The phased rollout starts April 2026
The Employment Rights Act 2025 received Royal Assent on 18 December 2025. Now comes the compliance work. Changes roll out across 2026 and 2027, with some immediately affecting payroll, leave tracking, and dismissal procedures.
The Act shifts unfair dismissal rights from a two-year qualifying period to six months (effective January 2027). The compensation cap (previously £118,233 or 52 weeks' pay, whichever was lower) is gone entirely. That matters for M&A exits, restructures, and any dismissal where documentation is weak.
Tribunal claim time limits extend from three months to six months. Employers now have longer exposure windows and need better record retention.
Payroll and leave changes hitting April 2026
Statutory sick pay becomes a day-one right from April 2026. The £125 weekly earnings threshold is abolished. Budget accordingly.
Parental and paternity leave also become day-one rights (April 2026), though notice requirements still apply. Workers can hand in leave notices from their first day, even if the leave itself occurs later.
Annual leave records must now be kept for six years. Non-compliance carries fines. If your payroll system doesn't track this already, fix it before April.
Collective redundancy protective awards double from 90 to 180 days' pay (April 2026). That's material for larger restructures.
What employers should do now
Audit dismissal procedures. Six-month qualifying periods shrink the safe window. Probation reviews need tightening, especially with day-one rights eroding traditional probation protections.
Review payroll systems. Can they track six years of leave records? Handle sick pay from day one without threshold checks?
Update employment contracts. Zero-hours contracts face new guaranteed hours rules (rolling out 2027). Anti-avoidance provisions mean you can't simply restructure around them.
Budget for tribunal risk. Extended claim windows and uncapped compensation increase exposure. Legal reserves and insurance limits may need revisiting.
Watch for secondary regulations. The Act's framework is clear, but implementation details (particularly on flexible working and guaranteed hours) are still being drafted. Subscribe to ACAS updates or equivalent.
The government frames this as productivity-boosting and retention-focused. Critics note increased payroll volatility and compliance costs. Either way, the deadlines are fixed. Start auditing now.