UK Employment Law Updates 2026: What HR Managers Need to Prepare For 

HR software helps UK employers stay compliant in two ways.

It applies statutory rate and entitlement changes automatically, from the correct effective date, and it supports UK GDPR duties through access controls, retention rules, subject access request tooling and timestamped audit trails.

IRIS’ HR software, IRIS Cascade and Staffology HR, does both to help UK businesses manage their compliance.

2026 brings meaningful employment law changes for UK employers. Several provisions of the Employment Rights Act 2025 have now taken effect, statutory rates have been uprated, and the Fair Work Agency is operational with proactive enforcement powers. HR teams need to review policies, payroll settings, leave processes, and record-keeping — not as a one-off exercise, but as the start of a compliance cycle that will continue into 2027 and beyond. 

The biggest risk is not awareness of the law, but delayed operational implementation. Knowing that statutory sick pay rules have changed does not protect an employer whose payroll system still applies the old waiting-day logic. Knowing that holiday records must now be retained for six years does not satisfy the obligation if the records do not exist. The 2026 compliance environment demands action, not just understanding. 

This guide separates what is already in force, what is being phased in, and what is still ahead. It covers Great Britain. Employment law in Northern Ireland differs in several areas and is not addressed here. 

Sources: Employment Rights Act 2025; GOV.UK employment law guidance; ACAS; Fair Work Agency 

What Changed in 2026 

The following changes are in force. Effective dates are noted where specific provisions have a defined commencement date. 

The NLW, NMW rates, SSP weekly rate, and statutory family pay rates (SMP, SPP, SAP, ShPP, SPBP) are uprated annually from 6 April. These rates are announced in autumn of the preceding year.

Statutory sick pay and family leave 

Two of the most operationally significant changes from 6 April 2026 relate to statutory sick pay (SSP). The Employment Rights Act 2025 abolished the three-day waiting period that previously applied before SSP became payable. From 6 April 2026, SSP is payable from the first day of qualifying sickness absence. 

The Act also introduced a new lower rate of SSP for employees whose average weekly earnings fall below the lower earnings limit. Rather than receiving the flat weekly SSP rate, these employees receive SSP calculated as a percentage of their average weekly earnings. Payroll systems must be configured to apply the correct rate based on the employee’s earnings position; applying the flat rate to all employees regardless of earnings level will overcalculate SSP for lower earners. 

Separately, the Employment Rights Act 2025 removes the 26-week service requirement for paternity leave, making it a day-one right from 6 April 2026. An employee who starts work on Monday and whose partner gives birth on Friday is entitled to paternity leave from the day of birth. HR teams should audit any template correspondence, eligibility checkers, or HR system configuration that still references the qualifying period. 

Statutory rate updates 

The National Living Wage and National Minimum Wage are uprated annually from 6 April. The 2026/27 rates were announced by the Low Pay Commission in autumn 2025. Every employer must confirm their payroll system reflects the current rates from the first pay run on or after 6 April 2026. A failure to apply the correct rate from the effective date is an underpayment under the National Minimum Wage Act 1998 and is liable to investigation and penalty by the Fair Work Agency. 

Statutory family pay rates — Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Shared Parental Pay, and Statutory Parental Bereavement Pay — are uprated from the same date. The weekly rates apply for the relevant flat-rate weeks of each entitlement. Payroll systems should be verified against the confirmed 2026/27 rates at each year-end cycle, not assumed to update automatically. 

A practical audit at the start of the new tax year should confirm that the payroll system is applying: the correct NLW and NMW rates for each worker age group; the correct SSP daily and weekly rates; and the correct statutory family pay flat-rate amounts. Any discrepancy should be corrected before the first pay run that falls after 6 April. 

Worker rights and protections 

The Employment Rights Act 2025 contains a range of provisions beyond those taking immediate effect in April 2026. Several further provisions have commenced, with others subject to secondary legislation and consultation before implementation. 

