As we begin the new year, we take a further look ahead to the 2026 employment law changes. These 2026 employment law changes form part of a much wider programme of ongoing employment law changes being implemented by the Government throughout 2026, 2027 and beyond.
This is an update to our previous article on the 2026 employment law changes, to factor in the passing of the Employment Rights Act 2025 and other employment law changes.
Key Points
- From 6 April 2026, statutory maternity pay and statutory adoption pay will increase, with the weekly cap rising to £194.32 after the first 6 weeks.
- From April 2026, Statutory Sick Pay (SSP) will increase to £123.25 per week and will also become a day-one entitlement under the Employment Rights Act 2025, with the removal of both the three-day waiting period and the lower earnings limit.
- The National Living Wage and National Minimum Wage will rise again from 1 April 2026, with increases across all age bands and the accommodation offset rate.
- The statutory cap on a week’s pay for redundancy and tribunal awards, as well as the Vento bands for injury to feelings, will be updated in April 2026.
- The Employment Rights Act 2025 received Royal Assent on 18 December 2025, with most reforms to be implemented in phases during 2026 and 2027.
- Key reforms taking effect in April 2026 under the Employment Rights Act include day-one rights to paternity leave and unpaid parental leave, together with the establishment of a new Fair Work Agency to enforce employment rights.
- Further reforms due in October 2026 include a ban on “fire and rehire” (subject to limited exceptions), extended employment tribunal time limits (from three months to six months), and strengthened trade union access and information rights.
- From 1 January 2027, the qualifying period for ordinary unfair dismissal claims will reduce from two years to six months, with additional reforms during 2027 expected to include changes to zero-hours contracts and the removal of the statutory cap on unfair dismissal compensation (following consultation).
2026 Employment Law Changes: Rate Changes
The 2026 employment law changes will include the usual set of rate changes. These will take effect in April 2026, and will include the following:-
- As we highlighted in a previous article, the new rates for the National Living Wage and the National Minimum Wage that will apply from the 1st April 2026 were announced on the eve of the 2025 Autumn Budget which was delivered on the 26th November 2025. The new rates that will apply from the 1st April 2026 will be as follows: (i) For workers aged 21 and over (i.e. the National Living Wage), the rate will increase by £0.50 per hour (4.1%) from £12.21 per hour to £12.71 per hour (ii) For workers aged 18–20 inclusive, the rate will increase by £0.85 per hour (8.5%) from £10.00 per hour to £10.85 per hour (iii) For workers aged 16–17 inclusive, the rate will increase by £0.45 per hour (6.0%) from £7.55 per hour to £8.00 per hour (iv) The apprentice rate will increase by £0.45 per hour (6.0%) from £7.55 per hour to £8.00 per hour (v) The daily rate for the accommodation offset will increase by £0.44 (4.1%) from £10.66 to £11.10.
- Among the most important employment law changes for 2026 are the new rates for statutory maternity pay, statutory paternity pay, shared parental pay, adoption pay, maternity allowance, statutory parental bereavement pay, and statutory neonatal care pay, which were announced by the Government on the 27th November 2025. These employment law changes will apply from the 6th April 2026. The new rates are as follows: (i) Statutory maternity pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly earnings, subject to a maximum of £194.32 per week (up from £187.18 per week) after the first 6 weeks (ii) Statutory Paternity Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings (iii) Statutory Shared Parental Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings (iv) Statutory Adoption Pay – those who qualify are entitled to receive it for 39 weeks at a rate of 90% of their gross weekly earnings, subject to a maximum of £194.32 per week (up from £187.18 per week) after the first 6 weeks (v) Statutory Parental Bereavement Pay – the smaller of £194.32 per week (up from £187.18 per week) or 90 per cent of their average weekly earnings (vi) Statutory Neonatal Care Pay – the smaller of £194.32 per week or 90 per cent of their average weekly earnings. The average gross weekly earnings required to qualify for Statutory Maternity Pay and these other family friendly payments will increase from £125.00 or more per week, to £129.00 or more per week. Where an employee earns less than £129.00 per week on average, but was employed for 26 of the 66 previous weeks earning at least £30 per week (averaged over any 13 week period during the said 66 weeks), then they will be entitled to Maternity Allowance for 39 weeks of the smaller of £194.32 or 90 per cent of their average gross weekly earnings.
