Employment Rights Act & Fair Pay Agreements: Practical 2026 Compliance Checklist for UK Employers

Last reviewed: 16 May 2026

The most significant package of employment law changes in the UK for a generation is now being implemented. The Employment Rights Act 2025 received Royal Assent on 18 December 2025, and commencement orders are rolling out through 2026 and into 2027, introducing day-one family leave, the removal of SSP waiting days, new zero-hours protections, and the framework for Fair Pay Agreements. For HR directors, general counsel and SME owners, the window for compliance planning is narrowing fast. This guide provides a practical, date-anchored employer checklist covering every measure that demands action now, alongside worked examples, sample contract language and a clear implementation timeline to help organisations navigate these employment law changes in the UK with confidence.

TL;DR, Three Immediate Employer Actions

• Audit contracts and handbooks now. Update clauses covering day-one family leave rights, shift-notice obligations for zero-hours and low-hours workers, and SSP entitlements, measures that commenced between February and April 2026.
• Revise redundancy consultation timelines and record-keeping. New record-retention obligations and planned changes to collective consultation thresholds require immediate process updates.
• Prepare for Fair Pay Agreements. Employers in sectors likely to be designated first, adult social care, hospitality and facilities management, should begin collating workforce pay data, identifying bargaining representatives and reviewing industrial-relations plans.

What Changed and Why It Matters: Legislative Background

The Employment Rights Act 2025 is the centrepiece of the government’s Plan to Make Work Pay. Receiving Royal Assent on 18 December 2025, it is the most far-reaching piece of employment legislation since the Employment Rights Act 1996. Rather than taking effect all at once, the Act operates through commencement orders, secondary legislation that switches on individual provisions at different dates. This phased approach means employers face a rolling programme of compliance obligations throughout 2026 and 2027, as confirmed by the GOV.UK implementation timeline.

Key Statutory Changes at a Glance

• Day-one family leave. Paternity leave and unpaid parental leave become available from the first day of employment, removing previous qualifying-period requirements.
• SSP from day one. Statutory Sick Pay is payable from the first day of absence, with the previous three waiting days abolished and the lower earnings limit removed for SSP eligibility purposes.
• Zero-hours and low-hours worker protections. Rights to guaranteed hours based on hours regularly worked, reasonable notice of shifts, and compensation for short-notice cancellations.
• Reduction in unfair dismissal qualifying period. The qualifying period drops from two years to six months, expected to take effect from 1 January 2027.
• Fair Pay Agreements. A new sectoral collective bargaining framework, to be commenced via secondary regulations.
• Trade union access. New rights for trade unions to access workplaces for recruitment and organising purposes.
• Tipping and gratuities. Strengthened obligations on employers to distribute tips fairly and transparently.

New Enforcement Routes and the Fair Work Agency

The Act establishes the Fair Work Agency, a single enforcement body consolidating functions currently spread across HMRC, the Employment Agency Standards Inspectorate and the Gangmasters and Labour Abuse Authority. The Agency will have powers to inspect, issue compliance notices and bring civil proceedings on behalf of workers. Industry observers expect this to increase the likelihood and speed of enforcement action, making proactive HR compliance in the UK more important than ever for employers of all sizes.

Employment Law Changes UK: Key 2026 Measures and Your Operational Employer Checklist

The following checklist breaks the major 2026 obligations into time-bound action items. Each is assigned a responsible function and a priority rating tied to the relevant commencement window.

Contracts and Handbooks

Priority: Immediate (measures already commenced, February–April 2026)

• Day-one family leave clauses. Amend employment contracts and employee handbooks to remove references to qualifying periods for paternity leave and unpaid parental leave. Sample clause: “You are entitled to paternity leave from the first day of your employment, subject to the notice and evidential requirements set out in the Employee Handbook. There is no qualifying period of continuous service for this entitlement.” (Template language, review with counsel before adoption.)
• Shift-notice provisions for zero-hours and low-hours contracts. Insert clauses that confirm the employer’s obligation to provide reasonable notice of shifts and to compensate workers for short-notice cancellations. Sample clause: “The Company will provide you with reasonable notice of any scheduled shift, as defined under the Employment Rights Act 2025 and associated regulations. If a scheduled shift is cancelled at short notice, you will receive compensation in accordance with the statutory minimum.”
• SSP entitlement statement. Update the sickness-absence section of contracts and handbooks to reflect that SSP is now payable from the first qualifying day of absence, with no three-day waiting period.

