Employment Rights Act Changes 2026: A Practical Guide for UK Small Businesses

We are officially in the preparation window.

The Employment Rights Act reforms are now confirmed, with the first major changes taking effect from 6 April 2026 and further shifts following in January 2027.

For UK small business owners, this isn’t just about updating paperwork. These changes affect staff costs, probation decisions, sickness management, and how risk builds in the first six months of employment.

This guide sets out what’s changing, what’s coming next, and what you should be doing now.

Statutory Sick Pay (SSP): Day-One Entitlement

Confirmed from 6 April 2026

One of the most immediate cost changes for employers relates to Statutory Sick Pay (SSP).

What’s changing

• Statutory Sick Pay becomes payable from Day 1 of absence (the 3-day waiting period is removed)

• The Lower Earnings Limit is removed, meaning all employees qualify

  
  

  

  
  

  2026 SSP rate

• £123.25 per week

• Employees earning below this amount will receive 80% of average earnings, capped at the SSP rate

What this means for small businesses

A one-day sickness absence that previously cost nothing now has a direct financial impact.

Action: Update your 2026/27 cash-flow forecasts and review how sickness absence is reported and recorded.

Bereaved Partner’s Paternity Leave: New Day-One Right

Confirmed from 6 April 2026

This is a new statutory right introduced to support families in the most difficult circumstances.

What this means

• A Day-1 right to up to 52 weeks’ leave

• Applies where the mother or primary adopter dies

• Available regardless of length of service

Pay and protection

• The leave itself is unpaid

• Statutory Paternity Pay (2 weeks) still requires 26 weeks’ service

• The leave is intended to allow the surviving partner to care for the child and adjust following the loss, with enhanced employment protections applying during this period.

Family Leave Changes: Paternity & Unpaid Parental Leave

Confirmed from 6 April 2026

What’s changing

• Paternity Leave becomes a Day-1 right

• Unpaid Parental Leave also becomes available from Day 1

  

Important distinction

• The right to take leave is immediate, but eligibility for statutory pay remains unchanged.

• Employers must allow the time off, even if statutory pay is not due.

Unfair Dismissal: The 6-Month Qualifying Period

Effective from 1 January 2027

This is the most significant strategic change for growing businesses.

What’s changing

• The qualifying period for ordinary unfair dismissal reduces from 2 years to 6 months

• The compensation cap is expected to be removed

Why this matters now

Any employee hired from July 2026 onwards will reach six months’ service by January 2027.

Action: Probation processes need to be clear, structured, and consistently followed. Informal decisions or “gut feel” will no longer be enough.

What Else is on the 2026 Radar?

Launching April 2026

The Fair Work Agency (FWA): The government is moving towards proactive enforcement. The Fair Work Agency will have powers to inspect businesses without a tribunal claim, with early focus expected on:

• SSP compliance

• Holiday pay calculations

• National Minimum Wage

Trade union rights: You will be required to inform all new starters of their right to join a union from Day 1.

National Minimum Wage (NMW) Increased Enforcement Risk: While National Minimum Wage rates change annually, compliance is expected to be a key enforcement focus from April 2026, particularly with the launch of the Fair Work Agency.

Common risk areas for small businesses include:

• unpaid training or mandatory meetings

• deductions that reduce pay below NMW

• salaried hours not reflecting actual time worked

• incorrect treatment of travel or waiting time

Action: Regularly review pay arrangements, working hours, and deductions to reduce the risk of technical breaches.

What UK Small Businesses Should Be Doing Now

You don’t need to panic, but early preparation matters:

• Review contracts and policies referencing waiting days or qualifying periods

• Strengthen probation and onboarding processes

• Review sickness absence procedures and reporting

• Update payroll systems ahead of April 2026

• Support managers with early performance conversations

Most problems are far easier to manage before these changes take effect.

This isn’t an exhaustive list of every change coming through, but it covers the areas most likely to impact small businesses in practice.

Need Support Preparing for These Changes?

I support UK small businesses with clear, practical HR including HR Health Checks that provide clarity and a prioritised action plan, to one-off documentation and ongoing HR advice. My focus is helping you manage people issues confidently and prepare for upcoming legal changes in a way that fits your business and your team.

If you’d like to talk it through, you’re very welcome to get in touch.

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