The Employment Rights Act 2025 represents the most significant reform to employment law in over a decade. Although it received Royal Assent in December 2025, its provisions are being implemented gradually, with the initial phase commencing on 6th April 2026.
These reforms affect family leave rights, Statutory Sick Pay (SSP), collective redundancy exposure, and employment rights enforcement. Further changes are scheduled for late 2026 and 2027, subject to commencement regulations.
If you prepare early, implementation will be manageable. If you leave it until the final quarter, compliance risk increases significantly.
What’s Actually Changing in April 2026
The following measures are confirmed for implementation from 6 April 2026:
- Day-one paternity leave: The 26-week service requirement to take statutory paternity leave is removed. Employees can take leave from their first day of employment, although eligibility rules for Statutory Paternity Pay still apply.
- Day-one unpaid parental leave: The one-year qualifying period is abolished. Employees can take statutory unpaid parental leave from day one, subject to the existing 18-week entitlement limit.
- Statutory Sick Pay (SSP) reform: Waiting days are removed, and the Lower Earnings Limit is abolished. SSP becomes payable from day one and is calculated as 80% of average weekly earnings or the statutory flat rate (whichever is lower).
- Fair Work Agency: A new enforcement body will oversee employment rights compliance, with powers to investigate, issue notices and impose financial penalties.
- Collective redundancy protection: The maximum protective award for failure to consult increases from 90 to 180 days’ gross pay per affected employee.
Further reforms are scheduled for implementation in October 2026 and January 2027 (subject to commencement regulations), including new restrictions on “fire and rehire” practices and changes to the qualifying period for unfair dismissal claims.
Day-One Paternity and Parental Leave
Currently, employees must have 26 weeks of continuous service to qualify for statutory paternity leave. Effective from 6th April 2026, this requirement will be abolished pursuant to the Employment Rights Act 2025, thereby permitting eligible employees to avail themselves of paternity leave from their first day of employment.
In a similar vein, the one-year qualifying period for statutory unpaid parental leave has been eliminated, allowing employees to take unpaid parental leave from the commencement of employment, subject to the existing statutory limit of 18 weeks per child.
It is imperative to distinguish between the right to leave and the right to pay. For further detail on eligibility criteria, refer to the official GOV.UK guidance on Statutory Paternity Pay and Leave. This legislative reform broadens access to time off but does not inherently ensure paid leave.
Statutory Sick Pay: Key Changes from April 2026
Statutory Sick Pay (SSP) is undergoing significant reform under the Employment Rights Act 2025, with changes taking effect from 6th April 2026.
Removal of Waiting Days
Currently, SSP is not payable for the first three days of sickness absence. Effective from April 2026, these waiting days will be abolished, and SSP will be payable from the first day of sickness.
Employers experiencing frequent short-term sickness absences may incur increased SSP costs, as payments will now commence on the first day of absence rather than after a 3-day waiting period.
Removal of the Lower Earnings Limit
Currently, employees need to earn more than the Lower Earnings Limit to qualify for SSP. Starting in April 2026, this earnings threshold will be eliminated, allowing lower-paid workers who were previously ineligible to qualify.
This change is particularly relevant for part-time, casual and variable-hours staff.
Revised SSP Calculation
SSP will no longer operate solely as a flat-rate payment. Instead, it will be calculated as the lower of:
- 80% of the employee’s average weekly earnings, or
- The statutory flat weekly rate (as set annually by regulations).
Average weekly earnings will be calculated over the statutory reference period prior to the sickness absence, in line with secondary legislation.
This introduces additional payroll complexity, especially for employees with fluctuating earnings.
Transitional Position
Employees already receiving SSP before 6th April 2026 will remain subject to transitional provisions set out in the commencement regulations. Employers should review the final regulations to ensure correct treatment of ongoing absences that span the implementation date.
The Fair Work Agency
The Employment Rights Act 2025 provides for the establishment of a Fair Work Agency (FWA) to consolidate and strengthen the enforcement of employment rights. Its implementation is being phased, with operational powers introduced through secondary legislation from 2026 onwards. The Agency is expected to assume and expand certain labour market enforcement functions currently carried out by bodies, including HMRC.
