by Kathy Lloyd
Employment Tax Director
3 August 2026
Articleby Kathy Lloyd
Employment Tax Director
Employment law has already seen significant change this year, with more still to come. Many employers are struggling to keep up, asking themselves: How does it affect me? What does this mean for my business? Many of these developments will have implications for people strategy, payroll processes and overall cost base.
We’ve compiled the most important developments you need to know, and what employers should be doing now.
So, what’s changing?
A number of reforms introduced under the Employment Rights Act 2025 have begun to take effect across 2026, with more to follow into 2027.
Employees now benefit from expanded rights from the first day of employment. For many businesses, compliance must be embedded from the very start. Including:
2. Expanded statutory sick pay (SSP)
Statutory sick pay as of April 2026, has changed, affecting both workers and employers, with the lower earning limits being removed meaning that, part-time and lower paid staff now qualify. Employees will now be able to get SSP from the very first day of them being sick, removing the three waiting days.
3. Launch of the Fair Work Agency
A new Fair Work Agency is being introduced to strengthen enforcement of employment rights and compliance. This will affect all businesses regardless of size. It is now more essential than ever to:
4. Gender pay gap & Menopause action plans
From April 2026, employers will be encouraged to have an action plan in place, to better support women in the workforce. The plan should cover:
More changes on the way
By 2027 the Employment Rights Bill is expected to be fully implemented, bringing wider changes across the UK. Businesses will need to prepare for the changes heading their way as these reforms will change how companies hire, manage the workplace and retain employees.
Some changes employers need to be aware of:
Why this matters?
Many businesses will recognise that changes to employment law will have implications for legal and HR functions. However, their impact extends more broadly across the organisation.
Cost implications
Even though changes such as SSP are making work more secure and inclusive for new employees, they bring new financial costs, operational challenges and more. Some of these include:
Operational complexity
With these changes, businesses will need to ensure their processes are up to date. Many of the updates will require changes to:
As a result, it is essential for businesses to be properly equipped and prepared. Without alignment, there is a risk of inconsistency and increased exposure.
Risk and governance
With increased enforcement and scrutiny, poor compliance is more likely to be identified and challenged. Organisations should prepare by implementing:
What employers should be doing now
Rather than reacting to individual changes, we are advising clients to adopt a structured approach and prioritise readiness.
Employers should assess their current position, review whether payroll systems and policies reflect the new rules, and ensure key documents are up to date.
They should also consider the wider implications, including effects on absence costs and future hiring decisions, before planning to ensure they are prepared for the year ahead.
How we can help
With employment tax, payroll and regulatory changes becoming increasingly interconnected, many businesses are finding value in stepping back and reviewing their overall position.
Our employment tax specialists work with clients to:
Managing these changes are essential. Employers need to keep policies up to date and apply them. Watch our short video to learn how to assess your position and take the right next steps.
Watch our Employment Tax video here.
Contact a member of our employment tax team here.