- Statutory Sick Pay (SSP): The new rate was announced at the same time as the new rates for family friendly payments (i.e. the 27th November 2025), and will come into force on the 6th April 2026. SSP will increase from £118.75 per week to £123.25 per week. In addition, as part of the Government’s proposed employment law changes, major changes to SSP may come into force from April 2026. While these wider reforms form part of the Government’s Employment Rights Bill, they remain proposals subject to Parliamentary approval and may be amended before they take effect. The proposed changes are that SSP would become payable from the first day of sickness absence (rather than only from the fourth day), the Lower Earnings Limit (LEL) would be abolished so that all employees qualify regardless of income level, and for employees earning below the current LEL, SSP would be calculated as the lower of either 80% of their average weekly earnings or the flat rate of £123.25.
- The statutory cap on a weeks pay for the purposes of calculating the basic award and statutory redundancy pay: The new rate is likely to be announced in March 2026, and will come into effect on the 6th April 2026.
- The Vento Bands: The Presidents of the Employment Tribunals in England & Wales and Scotland are due to conduct the annual re-evaluation of the Vento bands in March 2026, with the changes coming into force on the 6th April 2026
Those employers who are signed up to the Real Living Wage and the London Living Wage are expected to implement the changes to the respective rates that were recently announced by the Living Wage Foundation by the 1st May 2026 at the latest. The Real Living Wage has been increased by £0.85 per hour from £12.60 per hour to £13.45 per hour, an increase of 6.7%. The rate for the London Living Wage increased by £0.95 per hour from £13.85 per hour to £14.80 per hour, an increase of 6.9%.
Gender Pay Gap Reporting
At the same time as the 2026 employment law rate changes are taking effect, the usual gender pay gap reporting deadlines need to be met by those organisations with a headcount of 250 or more employees. Accordingly, the deadline for public sector employers to report their data will be the 30th March 2026, with a snapshot date of the 31st March 2025. And for private sector employers and voluntary organisations, the deadline will be the 4th April 2026, with a snapshot date of the 5th April 2025.
2026 Employment Law Changes: Employment Rights Act 2025
Outside of the April 2026 rate changes, the bulk of the main employment law changes will stem from the Employment Rights Act 2025, which received royal assent on the 18th December 2025.
The Government recently published a roadmap setting out the timetable for the implementation of the Act, most of which will take place during 2026 and 2027, but some of which has subsequently been modified as the legislation has progressed through Parliament. The proposed implementation process is as follows
Phase 1 Employment Law Changes: Royal Assent Or Shortly Therafter
| Repeal of Strikes (Minimum Service Levels) Act 2023 | The Strikes (Minimum Service Levels) Act 2023 was repealed with immediate effect upon Royal Assent. |
| Trade Union Act 2016 Measures Removed | Most provisions of the Trade Union Act 2016 have been annulled, with some elements to be repealed later via commencement orders. |
| Political Fund Ballots | The requirement for trade unions to hold political fund ballots every 10 years has been removed. |
| Industrial Action Notices | Rules governing industrial action notices and ballot notices have been simplified. |
| Protection for Industrial Action | Stronger protections now apply against dismissal for taking part in lawful industrial action. |
| January 2026 Consultations | Consultations are scheduled to close on measures due to take effect in 2027, including statutory bereavement leave (including pregnancy loss) and strengthened dismissal protections for pregnant workers and those returning from maternity leave. |
| Trade Union Reforms (February 2026) | Trade union reforms take effect, including reduced notice periods for industrial action (from 14 to 10 days) and extension of strike mandates from six to twelve months. |
| Automatic Unfair Dismissal & Picketing | The 12-week limit on automatic unfair dismissal protection for participation in lawful industrial action is removed, and the requirement to appoint a picket supervisor is repealed. |
| Ballot & Notice Simplification | Ballot paper and strike notice information requirements are simplified, largely reverting to pre-2016 standards. |
| Public Sector Union Measures | Restrictions on public-sector “check-off” arrangements are removed and facility time reporting requirements are repealed. Electronic and workplace balloting for industrial action is expected to be enabled by April 2026, following consultation. |
Phase 2 Employment Law Changes: April 2026
The following employment law changes arising out of the Employment Rights Act 2025 will be implemented in April 2026:
| Collective Redundancy Protective Award | The collective redundancy protective award is expected to double. |
| Day-One Paternity and Parental Leave | Paternity leave and unpaid parental leave rights will apply from the first day of employment. |
| Whistleblowing – Sexual Harassment | Sexual harassment will be added to the list of matters capable of constituting a protected disclosure. |
