Employment law changes 2026: guide for HR and line managers

Happy new year to all our readers.

The past year was dominated by the government trying to get its landmark Employment Rights Bill through parliament. It managed it just before Christmas (after accepting some important last-minute amendments), and we now have the Employment Rights Act 2025 on the statute books. Some provisions will come into effect this year, but many others will be pushed back until 2027 or later. 

But that's not all, other important changes are also on the horizon. Here's what HR and line managers need to know for the year ahead.

Pay and Wages

National Minimum Wage

From April 2026, the National Living Wage (payable to workers aged 21 and above) will increase by 4.1% from £12.21 to £12.71. 

The National Minimum Wage will increase:

• By 8.5% for 18-20-year-olds, from £10.00 to £10.85
• By 6% for apprentices, from £7.55 to £8.00; and
• By 6% for 16-17-year-olds, from £7.55 to £8.00

These rates all exceed the expected inflation rates between April 2026 and April 2027, delivering a real-term pay increase for workers.

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). At the moment employees earning above the Lower Earnings Limit (LEL) - currently £125.00 per week - qualify for SSP from the fourth day of sickness absence. From April 2026, the LEL will be abolished, meaning all employees will be entitled to SSP from the first day they are ill. 

The weekly rate of SSP, which has been £118.75 since April 2025, is expected to increase to £123.25 or 80% of the employee's normal weekly earnings, whichever is lower. 

If you operate ‘waiting days’ you will need to amend your absence policies and the terms and conditions of staff subject to these. 

We also recommend that you review your sickness absence procedures and ensure managers know how to support staff when they are off sick, and are willing to have difficult conversations to help them return to work.   

Fair Work Agency (FWA)

The FWA is expected to be established in April 2026. It will bring together existing state enforcement functions including: 

• Minimum wage and statutory sick pay enforcement
• Employment Tribunal penalty scheme; and
• Labour exploitation and modern slavery

In addition, the FWA will enforce holiday pay and, over time, take on the enforcement of a wider range of employment rights. The timeline for when the FWA will begin carrying out enforcement activities remains unclear.

Family Rights

Day one right to paternity leave and parental leave

Currently, employees must meet minimum service requirements to qualify for the following types of leave:

• Paternity leave: 26 weeks' continuous service
• Unpaid parental leave: one years' service  

From April 2026, this service requirement will be removed. Subject to the other eligibility criteria, employees will be entitled to both types of leave from the first day of their employment. Plus, employees won't be prevented from taking paternity leave after shared parental leave, giving them greater flexibility in how they arrange their leave. 

Harassment

Third-party harassment

In October 2026, employers will become legally responsible where a third-party, such as a client or a customer, harasses a member of staff in the course of their employment. You will only be able to successfully defend this type of claim if you can show that you have taken all reasonable steps to prevent it. 

We recommend that you update your existing risk assessment to cover all types of harassment, including from third parties, and then consider what steps you can take to prevent this. We've suggested some steps you need to consider here.

Requirement to take all reasonable steps to prevent sexual harassment

Since October 2024, 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 you to take all reasonable steps. 

Bizarrely, regulations intended to clarify what constitutes ‘all reasonable steps’ won't be available until 2027. We're not entirely clear why there will be a significant gap between the duty coming into force and guidance being provided.

We recomment that you review your risk assessments and identify any additional measures needed to comply with this extended and more onerous obligation. 

‘Fire and Rehire’

From October 2026, it will be automatically unfair to dismiss an employee in order to make some changes to their terms and conditions of employment. These are referred to as ‘restricted variations’ and include key terms such as pay, working hours, and holiday. There will, however, be an exception where the employer is in financial difficulty.

A consultation is expected shortly to explore how these provisions will operate in practice.

Protective Award

Currently, if you fail to comply with your collective consultation obligations, employees can claim a protective award of up to 90 days' pay. From April 2026, this maximum award doubles to 180 days' pay. Employment tribunals will continue to be able to make proportionate awards below the maximum where appropriate.

The government will also publish guidance to help employers understand their legal responsibilities.

This is a significant increase and makes it even more critical to comply fully with your obligations to collectively consult staff where you are proposing to make 20 or more employees redundant within 90 days, or (when in force - which is expected to be 2027) at least the ‘threshold number of employees’ under new section 195A of TULRCA 1992. The threshold number may be specified as a fixed number, a percentage of employees, or determined in another way specified in regulations, but it cannot be lower than 20.  

Trade unions and industrial action

Two months after the Employment Rights Act received Royal Assent on 18 December 2025, most provisions of the Trade Union Act 2016 will be repealed. However, two provisions will be retained in amended form:

• Unions will still be required to give employers notice of any intended strike action, but the notice period will reduce from 14 to 10 days; and
• The validity of a strike mandate will be extended from six to 12 months. 

Further trade union reforms are also expected later in the year. For example, in April 2026, it is anticipated that the thresholds for statutory recognition will be lowered, making it easier for unions to gain recognition. 

Then, in October 2026, new obligations are expected, including providing employees with information about their right to join a trade union, alongside new rights for unions to formally request workplace access. 

Trade unions are expected to have a stronger presence in the workplace, and the reforms are likely to result in more frequent and prolonged industrial action. 

If you don't recognise a union, we recommend that you look at establishing other ways to give your staff a voice to collectively raise issues before they spill over into disputes. If you minimise workplace disputes, your staff may be much less likely to want to join a union.  

Extending time to bring employment tribunal claims

Currently workers have to bring most claims within three months of the issue they are complaining about. This will change to six months from October 2026 and will apply to all types of claims except for breach of contract claims arising or outstanding on termination of employment (although it's not clear if this has simply been overlooked by the government).

How to keep up with changes 

The expected enforcement dates for all the above changes - except for National Minimum Wage and statutory rates - are based on the government's roadmap, which you can read about here. In its recent 'Factsheet: Employment Rights Act 2025' the government reaffirmed its commitment to these timelines and confirmed that further updates and guidance will be issued to help employers and workers prepare for the 2026 reforms. That said, if the past year is anything to go by, we know how unpredictable things can be - so it wouldn't be surprising if some of these dates slip.  

We also anticipate that the government will launch a number of consultations in the coming months. Please contribute to those relevant to your organisations or contact us and we'll add your voice to our own submissions. 

We'll keep you updated when new consultations open and share more detailed guidance on the changes outlined above in due course. We are also hosting a free webinar on Thursday 26 February 2026, to prepare you for the year ahead. You can sign up to attend here.

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