New year reminder – major changes to UK employment law As the new year begins, businesses often review HR priorities, refresh contracts and policies and roll out training and engagement initiatives. However, this year, that familiar ‘New Year Reset’ comes with different challenges. The Employment Rights Act 2025 (which received royal assent on 18 December 2025) marks the most significant overhaul to UK employment law in decades. These changes will affect how businesses recruit, manage, consult with and in some cases dismiss employees. Early awareness and preparation are critical and this article provides a chronological list of the key changes most likely to affect our clients, the dates from which they will take effect and what you can do to prepare. Expected timing Change What it means for employers 6 April 2026 Day-one rights for eligible employees for: (i) paternity leave (but not statutory paternity pay); and (ii) unpaid parental leave. (Previously required 26 weeks and one year’s service respectively). Removal of the restriction on taking paternity leave or receiving statutory paternity pay following a period of shared parental leave and pay. Plan and budget for broader eligibility and potential increase in absences. Update family leave policies, HR systems and payroll processes, as relying on outdated policies risks incorrect refusals of leave or pay, exposing the business to grievances and tribunal claims. The Enactment Summary Impact Assessment published by the Department for Business and Trade on 7 January 2026 (ESIA) estimates that these changes will bring an extra 30,000 fathers or partners into scope of paternity leave and 1.5 million workers into scope of the right to unpaid parental leave. April 2026 Statutory sick pay (SSP) payable from day one of sickness (removing the current three-day waiting period) and dispensing with the lower earnings limit. SSP will therefore be the lower of the prescribed weekly rate (which will rise to £123.25 from 6th April 2026) and “the prescribed percentage of the employee’s normal weekly earnings”, which is to be set at 80%. Plan and budget for broader SSP eligibility. Update sickness absence policies and strategies. Update payroll processes and train HR teams to prevent errors in pay or eligibility which could result in grievances and tribunal claims. The ESIA states that Department for Work and Pensions analysis estimates additional SSP payments by employers will cost around £400 million annually. April 2026 The maximum Protective Award for failure to comply with collective redundancy consultation will increase from 90 days to 180 days’ pay per affected employee. * Timings for collective consultations (30 – 45 days depending on the number of redundancies) remain unchanged. * From 20th January 2025, a Protective Award may be liable to an increase of up to a further 25% for non-compliance with collective consultation requirements for any unreasonable failure to comply with a relevant Code of Practice (including the Code of Practice on Dismissal and Re-Engagement). This is due to the Trade Union and Labour Relations (Consolidation) Act 1992 (Amendment of Schedule A2) Order 2024, SI 2024/1272 amending Schedule A2 to the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992) Review redundancy policies, planned exercises and consultation timelines ensuring compliance and carefully document consultation steps. April 2026 Reports of sexual harassment shall also be deemed to be protected disclosures for the whistleblowing provisions, without needing another qualifying category (e.g. health and safety or breach of legal duty). Many reports of sexual harassment are already covered by whistleblowing protection, so this change may not have a major practical impact. However, it removes doubt and employers should review policies, reporting routes and manager training to prevent mishandling complaints, especially given the increased third-party liability noted below. NOTE: 1 July 2026 From 1 January 2027, the qualifying period for ordinary unfair dismissal claims is expected to reduce from 2 years to 6 months. Therefore, employees starting from 1 July 2026 will be eligible to claim once they reach six months’ service. The potential liability for unfair dismissal claims will also increase with the removal of the existing cap (52 weeks’ pay or £118,223 (currently) – whichever is the lower). From 1st January 2027 compensation for unfair dismissal will therefore be treated in the same as compensation for unlawful discrimination and whistleblowing. It will be uncapped with no upper limit. Review and strengthen probationary procedures, record keeping, performance management and dismissal processes. Update HR policies and train managers on effective onboarding, performance feedback and early disciplinary matters before 1 July 2026 to help mitigate the risk of future claims. 1 October 2026 Employment tribunal time limits extended with most employment claims needing to be brought within six months (up from three). Claims may now arise later than under the current three-month limit, increasing the importance of maintaining robust HR processes. Review policies and documentation practices to ensure that all decisions are recorded, legally compliant and applied consistently, or that any exceptions are supported by a clear and lawful rationale. Review data protection procedures and record any changes to processes, including data retention arrangements. October 2026 Under new restrictions dismissing and rehiring/replacing on less favourable terms will be unlawful in most cases, with a limited ‘financial difficulties exception’. Penalties for improper ‘fire and rehire’ consultation linked to collective redundancy consultation changes will also increase (see above). Employers will have much less scope to impose major changes to key terms. Carefully plan any contractual changes, engage in meaningful consultation and document all communications. October 2026 Employers will face greater liability for harassment, with liability for harassment of employees being extended to include their harassment from third parties, unless the employer can show that all reasonable steps were taken to prevent it, raising the standard for compliance and prevention. Conduct thorough risk assessments to identify potential sources of harassment, both internally from colleagues and externally from “third parties” e.g. clients, customers, contractors etc) Review policies, training, reporting mechanisms and documentation to ensure they are robust & effective and embed these measures into the business culture so preventing harassment is actively managed and compliance is consistently maintained. 2027 Additional significant changes currently expected to be introduced in or around April and October 2027 include: Further increase in rights for flexible working; Enhanced pregnancy and maternity protections; Wider bereavement leave application; Increased certainty and protection for zero-hour, low hour and agency workers; and a new additional threshold trigger for collective redundancies ‘across the business’. Monitor updates closely and continue to be proactive. Other targeted reforms The Act also introduces reforms on industrial action, strike processes, union access, tipping consultation and a maritime sector charter. These affect specific sectors and may require tailored advice. What’s next? The Employment Rights Act 2025 represents a fundamental rebalancing of employment rights in the UK. The reforms are phased, but their combined impact is substantial. The Government’s ESIA indicates that the Act may “increase the volume of cases in the ‘individual enforcement system’ … by around 17%”, with “some of this” potentially offset by the Fair Work Agency. It estimates this could lead to “an extra 21,000 early conciliation notifications to Acas” and “6,900 more Employment Tribunal cases”. Businesses should use the new year to move from awareness to action. Employers who plan ahead, invest in training and update their processes carefully will be best placed to navigate the new employment law landscape with confidence. How can Morr & Co help? If you have any questions or would like any further information on the contents of this article, please do not hesitate to contact our Employment team on 0333 038 9100 or email info@morrlaw.com and a member of our expert team will get back to you. Our employment team are running a webinar on Wednesday 28 January on the updates to redundancy in 2026, if you would like to join please register here. Disclaimer Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position. Authored by Mel McCrum Partner, Head of Department Message Emma McLoughlin Senior Associate Solicitor Message Tags Insights On this page Related Stories Employment Rights Bill – latest updates New Labour Government & employment rights View more Register for our Redundancy in 2026 Webinar Register now