| Statutory Sick Pay (SSP) | Statutory Sick Pay will become a day-one entitlement (removal of the three-day waiting period) and the lower earnings limit will be removed, extending eligibility to all workers. |
| Fair Work Agency | The Fair Work Agency will be established, consolidating key employment enforcement functions, including enforcement of holiday pay. |
| Trade Union Recognition | The trade union recognition process will be streamlined. |
| Gender Pay Gap and Menopause Action Plans | A voluntary reporting period will begin for large employers (250+ employees) in relation to gender pay gap and menopause action plans, ahead of mandatory publication in 2027. |
Phase 3 Employment Law Changes: October 2026
The following employment law changes arising out of the Employment Rights Act 2025 will be implemented in October 2026:
| Ban on Fire and Rehire | A ban on “fire and rehire” will apply except where it is necessary to ensure business survival and a proper procedure has been followed. |
| Dismissal and Re-engagement Code | The existing statutory code on dismissal and re-engagement will be replaced. |
| Sexual and Third-Party Harassment | The duty to take “all reasonable steps” to prevent sexual harassment and third-party harassment will come into force (with further regulations expected to follow). |
| Union Access and Information Duties | A duty to inform workers of their right to join a union will apply, with strengthened rights for unions to access workplaces. |
| Trade Union Representatives | Enhanced rights and protections will apply for trade union representatives. |
| Employment Tribunal Time Limits | The time limit for bringing most employment tribunal claims will be extended from three months to six months. |
| Protection Against Detriment | Protections against detriment connected with participation in industrial action will be strengthened. |
| Adult Social Care Pay Body | A body will be established for setting pay and conditions in the adult social care sector. |
| Allocation of Tips | The law on allocation of tips will be tightened further, including additional requirements to consult on tipping policies and review them regularly. |
| Two-Tier Workforce Code | The two-tier workforce code will be implemented (procurement). |
Phase 4 Employment Law Changes: December 2026
| Mandatory Seafarers’ Charter | New minimum employment standards will be introduced for seafarers who regularly work in UK territorial waters, through the implementation of a mandatory seafarers’ charter. |
Phase 5 Employment Law Changes: 2027
The employment law changes arising out of the Employment Rights Act 2025 that are being left until 2027 include:
| Unfair Dismissal Qualifying Period | From 1 January 2027, the qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months. |
| Unfair Dismissal Compensation Cap | Following consultation and an impact assessment, the statutory cap on compensatory awards for unfair dismissal is expected to be removed during 2027. |
| Zero-Hours Contracts | Workers will gain rights to guaranteed hours where they regularly work more than their contracted hours over a reference period, together with reasonable notice of shifts and compensation for short-notice cancellations or changes. These rights will extend to agency workers. |
| Flexible Working | Employers will only be able to refuse flexible working requests where refusal is “reasonable”, with a mandatory consultation process and written explanation required, subject to secondary regulations. |
| Gender Pay Gap and Menopause Action Plans | Large employers (250+ employees) will be required to publish mandatory action plans on addressing their gender pay gap and supporting employees experiencing the menopause. |
| Protections for Pregnant Workers | Protections against dismissal for pregnant employees and those returning from maternity leave will be strengthened, with dismissal potentially prohibited except in very limited circumstances. |
| Bereavement Leave | A new statutory right to bereavement leave will be introduced for the loss of a close family member, likely to be unpaid and extending beyond existing parental bereavement leave. |
| Collective Redundancy Consultations | Changes are expected to collective redundancy consultation requirements, including the definition of “establishment” when assessing whether consultation duties are triggered. |
| Umbrella Company Regulation | A regulatory framework will be introduced for umbrella companies, aimed at improving transparency around pay, deductions and employment status. |
| Blacklisting and Industrial Relations Reform | Anti-blacklisting protections will be extended, including coverage of predictive technologies, alongside further modernisation of the industrial relations framework, including collective grievance mechanisms. |
‘Next Steps’ Document
The following have not been included within the employment law changes arising out of the Employment Rights Act 2025, but the Government has confirmed with a ‘next steps’ document (published at the same time as the original Employment Rights Bill) that they will be addressed at a future point:-
- A Legal Right To Switch Off / Disconnect: The right to disconnect from work communications and obligations outside of regular working hours to protect employees’ well-being and work-life balance, by setting boundaries between their personal and professional lives.
