Key employment law updates | March 2026

Welcome to our Monthly update, where we share upcoming changes to Employment Law.

Changes taking effect on 6 April 2026

As highlighted in our previous bulletins, there are a number of changes coming into force under the Employment Rights Act 2025 on 6 April 2026. 

• Statutory Sick Pay expansion - SSP will, from 6 April 2026, be payable from day one of any sickness absence (rather than the fourth day).  Also, staff who earn below the lower earnings threshold will now be entitled to SSP, meaning a greater proportion of the workforce will qualify for SSP.  Employers will need to ensure that any staff who earn under the lower earnings on sick leave will need to be moved on to SSP from 6 April 2026.  

• Day‑one family leave rights –
  • Paternity Leave – the current requirement to have 26 weeks service is being removed for any baby born or child placed for adoption on or after 6 April 2026 (including any child who EWC was 6 April 2026).  An employee still requires 26 weeks service to be entitled to paid paternity leave.

For babies born between 6 April and 25 July 2026, the requirement to give 15 weeks' notice of the intention to take paternity leave is reduced to 28 days.  For parents of any children expected to be born outside of this window, the notice requirements remain unchanged.

• Parental Leave  - currently employees need to have one year of service before they are entitled to parental leave, from 6 April 2026, this will be a day one right.  This remains an entitlement to unpaid leave.

Policies and procedures will need to be updated to reflect this change.

• Strengthened collective redundancy protections - Maximum protective award doubles from 90 to 180 days’ pay, increasing the financial and compliance risk of mismanaging collective redundancy consultation processes.

• Changes to whistleblowing legislation - Disclosures relating to sexual harassment will now be explicitly recognised as a protected disclosure   Arguably this was already protected under a protected disclosure about breaching of legal obligations but employers should review their policies and ensure that they are clear as to whether complaints about sexual harassment will be dealt with under their whistleblowing policies or under any harassment policy.

• The Employment Rights Act (Commencement No.2 and Transitional and Saving Provisions) (Amendment) Regulations 2026 has also introduced a requirement for employers to keep records of annual leave for six year. Prior to the regulations being published, there had been no indication that this obligation was going to come into force this April.  Employers are required to keep "adequate records" for six years to show that they have give the workers the correct amount of holiday, they have paid holiday correctly and that they have paid untaken annual leave on the termination of employment.  The Fair Work Agency will have powers to take enforcement action against employers who do not comply.  It is currently not clear when its enforcement powers will come in.  But it is important that Employers keep adequate records dating back to 6 April 2026 (when the law comes into force).

Statutory 52‑week bereaved partner’s paternity leave: Reviewing compassionate and extended leave arrangements

This new right enables eligible employees to take up to 52 weeks' paternity leave where the child's primary carer dies within 52 weeks of the birth or adoption placement. The right will be enacted from 6 April 2026 onwards and can apply where the child's primary carer has died on or after this date.

There is no qualifying period of employment, meaning this is a day one right, however, the employee must have the main responsibility for the child's upbringing. In turn, the employee must be taking this leave to care for the child.

The notice requirements provide that the employee must notify the employer at least one week before the intended start date, or 'as soon as reasonably practicable' in urgent cases.

Whilst this new right does not create any entitlement to statutory pay, employers may choose to offer enhanced contractual arrangements.

FCA final rules on non-financial misconduct

The FCA's final rules on non-financial misconduct will become effective on 1 September 2026. These mandate that serious bullying, harassment and violence are treated as regulatory breaches, not just disciplinary issues. We have released a webinar discussing the updated changes for non-financial misconduct, exploring the definitions of non-financial misconduct, bullying and harassment. In the same webinar, we explored COCON and FIT guidance and identified practical steps firms can take to stay ahead. The webinar can be accessed here.

Culture is intangible but can be underpinned both through the tone of its leaders and a clear policy framework that identifies conduct which may constitute NFM, whilst remaining flexible to adapt to new circumstances.

Firms need to ensure they have the right policies and procedures in place to encourage employees to report NFM and to ensure a robust investigation and any subsequent disciplinary process. Senior managers will be under the spotlight in ensuring oversight of the framework, individual outcomes and regulatory reporting.

Annual increase in tribunal compensation limits and minimum awards

The Employment Rights (Increase of Limits) Order 2026 was made on 16 March 2026, and, with effect from 6 April 2026, will increase compensation limits and minimum awards which apply to certain employment tribunal awards as follows:

• The limit on the compensatory award for unfair dismissal, which will increase from £118,223 to £123,543 (This is likely to be the last such increase since the compensatory award is to be removed by S.25(3) of the Employment Rights Act 2025 (ERA 2025);

• The limit on a week's pay for the purpose of calculating, among other things, statutory redundancy payments and the basic award for unfair dismissal, which will increase from £719 to £751;

• The limit on the compensatory award for failure to allocate and pay tips fairly, which will increase from £5,135 to £5,366;

• The minimum basic award in cases where a dismissal is unfair by virtue of certain health and safety, working time, employee representative, trade union, or occupational pension trustee reasons, which will increase from £8,763 to £9,157.