Payroll and SSP Changes

Priority: Immediate (system changes required by April 2026 commencement)

• Remove the three-day SSP waiting period from payroll software. Liaise with your payroll provider or in-house payroll team to update SSP calculation logic. Ensure back-dated payments are made for any absences falling on or after the commencement date.
• Remove the lower earnings limit for SSP. Workers who previously earned below the lower earnings limit are now eligible. Update eligibility screening in payroll systems.
• Payroll codes and reporting. Check that HMRC Real Time Information (RTI) submissions correctly reflect the new SSP start date. Document the change and retain records of the updated configuration.
• Record retention. Maintain SSP records for a minimum of six years, in line with current ACAS guidance on record-keeping under the Employment Rights Act 2025.

Holiday Pay and Record-Keeping

Priority: Within 30 days

• Audit holiday-pay calculation methods. Ensure that rolled-up holiday pay practices, if used, comply with the latest statutory position and that calculations for irregular-hours and part-year workers are accurate.
• Record-retention policy. Holiday pay records should be retained for six years. Create or update a spreadsheet or HRIS module with columns for: employee name, leave year dates, statutory entitlement, additional contractual entitlement, hours/days taken, hours/days remaining, and pay calculations.
• Communicate changes to employees. Provide a written summary of updated holiday entitlements, particularly for zero-hours and casual workers whose entitlement basis may have changed.

HR Processes: Disciplinary, Dismissal and Tribunal Readiness

Priority: Within 60 days (ahead of January 2027 qualifying-period change)

• Review dismissal procedures. With the unfair dismissal qualifying period dropping to six months from 1 January 2027, every dismissal decision, even during probation, becomes a potential tribunal claim. Update manager training, template letters and approval workflows.
• Prepare for extended tribunal time limits. The government has indicated that Acas early conciliation and tribunal claim time limits are expected to be extended. Early indications suggest this will significantly increase the volume of claims; employers should review litigation budgets accordingly.
• Template letters. Draft or update: invitation-to-disciplinary-hearing letters, outcome letters referencing the right of appeal, and settlement-offer letters compliant with the “without prejudice” / section 111A framework.

Trade Union Access and Fair Pay Agreements

Priority: Within 90 days (secondary legislation expected later 2026)

• Trade union access policy. Draft an internal policy addressing how the organisation will facilitate the new statutory right of trade union officials to access the workplace for recruitment purposes. Identify a management point of contact and a meeting space.
• Fair Pay Agreement readiness. Employers in sectors likely to be designated first should establish an internal project team, collate pay-band data, and review existing collective agreements. Detailed guidance follows in the next section.

The table below provides a sample employer action plan format for tracking these items internally.

Fair Pay Agreements UK: What Employers Need to Know

Fair Pay Agreements represent an entirely new mechanism in UK employment law. Modelled in part on the New Zealand system, they allow sector-wide minimum terms and conditions, covering pay, hours and working conditions, to be negotiated collectively and then applied to all employers in a designated sector. The enabling provisions sit within the Employment Rights Act 2025, but the mechanism itself will only take effect once the Secretary of State makes secondary regulations designating specific sectors and setting bargaining thresholds.

Which Sectors Are Likely Affected First?

The government has signalled that adult social care will be the first sector subject to a Fair Pay Agreement, reflecting longstanding concerns about low pay and high turnover in care homes and domiciliary care. Industry observers expect hospitality and facilities management to follow. Employers in these sectors should treat Fair Pay Agreement preparation as a near-term compliance priority rather than a distant possibility.

Employer Steps: Preparing for Fair Pay Agreements

• Collate workforce data. Prepare a detailed breakdown of current pay rates, shift patterns, overtime arrangements and benefits across all roles that could fall within a designated sector. This data will be required during any bargaining process.
• Identify bargaining representatives. Determine whether your workforce is unionised and, if so, which union would represent workers in sectoral negotiations. If not unionised, anticipate that trade union access provisions may increase organising activity.
• Conduct a pay-structure gap analysis. Model the financial impact of potential minimum pay rates set at various levels above the National Living Wage. The likely practical effect will be compression of existing pay differentials, creating knock-on costs for mid-tier roles.
• Review existing collective agreements. If you already have a recognition agreement, assess how a Fair Pay Agreement would interact with its terms.
• Engage legal counsel early. Fair Pay Agreements in the UK introduce legal and industrial-relations complexity that most HR teams have not previously encountered. The Global Law Experts lawyer directory can help you identify experienced employment law counsel.