- Creating A Single Status Of Worker: Currently, there are 3 types of employment status – employees, workers, and the self-employed. Labour plan to amalgamate the categories of employee and worker so as to create one single status of ‘worker‘ who would have the same basic employment law rights. The only people outside of the new category of worker would be the genuinely self-employed.
- Equality (Race and Disability) Bill: To include the following: (i) extending the right to equal pay to ethnic minorities and the disabled (ii) Introducing ethnicity pay gap reporting and disability pay gap reporting for firms with 250 or more employees
- NMW Bands: The introduction of a “genuine living wage”. Hence, one rate will apply across the board, with the age bands removed. However, as we highlighted in a recent article, on the 30th July 2024 the Secretary of State for Business and Trade, Jonathan Reynolds, announced that the move towards having one rate across the board for the National Living Wage would be phased in gradually over a period of time. That is, the National Minimum Wage age bands will remain for some time yet. The remit of the Low Pay Commission has been expanded to factor in the cost of living.
- Reviews: Carers’ leave and parental leave to be reviewed
Pension Schemes Bill
The Government confirmed on the 13th November 2024 that it would be introducing a new Pension Schemes Bill, and the Bill was subsequently introduced in the House of Commons on 5 June 2025. It forms part of the wider programme of employment law changes planned for 2026. The Bill has since made significant parliamentary progress and is currently at the Committee Stage in the House of Lords.
The Government’s objective in bringing forward the Bill is to support the consolidation of pension assets by encouraging the creation of larger pension investment vehicles, including the proposed merger of tens of billions of pounds of assets from local government pension schemes and defined contribution schemes into larger pension “megafunds”, with a view to increasing investment in UK businesses, infrastructure, and long-term growth.
Salary-Sacrifice Pension NIC Exemption Capped At £2,000 From 2029
As part of the wider programme of employment law changes, the Government announced in the 2025 Autumn Budget that, from April 2029, it will introduce a cap on the National Insurance (NI) exemption for pension contributions made through salary-sacrifice arrangements. Under the changes announced in the Autumn Budget 2025, only the first £2,000 a year of salary-sacrificed pension contributions will remain exempt from employee and employer NI. Any amount contributed via salary sacrifice above that limit will become subject to NI contributions like standard earnings
This change means that employers and employees who currently benefit from significant NI savings via salary-sacrifice pension schemes may see higher costs from 2029 onwards — a consideration worth bearing in mind when reviewing overall remuneration and pension benefits packages.
Fully Funded Apprenticeship Training For Under-25s At SMEs
The Autumn Budget 2025 also confirmed a major boost for smaller employers and young workers. From 2026 onward, training and assessment costs for apprentices under the age of 25 at non-levy-paying small and medium-sized enterprises (SMEs) will be fully funded by the Government under the Growth & Skills Levy.
This change removes one of the key barriers to SME apprenticeship recruitment — namely the financial burden of training — and may encourage more employers to take on younger apprentices, helping tackle skills shortages while offering affordable training pathways for under-25s.
This reform forms another element of the Government’s planned employment law changes aimed at supporting workforce development and reducing barriers to recruitment for smaller employers.
Umbrella Companies
From April 2026, recruitment agencies will become responsible for operating PAYE (Pay As You Earn) when a worker is engaged through an umbrella company. This means the agency will be liable for any PAYE and National Insurance contributions, shifting the responsibility from the umbrella company to the agency. If there isn't a recruitment agency involved, the end-client will be held responsible. This change is part of a wider programme of employment law changes aimed at tackling tax non-compliance.
Economic Crime and Corporate Transparency Act (ECCTA) 2023
On the 1st September 2025, the offence of "failure to prevent fraud" came into effect, which made large organisations (those with more than 250 employees, more than £36 million in annual turnover, and more than £18 million in total assets) criminally liable if an "associated person" commits a fraud intending to benefit the organisation or one of its clients. Strict liability applies, unless the organisation can show that it had "reasonable procedures" in place to prevent the fraud.
The Act also implements new mandatory identity verification (IDV) requirements for directors, persons with significant control (PSCs), and members of limited liability partnerships (LLPs). The time line for implementation of this is as follows:-
- April 8, 2025: Voluntary identity verification opens. Individuals can proactively complete ID checks using approved methods before requirements become mandatory.
