Employment Rights Act 2025: changes to employment law from April 2026

This month has seen the first raft of major changes to be introduced by the Employment Rights Act 2025. In this article, we highlight these changes, before looking at some of the other employment law developments from April 2026.

Paternity and parental leave

The rights to paternity and unpaid parental leave became day-one rights on 6 April. Previously, entitlement to these types of leave was subject to qualifying periods of 26 weeks and one year respectively. This change applies to the right to take leave; eligibility for statutory paternity pay remains subject to the existing 26 week qualifying period.

Industrial relations

The latest raft of changes to industrial relations law relate to the simplification of the statutory trade union recognition requirements. For further details on these changes, see our previous article here.

Collective redundancy consultation

From April 2026, the maximum protective award for non-compliance with collective consultation obligations is doubled from 90 to 180 days, although employment tribunals will have discretion to vary the award.

Sexual harassment protected disclosures

From 6 April, any disclosure about sexual harassment explicitly qualifies as a protected disclosure under the UK whistleblowing legislation. To learn more, see here.

Removal of the waiting period and lower earnings limit requirement for statutory sick pay (SSP)

SSP is now payable from the first day of sickness absence, and the lower earnings limit for eligibility has been removed. For employees earning below the lower earnings limit, SSP will be payable at the weekly rate or at 80% of their average weekly earnings (whichever is lower).

The Commencement Regulations, which were not published until late March, set out detailed transitional provisions for employees whose period of absence begins just before 6 April. Given the complexity of these provisions, many employers may simply choose to pay SSP from the first day of absence.

Duty to keep annual leave records

A new regulation 16B is added into the Working Time Regulations 1998 requiring an employer to keep records that are ‘adequate to show’ whether it has complied with its obligations in relation to annual leave. The form that these records take is up to the employer, but they must be kept for at least six years. Failing to keep adequate annual leave records becomes a criminal offence.

Fair Work Agency (FWA)

The FWA was established on the 7 April. To an extent, the FWA simply brings existing enforcement functions under one umbrella; for example, it takes on responsibility for national minimum wage (NMW) enforcement from HMRC. However, the act also extends the FWA’s remit to SSP and paid annual leave, with the effect that an employer that is not complying with its obligations to provide paid annual leave or SSP is subject to a similar regime of inspections, notices of underpayments and financial penalties that apply for breaches of the NMW legislation.

While the transfer of existing enforcement activity regarding the NMW has come into effect from 7 April, it is currently unclear when the new enforcement powers will come into force. Speaking in March, the chair of the FWA, Matthew Taylor, suggested that the agency will focus on persuading employers to conform with employment legislation, rather than rely on its powers of enforcement, noting that the threshold for using these powers is ‘quite high’, and that, ‘In a perfect world you minimise the amount of enforcement you have to do because you maximise the amount of compliance you achieve by educating employers.’

Equality reporting

Although it will not become compulsory for large employers (those with more than 250 employees) to produce gender equality action plans alongside their gender pay gap report until 2027, voluntary action plans are encouraged from April this year. Action plans will be expected to set out what the employer is doing to address the gender pay gap and how it supports employees who are going through menopause. They will also need to include information relating to the employer’s efforts to reduce the risk and prevalence of sexual harassment in the workplace. The government published guidance for large employers on gender equality action plans in March 2026 (see here).

Other changes

The start of April has also seen the annual increase in the rate of statutory payments such as statutory maternity pay, paternity pay, adoption pay, shared parental pay, parental bereavement pay and neonatal care pay.

There has also been the annual increase in the Vento bands – the range of employment tribunal awards made for injury to feelings. For claims presented on or after 6 April 2026, the bands are as follows: a lower band of £1,300 to £12,600 for less serious cases; a middle band of £12,600 to £37,700 for cases that do not merit an award in the upper band; and an upper band of £37,700 to £62,900 for the most serious cases, with the most exceptional cases capable of exceeding £62,900.

Further, from 6 April, the maximum compensatory award for unfair dismissal has increased to £123,543, or 52 weeks’ gross pay (whichever is lower). This applies to claims presented on or after 6 April 2026 and is the final increase before the cap is abolished in January 2027 pursuant to the Employment Rights Act 2025.

What to take away

The next raft of measures under the Employment Rights Act will be introduced in October, including further changes in industrial relations and a strengthening of the duty to prevent harassment. The headline reforms under the act, including the changes to the unfair dismissal regime, will not come into effect until 2027.

Employers should note, however, that although the qualifying period for unfair dismissal claims will not be reduced to six months until 1 January 2027, employees who are recruited on or after 1 July 2026 will accrue unfair dismissal rights after six months’ service. Employers should be thinking now about updating contracts and policies, and tightening up recruitment and performance management processes, with a particular focus on probationary periods.

We will continue to update you on the implications of the Employment Rights Act 2025. For further information on how these issues might affect your organisation, please contact Paul Mander.