On 18 December 2025, The Employment Rights Bill received Royal Assent and became law as the Employment Rights Act 2025. These reforms will affect how employers manage contracts, pay, dismissal processes and employee requests.
While the Autumn Budget 2025 did not introduce new employment rights, it reinforced cost pressures facing employers, including wage increases and payroll considerations. Together, these developments make early preparation essential.
At Glaisyers ETL, our Employment team supports SMEs across the North West with clear, practical legal advice to help them stay compliant and confident as the law changes.
Key Employment Law Changes Taking Effect from 2026
Holiday Pay and Working Time
Reforms are expected to simplify holiday pay calculations, particularly for employees with irregular or variable hours. Employers must continue to ensure holiday pay reflects normal remuneration, an area that frequently gives rise to tribunal claims.
Employers should review payroll practices and update holiday policies accordingly.
Paternity Leave and Unpaid Parental Leave Time
From April 2026, paternity leave and ordinary unpaid parental leave will become day-one rights. This removes existing service requirements and will require updates to family leave policies and onboarding processes.
Statutory Sick Pay
Changes to statutory sick pay (SSP) will expand eligibility:
SSP payable from the first day of sickness Removal of the lower earnings limit
These reforms, expected from April 2026, are likely to increase costs for employers and will require updates to sickness absence policies and payroll systems.
Ordinary Unfair Dismissal
The qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months’ service, with changes expected from January 2027.
Employers will need to follow fair procedures and have one of the statutory potentially fair reasons for dismissal from a much earlier stage of employment and ensure disciplinary and performance management processes are robust.
Zero-Hours Contract
Workers on zero-hours contracts will gain the right to request guaranteed working hours after a reference period, likely around 12 weeks. Employers will also be required to provide reasonable notice of shifts and compensate workers for short-notice cancellations.
These changes are expected to take effect in 2027 and will require improved record-keeping and scheduling systems.
Flexible Working
Flexible working rights will be made more of a “default” position with reference to:
Strengthening the day-one right to request flexible working A requirement for employers to provide written reasons for refusals
Failure to follow the correct process could result in compensation of up to eight weeks’ pay. Employers should ensure managers are trained to deal with requests fairly and consistently.
Preparing Your Business for Employment Law Changes in 2026
To stay compliant, employers should:
Review employment contracts and eligibility thresholds Update staff handbooks and HR policies Train managers on new rights and procedures Audit payroll and HR systems
Early action will reduce risk and help businesses adapt smoothly.
How Glaisyers ETL Can Help
The Employment team at Glaisyers ETL provides practical, commercially focused advice to help SMEs navigate employment law reform. We offer Employment Law compliance audits, reviewing contracts, policies and procedures to ensure your business is ready for the changes ahead.
Book an Employment Law compliance audit with Glaisyers ETL today.