Imminent Changes Under the Employment Rights Act 2025

Why It Matters

Non‑compliance will expose employers to fines, criminal liability, and reputational harm while increasing payroll obligations, making swift policy and system updates critical.

Key Takeaways

• Paternity and parental leave become day‑one rights for all hires
• Employers must retain detailed holiday‑pay records for six years
• New Fair Work Agency can bring claims without employee initiation
• Statutory sick pay payable from first day, eliminating waiting period
• Update policies, payroll systems, and contracts before April 2026

Summary

The Employment Law and HR podcast outlines four critical reforms slated for April 2026 under the Employment Rights Act 2025. These include extending paternity and parental leave to a day‑one entitlement, mandating six‑year retention of detailed holiday‑pay records, establishing a new Fair Work Agency with enforcement powers, and eliminating the waiting period for statutory sick pay.

The episode highlights that while leave eligibility expands immediately, statutory paternity pay still requires the traditional 26‑week qualifying period, prompting employers to consider discretionary pay enhancements. Holiday‑pay record‑keeping must now cover all statutory leave, including variable pay components, and failure to retain records could constitute a criminal offence. The Fair Work Agency will proactively bring claims, enforce minimum wage, sick pay, and modern‑slavery rules, and levy fines, raising compliance stakes.

Allison Collie advises firms to shift to electronic HR systems for robust record‑keeping, revise contracts and policies to reflect day‑one rights, and train payroll and management teams on the new calculations—especially the average‑pay method for holiday pay and the immediate statutory sick pay entitlement. She warns that non‑compliance could trigger financial penalties and reputational damage, urging employers to attend a free webinar for detailed guidance.

Overall, the reforms demand immediate policy updates, system upgrades, and staff education to avoid legal exposure and manage rising payroll costs, making proactive compliance essential for all UK employers.

Original Description

In this episode 259 of the employment law and HR podcast, we delve into some of the detail of the forthcoming changes under the Employment Rights Act 2025. In this episode I am covering the key changes taking place from April 2026.

In this episode we cover:

Changes to Paternity Leave

Paternity Leave will become a day 1 right for all employees

Statutory paternity pay will still have the qualifying period of 26 weeks

Unpaid Parental Leave will become a day 1 right

The requirement for all employers to keep holiday records for 6 years

All employers need to keep records of annual leave entitlement and time taken off

Employers also need to keep records of how much an employee is paid when they take holiday

Why it is important to reconsider how you hold holiday records

The new Fair Work Agency

The risks to employers in terms of penalties and reputation if the Fair Work Agency intervene

Changes to Statutory Sick Pay

The impact on employers of the new SSP rules

Why managers need to be aware and to tighten up the management of short term regular sickness absence

Why it is important to start taking action now to get ready for the new law.

Key takeaway:

Employers need to start taking action now to educate and empower managers to proactively manage employees for success.

You need to review and update policies on Paternity Leave, Parental Leave and Statutory Sick Pay.

You also need to consider how you store your holiday records and how you are going to store them going forward.

Don’t forget to subscribe to the podcast to stay informed on the latest in UK employment law. If you have questions or need tailored advice, feel free to get in touch – we are here to help.

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