Please note that these rates will only take effect where the 'appropriate date' for the cause of action falls on or after 6^th April 2026 (for example the last day of employment). The old limits still apply where the appropriate date falls before 6 April 2026.

Annual increase in statutory payments

From the beginning of April, the rate of payment for a range of statutory leave entitlements will be increased as follows:

• From 5 April 2026 onwards, statutory maternity pay (after the first six weeks) will be the lower of: £194.32 per week (increased from £187.18) or 90% of the employee's average weekly earnings;

• From 6 April 2026, the above increase will apply to the following statutory leave entitlements: statutory adoption pay (after the first six weeks), statutory paternity pay, statutory shared parental pay, statutory neonatal care pay, statutory parental bereavement pay and maternity allowance; and

• From 6 April 2026, statutory sick pay will rise from £118.75 to £123.25 (this change will come into effect at the same time that statutory sick pay becomes a day-one right).

Removal of the statutory cap on unfair dismissal compensation

Effective from 1 January 2027, the ERA removes the statutory cap on unfair dismissal compensation. This is currently capped at the lower of £118,223 or 52 gross weeks' pay.  Employees who bring claims of unfair dismissal will still have duties to mitigate their losses by finding alternative employment, but the removal of the cap could potentially make litigation more attractive for higher earners.   

Ongoing consultations

A wave of ongoing consultations opened across February and March and are set to shape the secondary legislation underpinning the Employment Rights Act 2025.

• Fire-and-rehire: 'Fire-and-rehire' describes the process whereby employers fire employees and then re-employ them under a new contract. The Employment Rights Act 2025 makes any dismissal of an employee following changes to certain core terms in their employment contract (or 'Restricted Variations') an automatic unfair dismissal. The Government is seeking feedback on which expenses, benefits and shift changes should be protected as 'restricted variations'. This consultation closes on 1April 2026.

• Improving access to Flexible Working: the Employment Rights Act will introduce a new process for employers to follow if they need to reject a flexible working request. The consultation seeks views on three areas: a proposed new process for employers to consult with employees where a flexible working request cannot be immediately agreed, which training and resources could help businesses navigate flexible working requests and other ways to improve access to flexible working. This consultation closes on 30 April 2026.

• Strengthening the law on tipping: The Government is strengthening the law on tipping by introducing new requirements for employers to consult with workers when developing or reviewing their tipping policies. The consultation seeks to gather views on the new requirements, as well as the current statutory code of practice on fair and transparent distribution of tips and the non-statutory guidance for distributing tips fairly. The consultation closes on 1 April 2026.

• Modernising the agency worker regulatory framework: the Government is seeking views on proposals to improve the framework which governs the temporary labour market to better protect workers while minimising business burdens. Specifically, the Government is seeking feedback on how the regulatory framework should be adapted to account for the activities of umbrella companies, and what broader changes should be considered to modernise the rules. This consultation closes on 1 May 2026.

• Recognition of Trade Unions of code practice and e-balloting unfair practices: the ERA makes several changes to the way in which trade unions can gain recognition and therefore the code of practice in this area is being updated to reflect this.  The Government has redrafted this code and is now consulting on this. 

• In addition, the ability for trade unions to e-ballot is being introduced under the ERA but the Government has indicated that it wants to ensure that the necessary safeguards are in place to prevent inference.  The Government is therefore consulting on ways to prevent any interference.  The consultation closes on 1 April 2026.

• Protection from detriments for taking industrial action: the Government will be implementing new protections for workers against detriments by their employer to penalise, prevent or deter them from taking industrial action. In particular, the Government is seeking views on the types of detriments which employers should be prohibited from imposing on workers. This consultation closes on 23 April 2026.

• Threshold for triggering collective redundancy obligations: at present, employers are required to undertake collective redundancy consultations when making 20 or more redundancies at one establishment. The Employment Rights Act will now extend this requirement so that employers will need to undertake collective consultation where the redundancies meet a certain threshold across the organisation (and not just at one establishment). This consultation seeks views on the form this new threshold will take, specifically which of the two options the government should implement as the new threshold: a single fixed number or tiering the obligation based on the number of employees.

We encourage you to respond to and engage with the consultations if you have concerns or views about any of the topics raised within them.