There has been a lot of commentary around the new Employment Rights Act (ERA 2025), much of which describes the changes as the most significant and wide-ranging in a generation.

Most employers know that change is coming. The harder part is knowing what to prioritise and when. The detail is extensive, but the immediate priority is understanding what needs to be dealt with now. This article focuses on the numerous changes effective from April 2026 and shares some practical tips in terms of the measures that employers should be putting in place to be ready for those changes.

A full timeline of the changes is set out in the Government policy paper ‘Plan to Make Work Pay and Employment Rights Act: timeline update’, available on www.gov.uk.

Changes to Statutory Sick Pay (SSP)

From 6 April 2026, SSP became payable from the first day of sickness absence, rather than the fourth day, which brings an end to the three-day waiting period. The lower earnings limit has been removed and so all eligible employees, regardless of earnings, will be entitled to SSP. The amount of SSP payable will be the lower of the statutory rate (£123.25 per week from April 2026) and 80% of usual weekly earnings. Sick absences that commenced shortly before 6 April 2026 will be covered by detailed transitional provisions contained in recently published Regulations.

Whilst the change itself is not complicated, it will affect all employers in practical terms. Payroll systems will need to be updated, policies and employment contracts referring to the previous position will need to be updated and any impact on company sick pay will need to be reviewed. Managers and staff will need to be briefed about the new rules. Payroll systems (whether internal or outsourced) will need to be adapted to reflect SSP payments from the first day of absence and the new lower earnings rate.

It is also worth looking more broadly at the absence management in place in your organisation. With SSP being payable from day one, businesses may see an increase in short-term absences. There is no need to assume the worst, but it is important to pay attention to absence patterns (e.g. whether absences are regularly falling on particular days of the week), to hold return to work meetings and to ensure that attendance is being managed well and consistently.

Expansion of Family-Friendly Rights

From 6 April 2026, both paternity leave and unpaid parental leave became day one rights. Previously, these were subject to qualifying service requirements. The right to paternity leave is different to the entitlement to paternity pay, where service requirements remain in place.
The immediate issue for employers is making sure policies reflect the current position. Outdated policies create risk, particularly where they are relied on when managing employees.
A new provision, outside the ERA 2025 but which takes effect on the same date, allows bereaved fathers and partners to take up to 52 weeks of paternity leave where the mother or primary adopter dies within the first year of the child’s life. In the hopefully rare occasions when this right will apply, it will be in very difficult circumstances. Policies should reflect the entitlement clearly, and managers should understand how to handle these situations with utmost sensitivity and care.

Collective Redundancy Risk

The requirement to collectively consult where 20 or more redundancies are proposed at a single establishment in a rolling 90-day period remains unchanged: employers are required to consult with a recognised union or elected employee representatives, and the consultation is required to last at least 30 days. However, under the ERA 2025, the potential penalty for failing to comply is doubling from 90 days’ pay to 180 days’ pay per affected employee, which is significant.

Given the level of financial exposure, this is an area where it is worth taking a careful approach and seeking specific advice where needed. If you are proposing to make 20 or more employees redundant within a 90-day period, the collective consultation requirements must be strictly adhered to.

Sexual Harassment and Whistleblowing

Workers who raise concerns about sexual harassment (specifically) will now be protected under whistleblowing legislation, provided they reasonably believe their disclosure is in the public interest.
This reflects the approach that has already been adopted by courts and tribunals, but is likely to increase awareness and, potentially, an increase in complaints and claims for detriment and unfair dismissal.

Employers should make sure whistleblowing policies include sexual harassment as a category of protected disclosure and that managers understand how to recognise and respond appropriately to those concerns.

Establishment of The Fair Work Agency (FWA)

The FWA has been established as a new, single enforcement body for UK employment rights and will ultimately assume enforcement powers from HMRC, the Gangmasters and Labour Abuse Authority and the Employment Agency Standards Inspectors. The FWA began operating on 7 April 2026, it brings together existing enforcement functions and introduces additional powers, including the ability to require repayment of underpaid statutory entitlements and to impose financial penalties including the ability to fine employers who underpay holiday or SSP.

In practice, this is likely to mean more active enforcement, particularly in areas such as holiday pay, sick pay and record-keeping.

Holiday Record-Keeping Requirements (new)

From 6 April 2026, employers are required to keep annual leave records for six years (even where an employee leaves the organisation), demonstrating compliance with holiday entitlement and pay rules. The FWA has a power to inspect those records and failure to keep adequate records could result in significant fines.

Calculation of holiday entitlement can be complex, particularly taking into account employees who work part-time, irregular hours or for part of the year, those who earn commission or bonuses, in situations where annual leave entitlement needs to be carried over and in respect of those who join or exit the organisation part-way through the leave year. This means that it is easy for mistakes to be made.

Record-keeping systems need to accurately reflect entitlement for individual employees and what has been received. Whatever system is used, managers and relevant staff need to be able to use it correctly and consistently. This is an area where issues arise more often than expected, usually because records are incomplete, incorrect or inconsistent. It’s important that you can show what you have done and why.

Next Steps

In practical terms, there are a number of immediate practical steps that employers should take to meet the changes that came into effect this month:

• Review policies. If they have not been updated in readiness for the changes under the ERA 2025, they will not reflect the current position or the further changes that will be coming into force later this year and beyond.
• Ensure processes and systems are in place for adequate record-keeping. This is particularly important for holiday entitlement and pay.
• Tighten up early-stage employee management. With changes on the horizon to unfair dismissal rights, including shorter qualifying periods, issues will need to be addressed promptly.
• Train managers. In many situations, exposure to risk of employment tribunal claims arises because of how situations are handled in practice.

When To Seek Advice

Not every organisation will need immediate legal input. However, if policies have not been reviewed for some time, if there is uncertainty about whether current processes reflect the law, or if changes to contracts or workforce structures are being considered, it is sensible to seek advice.

Many of these changes are not dramatic in isolation. They are operational, which is why they are often overlooked, and why issues tend to arise further down the line rather than at the point of change.

What’s On The Horizon?

October 2026

The next set of changes under the ERA will take place in October 2026 including new rules on harassment at work. The first relates to liability for third-party harassment: employers can be held liable for harassment of its employees by a third-party (i.e. customer, client, contractor, supplier or visitor). In relation to sexual harassment specifically, employers will be required to demonstrate that they took all reasonable steps to prevent sexual harassment to avoid an uplift of up to 25% in compensation following a successful claim.
Some trade union reforms will take place in October 2026, even if the organisation does not recognise a union.

The time limit for bringing an employment tribunal claim is expected to increase from three months to six months in October.

January 2027

Some of the most significant changes under the ERA will come into effect in January 2027 including the reduction in the qualifying period for unfair dismissal claims from two years to six months. This means that every employee with six months’ service (or longer) on 1 January 2027 will gain protection from unfair dismissal. In practice, this means that employers will have a much shorter period of time in which to assess the performance of employees starting employment on or before 1 July 2026 and to effect short-service dismissals before those employees acquire the right not to be unfairly dismissed.

FAQs

When do the Employment Rights Act 2025 changes take effect?
Key changes take effect from April 2026, with further reforms planned for October 2026 and January 2027.

Do employers need to update policies now?
Yes. Employers should review policies to reflect changes to statutory sick pay, family leave rights and compliance requirements.

What is the Fair Work Agency (FWA)?
A new enforcement body responsible for ensuring compliance with employment rights, including powers to inspect records and impose penalties.

What is the biggest compliance risk for employers?
Record-keeping, particularly around holiday entitlement and pay, is expected to be a key area of enforcement focus.