TECHNICAL | 21
Paul Chamberlain, Head of Employment and Specialist Recruitment Lawyer, JMW Solicitors, provides an overview of some of the most substantial changes on the horizon now that the Employment Rights Bill is officially law W ith Royal Assent granted on 18 December, the Employment Rights Bill is now an Act and particular attention to this change. Payroll providers will need to ensure their systems are configured to apply SSP correctly across all employee categories. Statutory paternity leave and unpaid
This reform is particularly relevant for payroll and HR teams involved in organisational restructuring or cost-saving exercises. Where the proposed contractual changes affect pay or hours, this must be carefully considered and legal advice may be advisable. Payroll teams will need to work closely with HR and legal colleagues to ensure any changes to pay structures are lawful and clearly recorded. Systems may need to accommodate more complex pay arrangements or transitional terms. Employers should review existing contracts and schedule time for consultation and legal review well ahead of any proposed changes. The Fair Work Agency (FWA) The FWA, launching in 2026, will consolidate the enforcement of employment rights such as SSP and holiday pay, and will have the power to bring claims on behalf of employees against non-compliant employers. Payroll compliance will come under greater scrutiny, so accurate record- keeping and system integrity will be more important than ever. Plan ahead with payroll Businesses should begin preparing for the changes ahead. Certain changes may require prompt action, while others may warrant waiting for further detail in upcoming regulations. In either case, businesses should diarise these changes and ensure they’re monitored and incorporated into planning cycles. Payroll providers particularly affected by the changes may wish to audit their systems so that SSP can be processed from day one and that eligibility checks no longer depend on earnings thresholds. Finally, stay alert for further Government guidance and secondary legislation which will clarify the finer details. Early planning and cross-functional collaboration will be key to ensuring a smooth transition and minimising compliance risks as the new regime takes effect in 2026.
introduces the most substantial overhaul of employment law in over a decade. Most of the changes are being rolled out over 2026 and 2027 via secondary legislation, which will set out the finer details of how the changes will operate. For payroll providers and human resources (HR) teams, the changes coming into force from 2026 are likely to require updates to systems and procedures to ensure compliance. The first major changes under the Government’s roadmap take effect in April, leaving only a couple of months for businesses to prepare for the new regime. April 2026: changes to sick pay and family leave April 2026 will see several key entitlements become day-one rights, available to employees immediately upon joining without any qualifying period. This will require updates to payroll and HR systems to ensure the accurate tracking and application of those entitlements from day one. Statutory sick pay (SSP) will be payable from the first day of illness, removing the current three-day waiting period. This means that a single day of absence due to illness could now trigger SSP entitlement. Payroll systems must be updated to calculate and process SSP from day one, and to include any short absences which were previously excluded from the scheme. Additionally, the lower earnings limit for SSP is to be removed. Currently, employees must earn above a set threshold to qualify. From April, this is being abolished and all workers will be entitled to SSP regardless of earnings. The change is likely to affect part-time, temporary and lower-paid staff who previously fell below the threshold. As a result, businesses employing part-time, temporary or lower-paid staff should pay
ordinary parental leave will also become day-one rights in April, with the current qualifying periods removed. HR policies and onboarding processes will need to be updated to reflect this, and payroll teams should be ready to process statutory paternity payments from an employee’s first day. These reforms reflect a shift towards a more inclusive and family-friendly approach to employment rights. While much of the Act has been subject to debate and increased complexity as it has passed through Parliament, the changes to SSP and family leave are relatively straightforward. Businesses should begin preparing for these changes as soon as possible to ensure systems can be tested and documentation is updated prior to April. October 2026: dismissal and re-engagement restrictions From October, new rules will restrict the use of ‘fire and rehire’ practices. Dismissing an employee for refusing a contractual variation may be deemed automatically unfair. Broadly, this will apply where the contractual terms in question fall into the category of a ‘restricted variation’. Restricted variations include terms relating to an employee’s pay, hours or ‘flex clauses’ which allow unilateral variation of the contract by the employer. Examples of these include: l pay – salary, bonuses or pension rights l hours – working hours, shift patterns or holiday entitlement. Terms outside the definition of a ‘restricted variation’, which are potentially lawful to change include: l role – job title or duties l location – mobility clauses or work from home allowances l exit provisions – notice periods or restricted covenants.
Made with FlippingBook - Online magazine maker