- November 18, 2025: Mandatory identity verification required for all new company directors, PSCs, and LLP members at the point of incorporation or appointment.
- November 18, 2025 – November 17, 2026: Existing directors, PSCs, and LLP members must verify their identities within this 12-month transition period, usually aligned with their company’s next annual confirmation statement.
- Spring 2026 (exact date to be confirmed): Individuals who file documents at Companies House must complete identity verification by this time.
- Future date (TBC): Identity verification will be extended to limited partnerships, corporate directors/members of companies or LLPs, and officers of corporate PSCs—timelines for these groups will be announced later.
Moreover, under the Act only corporate entities registered in the UK will be permitted to serve as corporate directors for UK companies. Additionally, every corporate director on the board must be an individual whose identity has been successfully verified before the corporate director can be officially recognised. These requirements are likely to come into force in late 2025 or in 2026.
Further 2026 Employment Law Changes
Additional employment law changes include the following:-
- Immigration (from 8 January 2026): New applicants in key work routes (including Skilled Worker, Scale-up and High Potential Individual) must meet a higher English language standard (CEFR B2, previously B1).
- Home working (from 6 April 2026): Employees will no longer be able to claim HMRC Income Tax relief for additional household costs of employer-required home working (previously claimable as actual costs or a £6 per week flat-rate deduction).
Other Potential Employment Law Changes
The following are further employment law changes that may potentially be enacted. Some of these employment law changes however may not be enacted in time to form part of the 2026 employment law changes, but instead of later employment law changes beyond the 2026 employment law changes:-
- In response to its 2020 consultation on non-compete clauses, the previous Government announced on the 10th May 2023 its intention to legislate for a statutory three-month limit on post-termination non-compete clauses, stating that the aim was to promote “competition and productivity in the workplace.” That proposal was not implemented before the change of Government. Subsequently, on the 21st July 2025, Baroness Jones of Whitchurch confirmed in the House of Lords that the Government had been reviewing the research undertaken to date and would be consulting on options for reform “in due course”. Consistent with that statement, the Department for Business and Trade published a working paper on the 26th November 2025 setting out five potential reform options, including a statutory time limit and an outright ban, with responses closing on the 18th February 2026.
- AI technology: New measure to “harness the power of artificial intelligence [and] strengthen safety frameworks”. On the 17th December 2024, the Government launched a consultation aimed at clarifying copyright regulations for both AI developers and creative industries, with the aim of fostering innovation and advancement across both fields. On 13th January 2025, the Government introduced a plan outlining the country's AI strategy to enhance economic productivity and expansion. This initiative involves the creation of specialised AI growth areas, investment in new infrastructure, and the establishment of a National Data Library. Since then, the UK Government has continued to progress its AI programme. The copyright consultation launched in December 2024 closed in February 2025, but no formal legislative proposals have yet been published, leaving legal uncertainty around the use of copyrighted works in AI model training. As of June 2025, over £2 billion has been committed to AI infrastructure, growth zones and national data initiatives. In addition, a separate £137 million “AI for Science Strategy” was announced later in 2025 to fund publicly backed AI research and strengthen national computing and data capabilities.
As stated, some of the above employment law changes may not be enacted in time to form part of the 2026 employment law changes, but instead of later employment law changes beyond the 2026 employment law changes.
Further 2026 Employment Law Changes May Be Announced
Further employment law changes may yet be announced, and any further proposed employment law changes will be detailed in future updates to this article. Nevertheless, already, these employment law changes make up some of the most substantial employment law changes in recent years.
What This Means for Employers
- Build the Employment Rights Act 2025 timetable into workforce planning and budget assumptions for 2026–2027.
- Update policies and systems for April 2026 changes (including day-one rights and SSP reform), and plan HR/manager training ahead of October 2026 reforms.
- Review dismissal, probation and litigation risk in light of the 1 January 2027 unfair dismissal qualifying period change and the proposed removal of the compensation cap (subject to consultation).
- Audit the use of zero-hours and low-hours arrangements and prepare for guaranteed-hours, notice and cancellation compensation rules expected in 2027.
- If you sponsor workers, factor the higher English language threshold for new applicants into recruitment timelines and candidate screening.
- For hybrid workers, consider whether to reimburse home-working costs where appropriate, as employees will no longer be able to claim HMRC relief from April 2026.
