Employment Rights Act changes 2026: What UK businesses need to prepare for

The way businesses manage their people is changing.

The Employment Rights Act 2025 introduces a number of important changes to UK employment law, affecting everything from employee contracts and HR policies to recruitment, absence management and workplace procedures.

Many businesses will recognise these changes from the Employment Rights Bill, which has now passed into law as the Employment Rights Act 2025.

Importantly, the changes are being introduced in phases. Some measures are already taking effect, with further changes expected throughout 2026 and beyond.

For business owners, this is a good opportunity to understand what is changing, identify where existing HR processes may need updating and put the right arrangements in place before new requirements take effect.

For small and growing businesses without a dedicated HR team, keeping up with employment law can be challenging. Taking action early can help reduce risk and ensure your contracts, policies and people processes remain fit for purpose.

What employment law changes should businesses be aware of?

The Employment Rights Act introduces a wide range of measures designed to strengthen employee rights and update workplace protections.

While implementation is taking place in stages, there are several key areas employers should be preparing for.

Changes to unfair dismissal rights

One of the most significant changes for employers relates to unfair dismissal protection.

Currently, employees generally need two years’ continuous service before they can bring an ordinary unfair dismissal claim. From 2027, this qualifying period will reduce to six months.

For employers, this makes effective recruitment, onboarding, probation and performance management increasingly important.

Businesses should consider whether they have:

• Clear expectations in place from the start of employment
• Effective and consistently managed probation processes
• Accurate records of performance and employee conversations
• Fair and consistent procedures for addressing concerns

Having robust processes in place can help managers deal with employee matters fairly and confidently while reducing unnecessary risk for the business.

Changes to Statutory Sick Pay

Changes to Statutory Sick Pay started being introduced from April 2026.

The reforms remove the waiting period and lower earnings limit, meaning eligible employees receive Statutory Sick Pay from the first day of sickness absence.

Businesses should review their absence management processes, payroll procedures and sickness policies to make sure they reflect the updated requirements.

Changes to parental leave rights

From April 2026, employees have day-one rights to paternity leave and unpaid parental leave.

Employers should ensure their family-friendly policies, employee handbooks and manager guidance reflect these changes and that managers understand how to respond to requests appropriately.

Is your HR documentation ready for the changes?

Changes in employment law are also a useful reminder of the importance of keeping HR documentation up to date.

Businesses often review areas such as financial and tax compliance regularly, but HR documentation can sometimes remain unchanged for years.

Employment contracts, employee handbooks and workplace policies that were appropriate when they were first created may no longer reflect current requirements or the way the business operates today.

Areas worth reviewing include:

• Employment contracts and terms of employment
• Employee handbooks
• HR policies and procedures
• Sickness and absence processes
• Recruitment, onboarding and probation processes
• Employee records and documentation

Reviewing these areas early gives businesses time to make considered changes rather than having to react when an employee issue arises or new legislation takes effect.

Practical HR support for small and growing businesses

Keeping on top of employment law changes can be difficult, particularly for organisations without an in-house HR team.

Business owners and managers often have to manage employee matters alongside the day-to-day demands of running the business. Outsourced HR support can provide access to experienced guidance when it is needed, without the cost and commitment of employing a full-time HR resource.

At Verallo, our HR Services provide practical support across areas including:

• HR advice and guidance
• HR policy creation and reviews
• Employee handbook and contract reviews
• HR administration, including employee records and holiday management
• HR documentation and letters

Start with an HR Review

With employment law changes being introduced in phases, now is a good time to understand what they mean for your business and identify where action may be needed.

Verallo’s HR Review assesses your existing HR documentation and processes, highlights areas that may need updating and provides practical guidance on the steps your business can take to prepare.

Whether you need to update employment contracts, review workplace policies or simply want reassurance that your current HR arrangements are fit for purpose, our team can help.

Contact the Verallo team to discuss an HR Review and understand what the upcoming employment law changes mean for your business.