Among those now in force or taking effect during 2026: 

• Fire and rehire restrictions: the Employment Rights Act 2025 strengthens protections against dismissal and reengagement practices. Employers who dismiss employees and offer re-engagement on materially inferior terms without genuine business justification face stronger legal challenge. HR teams should review any restructuring or contract variation processes against the updated framework. 
• Strengthened trade union rights: the Act includes provisions restoring and expanding trade union recognition and consultation rights. Employers with recognised unions or workforces where recognition may be sought should be aware of the updated framework. 
• Neonatal care leave and pay: introduced from 6 April 2025, this is now fully in force. Eligible employees whose newborn child is admitted to neonatal care may take up to 12 weeks of neonatal care leave and, where eligible, receive neonatal care pay. HR teams should ensure policies and payroll systems reflect this entitlement if they have not already done so. 

Several other Employment Rights Act 2025 provisions — including guaranteed-hours requirements for zero-hours and low-hours workers — are subject to further consultation and secondary legislation. These are covered in the forward-looking section below. 

Enforcement and compliance 

The Fair Work Agency became operational on 7 April 2026. It consolidates several enforcement functions previously held by HMRC’s National Minimum Wage team and other bodies, and it has proactive inspection powers that do not require a worker complaint to trigger an investigation. The Fair Work Agency can inspect employer compliance with NMW obligations, holiday pay rules, statutory sick pay records, and the new holiday records duty under Regulation 16B. 

This represents a fundamental shift in the enforcement landscape. For the preceding decade, most employment rights enforcement outside Employment Tribunal litigation was complaint-driven. The Fair Work Agency’s proactive powers mean that an employer with weak records, inconsistent payroll practices, or outdated policies can be subject to investigation without any employee raising a formal concern. 

The practical implication is that compliance adequacy must be evidenced in records, not just claimed in policy. An employer whose payroll system correctly calculates NMW but whose records do not demonstrate what rate was applied, when, and to whom is in a weaker position than one whose system produces and retains that audit trail automatically. 

How HR Software Supports Compliance 

When employment law changes, the compliance obligation does not sit in the policy document. It sits in every system, process, and decision that touches employees. An updated sickness absence policy that is not reflected in payroll configuration still generates incorrect SSP payments. A paternity leave policy that has been revised but whose change has not been communicated to managers still produces incorrect eligibility decisions at the point of employee request. 

Manual compliance processes — spreadsheets, email threads, shared drives, and ad hoc manager training — create three specific risk profiles: 

• Inconsistency: different managers, payroll operators, or HR team members may apply the same rule differently, producing outcomes that cannot be defended as consistent organisational practice. 
• Latency: changes take time to propagate through manual systems. The period between a statutory change taking effect and the change being correctly applied across the organisation is a period of direct compliance exposure.
• Evidential gaps: manual processes do not produce the kind of timestamped, version-controlled, retrievable audit trail that the Fair Work Agency and Employment Tribunals increasingly require. A correct decision that cannot be evidenced is, for compliance purposes, the same as no decision at all. 

The 2026 compliance environment specifically rewards organisations that can produce evidence of compliance rapidly and completely. The Fair Work Agency’s proactive inspection model means that the ability to demonstrate compliance on demand is no longer a theoretical risk management objective — it is an operational requirement. 

H2: What centralised HR and payroll systems help with 

Centralised HR and payroll software supports employment law compliance in six specific ways.

The examples below show how IRIS Cascade, Staffology HR and Staffology Payroll support each one.

• Statutory rate updates: Staffology Payroll applies the updated SSP and statutory family pay rates from 6 April automatically, and flags when an employee’s pay falls below the NLW and NMW rates that take effect on 1 April, so you know which records need reviewing.
• Document version control: IRIS Cascade and Staffology HR store policy documents with their issue date and a record of who acknowledged them, giving you both an audit trail and a single source of truth so you can evidence that an updated policy was communicated.
• Workflow approvals: IRIS Cascade and Staffology HR provide structured approval workflows for leave and absence management, creating a documented record of each decision, the date it was made and who made it.
• Leave and absence tracking: integrated leave management feeds into Staffology Payroll and IRIS Cascade Payroll, reducing the risk of holiday pay errors, mis-accrual for non-standard workers and SSP miscalculation.
• Reporting and audit readiness: IRIS Cascade and Staffology HR produce a range of reports, which are filtered by employee, leave type and period, enabling you to respond to a Fair Work Agency inspection or Employment Tribunal disclosure request.
• Employee data governance: IRIS Cascade and Staffology HR apply role-based permissions to salary, sickness and disciplinary records and support configurable retention periods.

