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Navigating the Latest Employment Law Changes: What Businesses Need to Know for 2026
Adrian Fryer
2026 is shaping up to be one of the most significant years for UK employment law in decades.
With the Employment Rights Act 2025 now moving into phased implementation throughout 2026, businesses across all sectors will face a rapidly changing compliance landscape.
Understanding these reforms, and preparing early, will be essential to managing risk, maintaining good employee relations, and staying ahead of regulatory expectations.
Here are some of they key changes coming in 2026:
- Strengthened Sick Pay and Day-One Rights (April 2026)
One of the most impactful reforms arriving in April 2026 is the overhaul of Statutory Sick Pay (SSP). Employers will need to adapt to:
- SSP being payable from the first day of absence
- The removal of the lower earnings limit, extending sick pay eligibility to more workers
- A shift toward SSP being calculated as a percentage of usual earnings, rather than a flat rate.
Organisations will need to update their payroll systems, HR procedures, and sickness policies to ensure compliance and avoid unexpected cost implications.
The government is also introducing day-one rights for paternity leave and unpaid parental leave, removing previous minimum service requirements. As a result, businesses should anticipate an increase in family related leave requests and ensure managers are equipped with the right training to handle them confidently and consistently.
- Enhanced Whistleblowing Protections
The Act expands protections for employees who raise concerns, including explicitly recognising disclosures about sexual harassment as ‘protected disclosures’. This places a renewed emphasis on transparency, accountability, and safe reporting cultures. Employers will need:
- Clear, confidential reporting channels
- Updated whistleblowing policies
- Manager training to recognise and escalate concerns appropriately
Failing to make the necessary updates could leave businesses vulnerable to both legal consequences and reputational damage.
- Changes to Industrial Relations and Trade Union Rights
One early reform which is already in force is the repeal of the Strikes (Minimum Service Levels) Act 2023. This was legislation brought in by the previous Conservative government which required minimum staffing levels to be in place during industrial action in key public services. The Employment Rights Act 2025 will also simplify the trade union recognition processes, making unionisation more accessible in many workplaces. Employers should prepare for increased union activity and review their consultation and industrial relations strategy accordingly.
- The Fair Work Agency Launch (April 2026)
A newly formed Fair Work Agency will oversee compliance with sick pay, minimum wage, and holiday pay requirements. This signals a more robust enforcement environment, particularly affecting businesses with large hourly paid workforces or variable hours staff.
- Fire-and-Rehire Restrictions (2027)
From 2027, dismissals connected to refusal of contractual changes will become automatically unfair unless the employer can demonstrate significant financial difficulty.
This change means employers can no longer rely on fire and rehire as a routine method for implementing contractual variations. Careful planning and early consultation will be essential.
- Unfair dismissal qualification period Nand compensation (January 2027)
Currently, employees need 2 years’ service to be able to bring a claim for unfair dismissal. From January 2027, this qualification period will be reduced to 6 months. Importantly, this will apply to employees who already have 6 months service when the legislation comes into effect January, so could apply to any employees whose employment started in August of this year, or earlier.
In addition, unfair dismissal claims currently have a compensation cap of £118,223, or a year’s gross pay (whichever is lower). This cap will be removed completely under the new legislation.
These two changes are extremely significant. They will certainly result in more unfair dismissal claims being issued against employers, and potentially higher compensation for those that succeed.
What Should Businesses Do Now?
- Audit employment contracts and staff policies for compliance with day one rights, SSP changes, and whistleblowing reforms.
- Train managers on new entitlements, reporting obligations, and limitations on contractual changes.
- Review workforce planning and restructuring strategies, particularly where flexibility or contractual changes may be needed in future.
- Strengthen HR documentation and recordkeeping, anticipating increased regulatory oversight.
Contact us
Contact Adrian Fryer, Head of Employment to discuss your needs.