Call for business advice
Employment Law Changes Coming in 2026 & Beyond: What Small Businesses Need to Know
From April 2026 onwards, several important employment law changes will come into effect across the UK. These updates are designed to strengthen worker protections, simplify enforcement, and modernise workplace rights.
For small businesses and SMEs, these changes don’t necessarily mean a complete overhaul of how you operate. However, they do require preparation. Policies may need updating, payroll systems may need adjusting, and managers will need to understand new employee rights.
In this guide, we outline the key employment law changes coming in 2026 and beyond, what they mean for small business owners, and the practical steps you should take before the new rules come into force.
Key employment law changes coming into effect from April 2026
Several reforms will begin rolling out from April 2026 onwards. The most significant changes include:
- Statutory Sick Pay reforms – Sick pay will start from the first day of illness and will be available to more employees.
- Day-one rights for Paternity Leave and Unpaid Parental Leave – Employees can give notice of these entitlements from their first day in a new job.
- Bereaved Partner’s Paternity Leave – A new right allowing leave where a child’s mother or primary adopter dies within the first year.
- National Minimum Wage increases – New wage rates will take effect from 1 April 2026.
- Collective redundancy penalties doubling – Maximum protective awards will increase significantly where employers fail to follow consultation requirements.
- The new Fair Work Agency – A single body will enforce several employment rights.
- Stronger whistleblowing protections – Workers reporting sexual harassment will be protected under whistleblowing law.
- Trade union law changes – Simplified rules around industrial action and union recognition.
- Future unfair dismissal reforms – Further changes expected in January 2027.
Here, we break down what each of these changes means for small business owners.
Statutory Sick Pay changes: Earlier payments and wider eligibility
From 6 April 2026, Statutory Sick Pay (SSP) will be available to more employees and will start earlier during sickness absence.
What’s changing
- The Lower Earnings Limit will be removed, meaning more lower-paid employees will qualify for SSP.
- SSP will be paid from the first full day of sickness absence.
- The current three-day waiting period will be removed.
- The SSP rate will be calculated at 80% of an employee’s average weekly earnings or the flat SSP rate, whichever is lower.
What this means for small businesses
For SMEs, this change may slightly increase costs when employees take short-term sickness leave. Under the current system, many short absences never triggered SSP because of the waiting period.
However, the intention behind the change is to ensure employees can afford to stay home when they are unwell. In practice, this may help reduce the spread of illness in workplaces, particularly in small teams.
Small businesses should review how sickness absence is managed and ensure payroll systems are ready for the new calculation rules.
Day-one rights for Paternity Leave and Unpaid Parental Leave
From 6 April 2026, employees will be able to give notice to take Paternity Leave and Unpaid Parental Leave from the first day of employment.
What’s changing
- Employees can give notice for Paternity Leave from day one of employment.
- Employees can give notice for Unpaid Parental Leave from day one.
- Fathers and partners can now take Paternity Leave after Shared Parental Leave, which was previously not allowed.
- The service requirement for Paternity Pay remains unchanged.
Temporary transitional arrangements will apply for babies due before 26 July 2026, reducing the notice period to 28 days in some cases.
What this means for small businesses
For SMEs, this means new employees may request parental leave relatively soon after joining. While this requires some workforce planning, it also reflects growing expectations around family-friendly workplaces.
Businesses that support working parents often benefit from stronger employee retention and recruitment, particularly when competing with larger employers.
Bereaved Partner's Paternity Leave: Supporting employees through loss
From 6 April 2026, a new entitlement called Bereaved Partner’s Paternity Leave will support employees who lose the mother or primary adopter of their child within the first year of the child’s life or adoption.
Key points
- This will be a day-one right, meaning no minimum service requirement.
- Employees may take up to 52 weeks of leave, depending on the timing of the bereavement.
- There is no statutory pay requirement, although employers may choose to offer paid leave.
What this means for small businesses
While this situation will hopefully be rare, it requires careful and compassionate handling.
Small businesses should ensure managers understand both the legal entitlement and how to support employees experiencing bereavement. Some employers may also consider offering paid leave to support staff wellbeing.
National Minimum Wage increases
The National Minimum Wage and National Living Wage will increase from 1 April 2026.
New wage rates
|
Age group |
New rate from April 2026 |
|
21 and over |
£12.71 |
|
18–20 |
£10.85 |
|
Under 18 |
£8.00 |
|
Apprentice |
£8.00 |
Even if your business already pays above the minimum wage, it’s important to check your payroll carefully.
Common mistakes employers make
Underpayments often happen unintentionally. Common issues include:
- Not paying for all hours worked, including overtime.
