A decade of employment law debate has culminated in a single, sweeping piece of legislation. The Employment Rights Act, which was approved in December last year, is not a marginal adjustment to existing rules, but a fundamental reordering of the relationship between employers and workers - one that touches everything from sick pay and parental leave to contingent workforce accountability and dismissal rights.
The first wave of changes comes into effect from the 6th of April, with further reforms following in October and through 2027. For organisations, the window to prepare is narrowing.
"The Employment Rights Act is unlike any reform we have seen in recent decades. The breadth of changes is significant, but what concerns us most is the number of organisations that are still in a passive, wait-and-see mode. April is not a rehearsal, but the start of an entirely new operating environment for workforce management," says Ray Walker, Director, Operational Compliance at Magnit Global.
Organisations not only need to be aware of these changes but need to be operationally prepared for them. Awareness without action creates liability, and in several areas of the Act, the financial consequences of non-compliance have increased substantially.
What changes from the 6th of April
The April changes are wide ranging, touching everything from day-to-day sick pay administration to the governance of contingent labour supply chains. Here is a run-down of what to expect:
- Statutory Sick Pay from day one: Statutory Sick Pay will be payable from the first day of illness, removing the existing three-day waiting period. The lower earnings limit is also abolished, meaning workers previously below the eligibility threshold will become entitled to SSP at 80% of weekly earnings. For organisations with large hourly paid, part-time or contingent workforces, this has a direct impact on payroll calculations and absence management.
- Paternity leave and unpaid parental leave become day one rights: Employees can access statutory paternity leave and unpaid parental leave from their first day of employment. The restriction on taking paternity leave after shared parental leave is removed, and partners will be able to take up to 52 weeks of unpaid bereaved partner's paternity leave. Contracts or policies referencing qualifying periods should be updated before the deadline.
- Collective redundancy protective award doubled: The maximum protective award for failure to comply with collective redundancy consultation requirements doubles from 90 to 180 days' pay per affected employee. Where the Code of Practice on Dismissal and Re-engagement has not been followed, that figure can be uplifted by a further 25%, creating potential liability of up to 225 days' pay per employee.
- Whistleblowing protections extended to sexual harassment disclosures: Sexual harassment will become a qualifying disclosure under whistleblowing law, giving workers who raise concerns protection from detriment and unfair dismissal. Whistleblowing and grievance policies should be reviewed ahead of implementation.
- Umbrella company PAYE chain liability: Perhaps the least widely understood change taking effect in April, but one of the most consequential for organisations relying on flexible and contingent workers, concerns liability across the labour supply chain. Introduced not through the Employment Rights Act but via the Finance (No. 2) Bill, Joint and Several Liability (JSL) will apply to umbrella arrangements from the 6th April:if an umbrella provider fails to correctly operate PAYE or National Insurance, HMRC can pursue unpaid liability from the agency or client above it in the supply chain.
"The introduction of JSL is a fundamental change in how compliance risk is allocated across the labour supply chain. Organisations that have historically treated umbrella arrangements as an outsourced concern can no longer do so. The liability is real, it attaches to payments made on or after 6 April, and due diligence is no longer optional, but a legal and financial imperative," says Nana Yeboah, Director, Global Contractor Compliance at Magnit Global. "For businesses working with contingent labour, the choice of umbrella partner now directly affects an organisation's risk profile, and no amount of contractual indemnity can fully mitigate that exposure."
The Fair Work Agency is established
On the 7th April, the Fair Work Agency will be formally established, consolidating existing enforcement bodies and taking on state enforcement of employment rights including holiday pay and statutory sick pay for the first time. With powers to enter premises, inspect records, bring tribunal proceedings on behalf of workers and recover its own enforcement costs, it signals a markedly more active enforcement regime.
The changes still to come
April is the first milestone, not the last. From October 2026, employers face new third-party harassment liability, a strengthened duty to prevent sexual harassment, new trade union notification obligations, and employment tribunal time limits extended from three to six months, a change that widens the window for potential claims.
From January 2027, the unfair dismissal qualifying period drops from two years to six months, compensation caps are abolished, and fire and rehire protections take effect. Later in 2027, zero-hours and low-hours workers gain the right to guaranteed working hours, and umbrella companies will be formally brought within the regulatory framework for employment businesses, with direct implications for the contingent labour market.
“Much of the 2027 programme is still subject to consultation and secondary legislation, which means the detail will continue to evolve. But the direction of travel is clear, and organisations that wait for final confirmation before preparing are likely to find themselves significantly behind," adds Walker.
What organisations should be doing now
With April weeks away and further changes confirmed through 2026 and 2027, preparation cannot wait.
The immediate priorities are clear, and payroll systems and employment contracts need to reflect the new SSP rules before 6 April, and line managers should be briefed on day one parental and paternity leave entitlements to avoid inadvertent non-compliance from the moment a new hire starts.
For organisations using umbrella arrangements, auditing contingent workforce supply chains is urgent - Joint and Several Liability means due diligence is now a financial imperative, and governance structures need to be in place before the April deadline. Collective redundancy procedures should also be reviewed considering the doubled protective award.
Looking further ahead, the reduction of the unfair dismissal qualifying period to six months in January 2027 will reshape how organisations approach probation, performance management and documentation. That work needs to start now, not when the date arrives.
"What this Act demands is joined-up thinking across HR, legal, procurement and finance. Organisations that treat it as a compliance checklist will miss things, and in several areas, missing things carries real financial consequences," adds Yeboah.