As of May 2026, the enabling secondary regulations have not yet been laid before Parliament. Employers should monitor GOV.UK and ACAS guidance closely for commencement announcements.

Dismissal, Redundancy and Settlement Risk: Calculating Exposure Under the Employment Law Changes UK

The reduction of the unfair dismissal qualifying period from two years to six months, expected from 1 January 2027, is arguably the single highest-impact change for employers. It will expose a far larger proportion of the workforce to unfair dismissal protection, dramatically increasing the risk and cost of poorly managed dismissals.

Unfair Dismissal Cap 2026: Worked Settlement Example

Consider the position of an employee aged 35, earning £40,000 per year, with four years of continuous service, dismissed in Q1 2027 under the new qualifying period. Here is an illustrative settlement-range comparison.

Note: Figures are illustrative and based on current statutory caps and typical tribunal awards. Actual outcomes depend on individual circumstances, mitigation of loss and tribunal discretion. Employers should obtain legal advice before making or responding to settlement offers.

Under the previous two-year qualifying period, this employee would have had no unfair dismissal claim if dismissed in the first 23 months. The new regime eliminates that buffer, meaning every dismissal from month seven onward carries tribunal exposure.

Redundancy Consultation Rules

• Collective consultation threshold. Where 20 or more redundancies are proposed at a single establishment within 90 days, collective consultation duties under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 apply. Consultation must begin at least 30 days before the first dismissal takes effect (45 days where 100 or more employees are affected).
• Required documentation. Employers must provide employee representatives with written particulars including the reasons for the redundancies, numbers and descriptions of employees affected, proposed selection criteria, the method of calculating redundancy payments and the proposed timetable.
• Protective awards. Failure to consult properly can result in a protective award of up to 90 days’ pay per affected employee, a significant financial exposure for medium and large employers.

Practical Mitigation Steps

• Alternative roles. Document all efforts to identify suitable alternative employment before confirming any redundancy.
• Selection scoring. Use objective, pre-agreed selection criteria. Retain completed scoring matrices for a minimum of six years.
• Enhanced redundancy pay. Consider offering enhanced packages in exchange for settlement agreements, particularly where the cost of a potential tribunal claim exceeds the enhanced package.
• Settlement offer templates. Prepare template “without prejudice” settlement letters and section 111A offers, reviewed by counsel, to deploy quickly when needed.

Contracts, Worker Status and HR Policy Updates

Beyond the headline changes, the Employment Rights Act 2025 requires employers to revisit fundamental questions about worker status and contractual terms. The new protections for zero-hours and low-hours workers, including the right to guaranteed hours based on a reference period of hours actually worked, will force a reclassification exercise for many organisations that rely on flexible staffing models.

Sample Checklist for Contract Amendments and Staff Communications

• Review every zero-hours contract. Identify workers who regularly work a consistent number of hours and prepare offers of guaranteed-hours contracts.
• Update shift-notification clauses. Ensure contracts and roster policies reflect the new reasonable-notice requirements.
• Flexible working policy. Flexible working is now a day-one right. Update handbooks to reflect this and train managers on the statutory grounds for refusal.
• Sexual harassment prevention. The Act strengthens the employer’s proactive duty to prevent sexual harassment, including by third parties. Update anti-harassment policies, conduct risk assessments and provide refresher training.
• Avoid unilateral detrimental changes. Any contractual change that is detrimental to the employee requires consultation and, ideally, express written agreement. Unilateral changes risk constructive dismissal claims. Follow a clear process: communicate the proposed change, consult genuinely, allow reasonable time to respond, and confirm the outcome in writing.

Employment Law Changes UK: Implementation Timeline and Compliance Comparison Table

The table below consolidates the key commencement dates, measures and required employer actions into a single reference. Employers should bookmark this table and cross-reference it against the GOV.UK implementation timeline, which is updated as commencement orders are laid.

Sources

1. GOV.UK, Plan to Make Work Pay & ERA timeline update
2. ACAS, Employment Rights Act 2025 guidance
3. GOV.UK, ERA 2025 overview factsheet (PDF)
4. Business.gov.uk, guidance for businesses
5. CIPD, Employment law updates / analysis
6. Pinsent Masons, ERA implementation and employer guidance
7. Freeths, Employment law changes 2025–2027 (horizon scanner)