Employment Law Changes – January 2026

Employment Rights Act 2025

The Employment Rights Act 2025 (ERA 2025) became law on 18 December 2025. This Act represents a substantial update to UK employment legislation. Many provisions will come into effect gradually, with different changes occurring later in 2026 and into 2027.

Two late amendments in the final passage of the Act are expected to be particularly influential:

• The qualifying period for ordinary unfair dismissal will reduce from two years’ service to six months’ service. This change is expected to take effect from January 2027.
• The statutory cap on compensation for unfair dismissal — currently set at the lower of one year’s salary or £118,223 — is expected to be abolished, subject to publication of a government Impact Assessment.

Immediate and Near-Term Changes

The first effect of ERA 2025 after Royal Assent was the repeal of the Strikes (Minimum Service Levels) Act 2023.

Further changes relating to industrial relations are scheduled to follow within two months. These include:

• Simplified industrial action ballots and notice requirements;
• Stronger protection against dismissal for employees participating in protected industrial action;
• Repeal of most of the Trade Union Act 2016.

Statutory Rates from April 2026

From 6 April 2026, new statutory rates are proposed for statutory sick pay and family leave payments. The proposed increases include:

• Statutory maternity, paternity, shared parental, adoption, parental bereavement and neonatal care pay rising from £187.18 per week to £194.32 per week;
• Statutory sick pay increasing from £118.75 per week to £123.25 per week;
• The average weekly earnings threshold required to qualify for family leave payments increasing from £125.00 to £129.00 per week.

Alongside these changes, new national minimum wage rates have been set to take effect from 1 April 2026.

Other Legal Areas Covered

In a bulletin from Roots HR other employment law topics were covered, including workplace investigations and handling pressure from third parties in dismissal situations. These provide guidance on current legal principles that employers and HR practitioners should continue to follow when conducting disciplinary, grievance or dismissal processes.

Implementation Timeline

The reforms introduced by ERA 2025 will be implemented over a phased timetable:

• Early 2026: Repeal of the Strikes (Minimum Service Levels) Act 2023 and initial industrial relations changes.
• 6 April 2026: New statutory pay and minimum wage rates.
• October 2026: Additional reforms scheduled under ERA 2025.
• January 2027: Reduction of the qualifying period for unfair dismissal and expected removal of the compensation cap.

The Department for Business and Trade have published a Factsheet which you can read here: Employment Rights Act 2025 –
Overview 

Roots HR CIC have produced a handy guide with the new rates for sick pay, family leave and national minimum wage from April 2026 along with all the latest updates here.

We will continue to update this page as the legislation is implemented and additional information is published.

If you need help understanding how these changes affect your organisation or require tailored guidance on compliance, HR professionals and employers should consult specialist legal or HR advisors.