Employment law in 2026-27: what employers need to know

The roadmap for implementing the Employment Rights Act 2025 over the next two years promises to keep employers busy and employers need to be ready to implement changes as they come into force.

Employers should start planning now by:

• Reviewing policies, contracts, template settlement agreements and NDAs and payroll processes and preparing for the updates that need to be made as and when the relevant provisions of the ERA come into force.
• Start or continue with formulation of their plans to increase gender equality and menopause in the workplace, documenting the plans and the steps they take as they take them so that they are ready to publish their reports either voluntarily or, for larger employers, compulsorily.
• Training managers on the new rights and ensuring that they keep up to date with developments, in particular, performance and conduct management (particularly during probationary periods), harassment prevention, handling flexible working requests, change management strategies and consultation duties, family friendly rights, SSP entitlements will be essential, alongside strengthening redundancy planning, document retention, and change-management strategies.
• Keep up to date with and react to developments. In particular, monitoring commencement regulations, preparing protocols for trade union access, and integrate new family-friendly and bereavement rights into onboarding and HR systems. Early engagement, risk assessments, and continuous monitoring will be critical to ensure compliance and avoid liability.

Here, we outline the changes that employers can expect.

The following changes are anticipated from April 2026. Some require commencement provisions and regulations to bring them into effect.

1. Statutory sick pay (SSP)

Waiting days will be abolished so that SSP will be payable from day one of a period of sickness absence. The lower earnings limit will be removed, widening the scope of those eligible for SSP and potentially leading to greater financial liability. For lower earners, weekly SSP becomes the lower of the flat rate set by government in April each year or 80% of normal weekly earnings.

These changes are enabled by ERA 2025 and targeted for April 2026. However, commencement and some substantive regulations are still required before they take effect.

2. Day‑one unpaid parental and paternity leave

Unpaid parental leave and paternity leave will become day‑one rights and the prohibition on taking paternity leave after shared parental leave will be removed. This change does not affect entitlement to paternity pay – employees will still require 26 weeks’ continuous service to be entitled to that.

3. Whistleblowing

Sexual harassment complaints will expressly become protected disclosures for whistleblowing purposes, adding a layer of protection for individuals making complaints about sexual harassment and introducing additional risks and liabilities for employers.

4. Fair Work Agency (FWA)

This new single state enforcement body launches, consolidating NMW, employment agency standards and gang-master functions, with added powers over statutory holiday pay and SSP. This body will have the power to investigate employers, name and shame and bring enforcement proceedings even if workers do not wish to bring claims. This makes compliance with areas over which the FWA has jurisdiction a top priority for employers. Whilst the FWA will be set up in April 2026, its initial focus will be set by the Secretary of State and its enforcement powers will be phased in over time from 2027.

5. Collective consultation – protective award

The maximum protective award for failure to collectively consult in redundancy situations doubles from 90 to 180 days pay per employee. This is a significant increase, which heightens the importance of following the complex and technical collective redundancy consultation process precisely, as even technical breaches can result in large awards.

1. Unfair dismissal

The qualifying period reduces from two years to six months from 1 January 2027.

The reduction in the qualifying period applies retrospectively so that individuals who are already employed with six months’ service by the time this law comes in will automatically be protected. Others already employed on that date with less than six months’ service will receive protection as soon as they accrue six months’ service.

The government has confirmed its intention to remove the statutory compensation cap (currently the lower of 52 weeks and £118,223). However, this change is enabled by ERA 2025 and will require secondary legislation to confirm the removal of the caps and any transitional rules.

2. Fire and rehire restrictions

Dismissal to impose restricted variations (pay, hours, pensions, time off and certain unilateral variation clauses) will be automatically unfair unless a strict, financial‑difficulties exception is met. Replacing employees with non‑employees is also covered.

3. Collective redundancies – aggregation threshold

Instead of the 20-employee threshold being counted based on each individual workplace, it will be counted across all employers’ sites combined. Multi-site employers may find a greater number of redundancy situations attract the duty to inform and consult.

It is possible that the minimum consultation period will be extended to 90 days for 100+ dismissals under consultation.

Legislation is aimed for 2027.

4. Sexual harassment – regulations on “reasonable steps”

Secondary legislation will specify the steps regarded as reasonable (for example, risk assessments, policies, reporting and complaint handling). Large employers may need published action plans.

5. Menopause and equality action plans, and outsourcing transparency

Employers with 250+ employees will be required to publish gender equality action plans and menopause action plans.

They will also need to disclose outsourcing relationships as part of pay‑gap reporting.

Whilst this duty will not be introduced for some time, employers can begin preparing now. They can engage with staff and implement policies, procedures and practices to reduce inequality in the workplace and provide menopause support. They should document the steps they have taken and a plan for further actions and continuous improvement in preparation for the new obligation.

Whilst the obligation will apply to larger employers, there is nothing to stop government rolling this out to smaller employers in the future. Fundamentally, the obligation is about employers doing the right thing by their staff, so smaller employers may wish to take similar steps.

6. Non‑disclosure agreements (NDAs)

Clauses purporting to prevent allegations or disclosures about harassment or discrimination or an employer’s response will be void, save for “excepted agreements” to be defined in regulations.

7. Trade union duties

Employers will have to issue a statement of trade union rights at prescribed times and in prescribed form.

8. Enhanced family protections

There will be automatic unfair dismissal protections for pregnant employees and new mothers expected to extend at least six months post‑return.

9. Bereavement leave

A new unpaid right will cover broader bereavement and pregnancy loss before 24 weeks.

10. Sectoral bargaining

The School Support Staff Negotiating Body (England) and Social Care Negotiating Bodies (GB nations) will be re-established, with first recommendations/agreements expected in 2027-29. This is relevant mainly to the state school sector, though independent schools and academies may also experience greater demands for improved terms and conditions from staff in comparable positions.