How HR software supports UK GDPR compliance

HR software supports UK GDPR compliance by helping businesses better control their employee data.

With HR software, you can see employee data, record what happens to it and apply retention rules automatically.

Additionally, if a subject access request arrives, HR software makes it straightforward to pull an individual’s records.

Under the UK GDPR and the Data Protection Act 2018, the employer is the data controller and the software provider is the data processor.

Responsibility for lawful processing stays with the employer.

What UK GDPR requires from employers

Under UK GDPR, employers must:

• Have a lawful basis for every processing activity.
• Collect only what the role and the legal obligation require.
• Keep personal data no longer than necessary for the purpose it was collected for.
• Implement appropriate technical and organisational measures, such as access controls and, where proportionate to the risk, data encryption.
• Uphold individual rights, including access and rectification, and erasure and portability where those qualified rights apply.
• Respond to a subject access request within one month, extendable by up to two further months where the request is complex.
• Report notifiable personal data breaches to the ICO within 72 hours of becoming aware of them, and record every breach internally, whether or not it’s reportable.
• Put a written data processing agreement in place with any provider that processes employee data on the employer’s behalf.

How IRIS Cascade and Staffology HR support these UK GDPR obligations

• Access controls: IRIS Cascade and Staffology HR apply role-based permissions, so salary, sickness and disciplinary records are visible only to the people who need them.
• Audit trails: IRIS Cascade and Staffology HR timestamp changes and approvals against the employee record, so you can show who did what and when.
• Retention: IRIS Cascade and Staffology HR support configurable retention periods, so data is removed when it expires rather than accumulating indefinitely.
• Subject access requests: an individual’s records sit in one place in IRIS Cascade and Staffology HR and can be exported, making the one-month deadline achievable.
• Right-to-work and document expiry: IRIS Cascade and Staffology HR can be configured to hold right-to-work documentation, visa expiry dates and professional certifications against the employee record, with automated renewal reminders.
• Breach investigation: access logs within IRIS Cascade and Staffology HR help you establish what was accessed, by whom and when.

Questions to ask your HR software provider about UK GDPR

• Where is employee data hosted?
• Is a data processing agreement in place?
• Are there data encryption capabilities?
• Can retention periods be configured by record type?
• Does data deletion happen automatically?
• Can an employee’s full record be exported for a subject access request?
• What is the provider’s breach notification commitment to you as controller, and does it support your 72-hour ICO obligation?
• What security certifications does the provider hold?

Further guidance on employer obligations is available from the ICO’s employment information pages.

Which IRIS product covers which obligation

What if you would rather not manage payroll compliance in-house?

Software reduces the risk of applying a statutory change incorrectly, which suits teams with in-house payroll expertise.

For those without the internal resource, a managed service removes the task from your team altogether.

With IRIS Payroll Services, IRIS processes payroll on your behalf and applies changes to statutory rates, SSP and family pay as they take effect.

What HR Needs to Do Now 

The changes described above require operational action, not just policy awareness. The following section sets out the practical steps HR teams should be working through now, with particular urgency for those that have a statutory deadline already passed. 