- Deducting the cost of uniforms or tools from wages.
- Failing to update pay when an employee’s birthday moves them into a new age bracket.
- Not paying for travel time between work locations.
- Counting tips as part of wages.
If a worker has been underpaid, employers must repay the arrears immediately, including back pay.
The Fair Work Agency
From 7 April 2026, the government will introduce the Fair Work Agency, bringing enforcement of several employment rights under one organisation. The agency will consolidate enforcement of areas such as:
- National Minimum Wage
- Agency worker protections
- Gangmaster licensing
Over time, it is expected to take responsibility for enforcing additional rights such as holiday pay.
The Fair Work Agency will also have powers to:
- Investigate breaches of employment law
- Issue civil penalties
- Take action against labour exploitation
What this means for employers
Importantly, the Fair Work Agency does not introduce new legal obligations.
For most compliant businesses, the change simply means a clearer place to go for advice and guidance.
Collective redundancy penalties will double
From 6 April 2026, the maximum penalty for failing to meet collective redundancy consultation requirements will increase significantly.
What’s changing?
The maximum protective award will double from 90 days’ pay to 180 days’ pay per affected employee.
This applies where an employer proposes 20 or more redundancies at one establishment within a 90-day period and fails to properly consult employee representatives.
What this means for SMEs
While many small businesses are unlikely to trigger collective redundancy rules, the financial consequences of getting the process wrong will become much more serious.
Businesses planning significant workforce changes should seek advice early to ensure consultation requirements are followed.
Stronger whistleblowing protections for sexual harassment
From 6 April 2026, employees who report sexual harassment at work will receive clear protection under whistleblowing law.
Previously, employees had to argue that their disclosure fell under broader categories such as health and safety concerns. The updated law makes it clear that reporting sexual harassment qualifies for whistleblowing protection.
This means workers will be protected from detriment at work and unfair dismissal.
For employers, this highlights the importance of having clear reporting processes and properly trained managers.
Trade union law changes
Several provisions of the Trade Union Act 2016 were repealed in February 2026, simplifying some rules around industrial action.
Key changes include:
- Industrial action notice period reduced from 14 days to 10 days
- Ballot mandates extended from 6 months to 12 months
- Removal of some administrative requirements around picketing and notices
- Employees protected from unfair dismissal when participating in industrial action regardless of strike length
Changes to the trade union recognition process will also take effect from April 2026, including the removal of the previous 40% support threshold in recognition ballots.
For many small businesses these changes may have limited impact unless their workforce is unionised, but policies should still reflect the updated legislation.
Actions to take now
Although many of these reforms are straightforward, small businesses should take time to put things in place. Here are some practical steps to consider.
Review and update employment policies
Check that your policies reflect upcoming changes, including:
- Sickness absence policies
- Paternity Leave and Parental Leave policies
- Bereavement and compassionate leave policies
- Whistleblowing procedures
Updating your employee handbook now will help avoid confusion later.
Review payroll systems and wage compliance
Make sure payroll systems are ready for:
- The new National Minimum Wage rates
- Changes to Statutory Sick Pay calculations
- Correct payment for all hours worked
Conducting a payroll audit can help identify potential issues early.
Brief managers on the new rules
Line managers are often the first people employees speak to about leave or workplace concerns. Ensure managers understand:
- New parental leave notice rights
- Bereavement leave entitlements
- Updated whistleblowing protections
- How to handle sensitive conversations appropriately
Check compliance with existing employment rights
The introduction of the Fair Work Agency means enforcement may become more streamlined. Reviewing compliance now can reduce risk later.
Check that your business is fully compliant with areas such as:
- Minimum wage
- Holiday pay
- Agency worker rules
- Record-keeping requirements
Stay informed about future reforms
Further changes, including updates to unfair dismissal protections, are expected in 2027. Keeping an eye on the UK Government's Business page will make sure you're aware of future developments and will help your business stay ahead of the curve.
Employment law in the UK continues to evolve, and the 2026 reforms represent one of the most significant updates in recent years.
For small businesses, the good news is that most of the changes reinforce good employment practices rather than introducing entirely new obligations. With a little preparation — updating policies, reviewing payroll systems, and briefing managers — SMEs can adapt smoothly.
Ultimately, these reforms aim to create fairer and more supportive workplaces, which benefits both employees and businesses in the long run.
Are you a business owner in Devon or Somerset? Would you like some free advice on any of the areas covered in this article, or on any other business challenges you’re facing? We’re here to help. Take a look at our current business support programmes here to see what’s available right now and to check your eligibility.
Share this Post