Subject to final regulations, the FWA will have powers to:
- Investigate suspected non-compliance
- Require the production of records and information
- Enter business premises in accordance with statutory inspection powers
- Issue enforcement or compliance notices
- Impose financial penalties for breaches
- Recover certain underpayments on behalf of workers
Enforcement time limits and penalty frameworks are set out in regulations and may allow recovery of historical underpayments, subject to statutory limitation rules.
Record-Keeping Risk
With increased enforcement oversight, it is essential to maintain accurate records. Employers must keep proper documentation to prove compliance with:
- Pay and working hours
- Holiday entitlement and holiday pay
- SSP and other statutory payments
Failure to maintain compliant records may result in enforcement actions, even if the underpayment is unintentional.
What Employers Need to Do
Review and Update Payroll Systems
Payroll systems must be updated prior to April 2026 to incorporate SSP reform. Ensure your system is capable of:
- Disbursing SSP from the initial qualifying day (without waiting days)
- Accurately calculating 80% of average weekly earnings
- Applying the statutory weekly cap precisely
- Managing transitional cases that extend across the implementation date
- Tracking linked sickness periods in accordance with statutory regulations
It is advisable to engage with your payroll provider well in advance and to conduct testing using real workforce data rather than generic examples.
Update Contracts and Policies
Review and update:
- SSP policies by removing references to waiting days and earnings thresholds.
- Family leave policies to include day-one rights for paternity and unpaid parental leave.
- Absence management procedures.
Ensure that employee handbooks and template contracts are aligned with the new statutory framework. For practical guidance, please consult ACAS.
Train Managers
Line managers should have a clear understanding of:
- Statutory leave rights from the first day
- The revised Sick Pay Scheme (SSP) framework
- Proper procedures for reporting absences
This training should encompass structured sessions with practical examples and scenario discussions, rather than merely circulating policy emails.
Engage with Staff
Employees are likely to learn about the reforms through media reports. Proactively disseminating information can help reduce confusion and prevent conflicts.
Consider:
- Providing clear summary updates
- Creating FAQ documents
- Conducting briefing sessions when appropriate
Initiating communication early assists in setting expectations and guarantees consistent implementation across the organisation.
Getting Ready: Your Timeline
February 2026: Contact your payroll provider to verify when the software updates reflecting the SSP reforms under the Employment Rights Act 2025 will be available. Confirm how day-one SSP, the 80% average weekly earnings calculation, and the statutory weekly cap will be implemented. Test these updates thoroughly using real employee data where possible.
February to March 2026: Review employment contracts, staff handbooks, and internal policies. Remove references to SSP waiting days and Lower Earnings Limit thresholds. Update family leave policies to include day-one paternity and unpaid parental leave rights. Ensure all language aligns with final commencement regulations and official guidance.
March 2026: Conduct structured training sessions for HR, payroll, and line managers. Provide practical examples of SSP calculations and leave scenarios. Distribute written reference guides for ongoing use.
March 2026: Distribute company-wide communications explaining the confirmed changes. Keep messages clear, factual, and consistent with statutory provisions. Prepare FAQs to address common questions and set expectations.
From April 2026 (Commencement): Carefully monitor payroll outputs to ensure SSP calculations are accurate. Ensure that leave requests are processed consistently and in accordance with new policies. Verify record-keeping compliance and enforcement standards.
April to July 2026: Perform a post-implementation review. Identify operational or payroll issues caused by the reforms. Adjust processes as needed to minimise compliance risks and ensure continued adherence to statutory requirements.
How The Infinity Group Can Help
Managing regulatory changes while operating a business can be challenging. Employment and payroll laws are continually evolving, and keeping pace with updates — while maintaining day-to-day operations — requires structured oversight.
At The Infinity Group, compliance constitutes the foundation of our payroll and umbrella services. We assist employers by ensuring payroll procedures comply with current legislation, accurately calculating statutory payments, and fulfilling HMRC-mandated reporting obligations.
Beyond processing, we keep employers apprised of legislative developments, provide practical guidance for implementation, and offer ongoing advisory support. Our strategy is designed to mitigate risk, promote transparency, and ensure that your payroll and workforce management remain compliant amidst evolving regulations.