Review policies and contracts 

Several policy documents require updating to reflect the 2026 changes. A structured review should cover: 

• Sickness absence policy: must reflect day-one SSP entitlement. Any reference to a three-day qualifying period is now legally incorrect. Policies should also clarify the calculation approach for lower earners and explain how SSP interacts with any enhanced contractual sick pay the organisation offers. 
• Paternity leave policy: must remove the 26-week service requirement. Any eligibility language, template correspondence, or HR system rules referencing the qualifying period must be updated before the next paternity leave request is processed. 
• Holiday pay policy and leave records: must reflect the Regulation 16B mandatory records duty. The policy should specify what records are retained, for how long (six years), and in what format. 
• Whistleblowing policy: the Employment Rights Act 2025 contains provisions affecting whistleblowing protections. HR teams should confirm with their employment advisers whether their current whistleblowing policy requires updating in light of the Act’s provisions. 
• Redundancy and consultation procedures: the Act includes changes affecting collective redundancy consultation and fire and rehire practices. Procedures should be reviewed to ensure they reflect the current legal position, particularly for businesses that have restructured since the Act was passed. 
• Employee handbook: where the handbook incorporates or summarises any of the above policies, it will require revision. A version-controlled review process should record when the handbook was last updated and which sections were changed. 

Policy updates should be communicated to all employees. Simply updating an intranet document without notification does not protect the employer if an employee later claims they were not aware of the current policy. A brief communication confirming the updates and directing employees to the revised documents provides both compliance evidence and practical clarity. 

Check payroll and leave processes 

Policy changes that are not reflected in payroll system configuration will not protect the employer. The following payroll and leave process checks should be completed before or immediately after 6 April 2026: 

1. SSP configuration: verify that waiting days have been removed and that the system calculates SSP from day one of absence. Verify that the lower-earner rate is configured for employees below the LEL.
2. SSP, SMP, and statutory pay rates: confirm all flat-rate payments reflect the 2026/27 uprated figures. 
3. NLW and NMW rates: verify by worker age category against the confirmed 2026/27 figures. Run a pay audit for any workers close to the minimum wage floor to identify any whose pay has inadvertently dropped below the new rate. 
4. Paternity leave rules: update any automated eligibility checks to remove the service qualification requirement. 
5. Holiday accrual and pay settings: verify that irregular-hours and part-year workers are accruing at 12.07% of hours worked per pay period. Verify that the 52-week reference period is being used for variable pay workers. 
6. Holiday records retention: confirm that the payroll and HR system retains the records required under Regulation 16B for six years and that the records are exportable for inspection purposes. 

A structured payroll configuration audit, signed off by the payroll lead and documented, provides both an evidence trail and a practical quality control. It should be dated and retained as part of the compliance record. 

Train managers and HR teams 

Employment law changes are most often encountered not in policy documents but in day-to-day management conversations. A line manager who tells a new joiner they are not yet entitled to paternity leave has breached a statutory right regardless of whether the HR policy has been updated. Operational compliance depends on managers understanding and applying the current rules, not just HR knowing them. 

Manager briefings should cover: 

• Day-one SSP: managers should not tell employees to wait before reporting sickness, and should not imply that a short absence will not generate SSP entitlement. 
• Day-one paternity leave: managers should not apply informal qualifying tests or suggest the employee check their eligibility before making a request. 
• Holiday pay and record-keeping: managers approving or recording leave must understand that their actions are being retained as compliance records for six years. 
• Reporting obligations: managers should know the escalation route for sickness, family leave, and redundancy situations, and should document their decisions in writing as a standard practice. 

Short, focused briefing sessions are more effective than comprehensive policy documents for manager training. A two-page summary of the 2026 changes, with the key dates and actions highlighted, will do more practical work than a full policy reissue for most line managers. 

Strengthen record-keeping 

The Regulation 16B mandatory records duty makes record-keeping a legal obligation with criminal penalties, not just a best practice recommendation. From 6 April 2026, every employer must be able to demonstrate that they have kept adequate records of holiday entitlement, accrual, and payment for each employee for the preceding six years. 

Practical steps to strengthen compliance records: 

• Holiday records: ensure leave taken, leave accrued, carry-over, and holiday pay calculations are retained at employee level with timestamps. 
• SSP records: maintain records of sickness absence, SSP calculations, and payment for each episode of absence, noting the start date, duration, and rate applied. 
• NMW records: retain payroll records showing hourly rates, hours worked, and total pay for each worker, sufficient to demonstrate NMW compliance for the Fair Work Agency. 
• Policy version history: retain dated copies of each version of key policies, with records of when they were issued and to whom. 
• Manager decisions: where managers exercise discretion on leave, flexible working, or absence management, those decisions should be documented and retained. 

