Employment Law 2026: What Employers Need to Know

As we settle into 2026, employment law is undergoing some of the most substantial changes in a generation. A wave of reforms — centred around the new Employment Rights Act 2025 — will affect contracts, family leave, sick pay, tribunals, flexible working, trade union rights and more. Here’s a breakdown of the key updates employers need to be aware of and practical steps to prepare.

What’s Driving Employment Law Changes in 2026?

The most seismic shift this year is the phased implementation of the Employment Rights Act 2025 (ERA 2025), which received Royal Assent in December 2025. The changes form part of the Government’s wider reforms under the Employment Rights Act 2025, which you can read about on the official GOV.UK website.

Instead of coming in at once, the reforms are being introduced in stages throughout 2026 and into 2027.

The overarching aim is to strengthen employee rights and modernise protections — but for employers this means reviewing policies, updating contracts and embedding compliance in everyday people management.

Key Employment Law Changes Taking Effect in 2026

1. Day-One Family Rights & Paternity Leave Changes

From 18 February and 6 April 2026:

• Employees will have day-one rights to give notice for certain family leave entitlements.
• Paternity and unpaid parental leave become accessible from the first day of employment.
• Bereaved partner paternity leave (up to 52 weeks) is also introduced.

Employer action: Update family leave policies, ensure managers and HR teams understand the new notice and entitlement rules.

2. Statutory Sick Pay (SSP) Reform

Major changes include:

• Removal of the lower earnings limit — meaning more employees, including low-paid and part-time staff, will qualify for SSP.
• Elimination of the three-day waiting period — SSP payable from day one of sickness.

Employer action: Adjust payroll systems and budgeting assumptions to reflect increased SSP liability.

3. Flexible Working & “Reasonableness” Test

The change builds on April 2024 reforms by strengthening employees’ access to flexible working. Employers must provide written reasons for refusals and justify decisions using a new reasonableness framework.

Employer action: Train managers and update flexible working request and refusal procedures.

4. Establishment of the Fair Work Agency

The new Fair Work Agency will launch to:

• enforce compliance with national minimum wage, SSP and holiday pay rules
• regulate employment agencies and licences
• act against labour exploitation and non-compliance.

Employer action: Prepare for increased scrutiny and reporting obligations.

5. National Minimum / Living Wage Increases

From 1 April 2026, the National Living Wage rises to £12.71 for workers aged 21+. Other minimum wage rates for younger age groups also increase.

Employer action: Review pay structures and salary bands ahead of April to remain compliant.

Future Employment Law Changes Beyond 2026

Several significant reforms are not yet in force — but employers should be planning now:

Unfair Dismissal Qualifying Period

The qualifying period for unfair dismissal protection will be reduced from two years to six months, expected on 1 January 2027.

Removal of Compensation Cap

The cap on unfair dismissal awards will be removed, exposing employers to larger financial liability.

Zero-Hours Contract Protections

Reforms will prohibit certain “one-sided” zero-hours contract conditions; agency workers will benefit from new guaranteed-hours rights

What Employers Should Be Doing Now

1. Get Ready Early

The breadth of changes means you can’t wait until April. Start reviewing and updating:

• employment contracts
• family leave policies
• flexible working procedures
• SSP and payroll systems

Especially where multiple changes intersect — like SSP and low-paid workers — early planning can save significant operational disruption.

2. Train HR & Line Managers

Managers must understand not just what has changed, but how to implement changes fairly and consistently.

3. Communicate with Your People

Clear employee communications help manage expectations — especially around family leave, flexible working and pay increases.

Final Thoughts

Employment law in 2026 represents a watershed moment in workplace regulation. For employers, these changes mean recalibration of people policies, pay structures, and compliance frameworks — but they also present an opportunity to modernise employment practices in ways that enhance fairness, flexibility and workforce engagement.

Want help preparing your workforce policies for 2026 changes? Get in touch — we’d be happy to support your next steps.