This means all employees will be entitled to SSP from the first day they are ill.
- The weekly rate of SSP will increase to £123.25 or 80% of the employee’s normal weekly earnings, whichever is the lower.
- If you operate ‘waiting days’ you will need to amend this practice and update any absence polices that reflect this.
Fair Work Agency
- The Fair Work Agency is expected to be established in April 2026. It will have the following state enforcement functions:
- Minimum wage and statutory sick pay enforcement
- Employment Tribunal penalty scheme; and
- Labour exploitation and modern slavery
- The Fair Work Agency will also enforce holiday pay and over time will take on the enforcement of a wider range of employment rights.
Further changes to the Employment Rights Act are as follows:
Family Rights
- From April 2026 Paternity Leave and Unpaid Parental Leave will become a day one right, with their existing service requirements removed. Other remaining eligibility criteria will remain in force.
- Employees will no longer be prevented from taking paternity leave after shared parental leave, giving them greater flexibility in how to manage such time off.
Protective Award
- From April 2026, the maximum award for failing to comply with your collective consultation obligations doubles from a protective award of up to 90 days to a maximum award of 180 days’ pay.
- An Employment tribunal will continue to be able to make awards of less than the maximum where this is appropriate.
- This new greater award means it will be even more critical to comply fully with your obligations to collectively consult with staff, where you are proposing to make 20 or more employees redundant within 90 days.
Bereaved Partners’ Paternity Leave
From April 2026, Bereaved Partners’ Paternity Leave will enable bereaved fathers and partners to take up to 52 weeks of paternity leave if the mother or primary adopter dies within the first year of the child’s life. On this basis, we have drafted and attached a new policy on this into your handbook.
Third Party Harassment
- In October 2026, as an employer, you will become liable for a third party such as a client or customer harassing a member of staff in the course of their employment. You will only be able to defend this type of claim if you can show that you have taken all reasonable steps to prevent it.
- Since October 2024, as an employer you have been required to take reasonable steps to prevent sexual harassment of staff, including by third parties, during the course of their employment. From October 2026, this duty will be strengthened, requiring instead that you take all reasonable steps.
- Regulations to clarify what constitutes ‘all reasonable steps’ will be provided; however this is not expected until 2027. For now, we recommend you update your risk assessments and identify any additional measures needed to comply with these obligations.
Timeline for employment tribunal claims
- The current deadline for workers to bring most claims is within three months of the issue they are complaining about.
- From October 2026 this will change to six months and will apply to all types of claims except for breach of contract claims arising or outstanding on termination of employment. This however may be subject to change as it is not currently clear if this provision has merely been overlooked.
Unfair dismissal changes
- With effect from 1st January 2027, the cap on unfair dismissal compensation will be removed. Currently is this the lower of either a year’s pay or £118k.
- The government has also confirmed that it intends to bring the six month unfair dismissal qualifying period into force on 1st January 2027. From that date, employees who already have six months service or more will have protection and other employees will gain this protection when they reach six months’ service.
‘Fire and Rehire’
- From January 2027 it will be automatically unfair to dismiss an employee in order to bring about changes to their terms and conditions of employment.
- These are referred to as ‘restricted variations’ and include changes to terms such as pay, working hours and holiday.
- There will however be an exception to this for severe financial difficulty
If you have any questions about anything you’ve read here regarding the Employment Rights Act, please don’t hesitate to get in touch.
