As we step into 2026, businesses across the UK are bracing for a significant wave of changes to employment law. The Employment Rights Bill introduces a phased rollout of reforms set to reshape employee entitlements, HR processes and employer responsibilities – with the first tranche arriving in April.
We spoke with Kat Derbyshire, founder of Black Kat HR, to break down what these changes mean for employers – especially SMEs – and how they can best prepare.
1. Statutory Sick Pay from Day One
One of the most impactful changes is the removal of the three-day waiting period for Statutory Sick Pay (SSP). From April, employees will be entitled to SSP from the first day of absence.
“More people will be entitled to sick pay in the first place,” says Kat. “But crucially, it’ll now be paid from day one, rather than day four. That’s a big financial shift for employers.”
While the existing self-certification rules still apply – no doctor’s note is needed until after seven days – this change may lead to increased absence.
“Businesses are worried there’ll be a higher rate of absence simply because people now get paid straight away,” Kat explains. “That means potentially higher costs and more strain on cover.”
Her advice? Review your absence management processes. “Make sure you’ve got clear trigger points and that managers know how to handle return-to-work conversations and address frequent absences. It’s about tightening up what you’ve already got.”
2. National Minimum Wage Increase
It might be an annual fixture, but the 2026 minimum wage rise is another notable change. The National Living Wage is set to increase to £12.71 – a substantial jump that could catch some businesses off guard.
“It happens every April, but it’s amazing how often businesses are shocked by it,” says Kat. “For smaller businesses especially, it’s essential to factor the new rate into your budgeting now.”
Kat warns that wage increases, coupled with rising national insurance costs, are forcing SMEs to reconsider recruitment and team structures.
“For many, it’s a question of whether they can afford to replace staff when they leave or if they need to restructure completely,” she adds.
3. Simplified Trade Union Recognition
From April, the process for trade unions to gain recognition within a business will be simplified – a change that may lead to more union activity across previously unaffected workplaces.
“Some businesses might be approached by a union for the first time,” says Kat. “They need to understand what that process involves and how to respond legally. It’s not just a case of saying ‘no thanks’ and moving on.”
For companies with little or no prior engagement with unions, Kat recommends getting up to speed now. “Don’t be a rabbit in the headlights – know your legal responsibilities before you’re approached.”
4. Redundancy Consultations – Higher Risks for Getting It Wrong
Another serious consideration is the doubling of compensation for businesses that fail to follow correct collective consultation procedures during redundancies.
“At the moment, if a business gets the process wrong, the protective award is 90 days’ pay,” explains Kat. “That’s going up to 180 days – half a year’s salary per employee. The financial risk is huge.”
Common mistakes include missing required timescales or not engaging employee representatives where required. “A lot of SMEs simply don’t know when collective consultation rules apply. That’s where getting professional HR advice can be invaluable,” she says.
5. Day-One Rights for Paternity and Parental Leave
Currently, employees need 26 weeks’ service to qualify for paternity leave and one year for unpaid parental leave. From April, both entitlements become day-one rights.
“This is a big shift. Businesses won’t be able to decline requests for those types of leave based on length of service anymore,” Kat says.
While great news for employees, it adds complexity for employers. “It’s another example of the Bill being very employee-centric. Businesses need to plan for more potential time off and ensure policies and systems are updated to reflect the change.”
6. Whistleblowing Now Includes Sexual Harassment
From April, complaints of sexual harassment will be protected under whistleblowing legislation – meaning employees who report such behaviour will have additional legal protection.
“It means if someone raises a complaint about sexual harassment and is then treated unfairly – for example, overlooked for a promotion or dismissed – they’re protected by law,” Kat explains.
The change follows on from earlier updates to harassment legislation and strengthens the responsibility on employers to handle complaints seriously and fairly.
“Employers should review their policies, make sure managers know how to deal with complaints properly, and ensure there’s a culture where people feel safe speaking up,” she adds.
7. Introduction of the Fair Work Agency
Finally, April will see the launch of the Fair Work Agency – a new regulatory body acting as a single point of contact for employers and employees seeking information and support on employment matters.
“There’s not a lot of detail yet,” Kat admits, “but it’s coming, and it’s something businesses should be aware of. It’s likely to become a go-to source for guidance, which should help in the long term.”
While it’s currently a “watch this space” development, Kat encourages businesses to keep an eye on announcements in the lead-up to April.
The Employment Rights Bill is the biggest shake-up to employment law in years, and with changes rolling out into 2027, staying on top of each phase will be essential. As Kat says, “It’s about knowing what you need to know, and either building that capability in-house or working with experts who can guide you.”
Looking for a personal and friendly Human Resources service to help you navigate these changes? Head to blackkat-hr.com for more.