For organisations managing records across spreadsheets, email, and shared drives, the six-year retention requirement creates a document governance challenge. Records must not only exist; they must be retrievable, legible, and organised by employee in a way that allows prompt production in response to a Fair Work Agency request or Employment Tribunal order. 

What to Watch in 2027 

The following are confirmed or anticipated reforms that are not yet in force. HR teams should monitor progress but should not treat them as current obligations. Implementation dates are subject to secondary legislation and, in some cases, consultation outcomes that had not concluded at the time of writing. 

Unfair dismissal reform 

The Employment Rights Act 2025 contains provisions that will significantly change the unfair dismissal framework. The most significant is the planned reduction of the qualifying period before an employee can bring an unfair dismissal claim. The current two-year qualifying period is expected to be substantially shortened — potentially to a much shorter initial period with a modified fairness test applying during that period. 

This change is expected to take effect in 2027, but the precise implementation date, the length of the new initial period, and the standard that will apply during it are subject to further secondary legislation and guidance. HR teams should begin reviewing their onboarding, performance management, and capability procedures now. Under a shorter qualifying period, a dismissal that takes place in the first few months of employment will be subject to tribunal scrutiny. Documented performance management, clear capability procedures, and fair dismissal processes will be essential from an employee’s first day. 

Other reforms in progress 

The following provisions from the Employment Rights Act 2025 are expected to take effect in 2026 or 2027, subject to secondary legislation and consultation: 

• Guaranteed hours for zero-hours and low-hours workers: the Act requires employers to offer guaranteed hours contracts to workers whose actual hours are regular and predictable, where those hours are not reflected in their current contract. The implementation timeline and the precise threshold for what constitutes a qualifying pattern are subject to further consultation. Employers with significant zero-hours workforces should monitor this position closely.
• Collective redundancy consultation threshold changes: proposals to modify the collective consultation obligations are under consideration. No confirmed implementation date at the time of writing. 
• Equality and equal pay action plans: the Act includes provisions requiring large employers to produce and publish equality action plans. Implementation timelines and the threshold employer size are subject to further secondary legislation. 

📌  Forward-looking section: monitoring guidance 

The provisions summarised above are not yet in force. HR teams should: 

• Subscribe to GOV.UK employment law updates and ACAS guidance alerts.
• Monitor IRIS HR communications for implementation updates. 
• Build review checkpoints into the HR calendar for Q3 2026 and Q1 2027. 

Do not treat anticipated changes as current obligations. Do treat them as preparation tasks. 

Which IRIS platform fits your organisation?

Staffology HR suits growing UK organisations that want comprehensive HR software without a lengthy configuration project.

IRIS Cascade is designed for larger, more complex organisations, including those going through periods of growth and acquisition.

Staffology Payroll is cloud-based payroll software, updated automatically to handle legislative changes, including the April 2026 reforms, such as day-one SSP and the extension of SSP to employees previously below the lower earnings limit.

IRIS Payroll Services is a managed service where IRIS runs your payroll processing and applies statutory changes on your behalf.

Software does not guarantee compliance. Statutory compliance depends on the accuracy of the data held, the decisions made by managers and HR teams, and the quality of governance applied to those decisions. What centralised systems do is reduce the operational friction between a change in law and correct application across the workforce, and produce the evidence that demonstrates that application when it is challenged. 

2026 Compliance Checklist for HR Teams 

The following checklist summarises the key actions required for 2026 compliance. It should be used as a working document, signed off by the HR lead and retained as a dated compliance record. 

UK Employment Law 2026: Frequently Asked Questions 

What employment law changes took effect in 2026? 

The most significant confirmed changes from 6 April 2026 include: the abolition of the three-day SSP waiting period, making statutory sick pay payable from the first day of qualifying absence; a new lower SSP rate for lower earners; the removal of the 26-week service requirement for paternity leave, making it a day-one right; the introduction of the mandatory holiday records duty under Regulation 16B, with a six-year retention requirement and criminal penalties; and the uprating of NMW, NLW, and statutory family pay rates. The Fair Work Agency became operational from 7 April 2026. 

