From April 2026 the government will be introducing a number of changes to employment rights under the Employment Rights Act 2025, which is a fundamental part of their Plan to Make Work Pay.

These changes will affect payroll processing, contract management, HR policies, and operational practices for all employers with employees, including SMEs.

While the aim of these reforms to enhance job security and fairness, they also mean an increase compliance obligations and potential costs.

Early preparation will be essential to minimise disruption and avoid penalties enforced by the new Fair Work Agency, which will commence operations on 6th April 2026.

To help you prepare for these changes we’ve summarised below a timeline of key Employment Rights Act 2025 changes that you will need to be aware of.

Please note: Alongside the below reforms, employers should also be aware of the National Minimum Wage and National Living Wage increases taking effect from 1st April 2026.

Key Reforms and Implementation Timeline

These changes will be introduced in a series of stages starting from April:

Effective 6th April 2026

• Statutory Sick Pay (SSP): SSP becomes payable from the first day of sickness absence (removing the previous three waiting days) and the lower earnings limit is abolished. All eligible employees above the National Insurance lower earnings limit threshold will qualify.
• Day-one family rights: Paternity leave and unpaid parental (ordinary) leave become available from the first day of employment.
• Collective redundancy protective awards are doubled (maximum of 180 days’ pay for failure to consult properly).
• Strengthened whistleblowing protections for reports of sexual harassment.

Effective 1st October 2026

• Employers must take “all reasonable steps” to prevent sexual harassment of employees, including by third parties (e.g., customers or clients).
• New obligations on tipping policies, requiring consultation with workers.
• Employment tribunal claim time limits increase from three to six months for most claims.

Effective 1st January 2027

• Unfair dismissal: The qualifying period is reduced from two years to six months. The statutory cap on compensatory awards is removed.
• Fire and rehire: Dismissing an employee and re-engaging them on less favourable core contractual terms will be automatically unfair in most cases, with a narrow exception only for businesses facing severe financial difficulties where no reasonable alternative exists.

Effective during 2027 (exact date subject to secondary legislation)

• Zero- and low-hours contracts: Workers gain rights to a guaranteed hours offer reflecting their regular hours worked over a reference period (expected to be 12 weeks), reasonable notice of shifts, and compensation for short-notice cancellations or curtailments. These rights extend to qualifying agency workers.
• Strengthened right to request flexible working, with employers required to provide reasonable explanations for refusals based on a prescribed list of grounds.
• New statutory unpaid bereavement leave (including for pregnancy loss before 24 weeks).
• Enhanced dismissal protections for pregnant employees and new mothers (up to six months post-return).
• Mandatory gender equality and menopause action plans for larger employers; voluntary guidance available earlier.

Recommended Actions for SME Employers

It’s important to note that all staff will be affected by these regulations, whether existing or new.  Therefore, it’s important to check:

Any existing contracts are contradictory to the new legislations

Any current conversations you’ve had with your staff are updated and reflect changes in the law from 6th April

How We Can Support You

At Clever Accounts we’re here to support our SME clients as they adjust to these upcoming changes.

Taking proactive action now by following the above steps will help ensure your business remains compliant, minimise disruption, and allow you to focus on maximising growth and operational efficiency.

Please contact your dedicated accountant to discuss in greater how the Employment Rights Act 2025 affects you.

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