When do statutory rate changes apply? 

NMW, NLW, SSP, and statutory family pay rates are uprated annually from 6 April. Employers must apply the new rates from the first payroll run on or after 6 April. Applying the previous year’s rates to payments made after 6 April constitutes an underpayment under the National Minimum Wage Act 1998 and the relevant statutory pay regulations. Payroll teams should verify rates against GOV.UK guidance before the first April payroll run and retain a dated record of the verification as a compliance control. 

How should HR prepare for 2027 unfair dismissal changes? 

The unfair dismissal qualifying period is expected to be significantly shortened under the Employment Rights Act 2025, with implementation anticipated in 2027. The precise date and the new qualifying framework are subject to secondary legislation that has not yet been confirmed at the time of writing. 

Preparation steps that make sense regardless of the exact implementation date: review your onboarding and performance management processes to ensure they are documented, fair, and consistent from day one of employment; audit any probationary period arrangements against the expected change in the statutory framework; and ensure managers understand that documented process is essential for any early-stage capability or conduct case. 

Do not implement changes to your employment contracts or disciplinary procedures based on the anticipated changes before the secondary legislation is confirmed. Monitor GOV.UK and ACAS guidance for implementation updates. 

How often should employee handbooks be reviewed? 

At minimum, employee handbooks should be reviewed annually, before the start of each tax year, to capture statutory rate changes and any legislative updates that have taken effect. In years with significant legislative activity — such as 2026 — a mid-year review may also be warranted. The review should be dated, documented, and any changes communicated to employees with a clear indication of what changed and when. 

Handbooks that have not been reviewed for more than two years are likely to contain incorrect statutory information, particularly on SSP, NMW, parental leave, and flexible working rights, all of which have changed materially in that period. An outdated handbook does not protect the employer in a dispute; it provides evidence that the employer was not applying current statutory minimums. 

Can HR software help with statutory compliance? 

Yes, in several specific ways. Payroll software that is maintained against current legislation applies statutory rate changes from the correct effective date, reducing the risk of underpayment. HR platforms that manage leave and absence records support the Regulation 16B records duty by retaining structured, timestamped data in a format that can be produced on request. Version-controlled policy management tools ensure that the most current document is always the accessible one, and that historical versions are retained for the period required. 

Software does not substitute for correct HR and management decisions. An HR platform cannot tell a manager that a particular dismissal is unfair, or prevent an incorrect eligibility decision being made by an untrained line manager. What it does is reduce the operational gap between a statutory change and correct application across the workforce, and produce the compliance records that the Fair Work Agency and Employment Tribunals expect to see. The combination of competent HR governance and well-configured systems is the practical standard the 2026 enforcement environment requires. 

How does HR software help with UK GDPR compliance?

HR software helps by controlling who can access employee data, keeping track of what happens to it and applying retention rules by record type.

IRIS Cascade and Staffology HR feature role-based permissions, timestamped audit trails and exportable employee records.

Under UK GDPR and the Data Protection Act 2018, the employer remains the data controller, so responsibility for lawful processing stays with the employer.

Can HR software handle a subject access request?

HR software can’t decide what should be disclosed in a subject access request, but it makes the one-month deadline achievable by storing employee records in one place and enabling easy export.

Data scattered across spreadsheets, shared drives and inboxes is a common reason subject access request deadlines are missed.

Do you need HR software to comply with UK GDPR?

No. UK GDPR does not require any specific technology, and an employer with well-managed manual records can be compliant.

However, HR software makes compliance considerably easier through:

• Access controls
• Retention schedules
• Audit trails
• Data exports

HR software also helps you evidence the data trail needed to demonstrate accountability if a breach or complaint occurs.

What is the difference between HR software and HR compliance software?

There’s no formal distinction.

HR compliance software is a marketing term for HR software with stronger record-keeping, permissions and audit functionality.

What matters is whether the system supports and evidences compliance rather than only recording data.