UK Employment Law Changes 2026: What Employers Need to Know

2026 is a significant year for UK employment law. The Employment Rights Bill, introduced in late 2024, is now being implemented in stages. Several new rights and obligations are coming into force, and employers need to be ready. This guide summarises the key changes that affect how you manage your people, with a focus on what you need to do now.

1. Flexible working: day one right (already in force)

Since April 2024, employees have had the right to request flexible working from day one of employment. Previously, employees needed 26 weeks of service before they could make a request. Key changes:

Employees can now make two requests per year (up from one)
Employers must respond within two months (down from three)
Employers must consult with the employee before refusing a request
The employee no longer needs to explain the impact of the request on the business

What to do: review your flexible working policy to ensure it reflects the new rules. Train managers on how to handle requests fairly and within the two month deadline.

2. Neonatal care leave (new for 2025/2026)

The Neonatal Care (Leave and Pay) Act 2023 introduces a new right to up to 12 weeks of paid leave for parents whose babies are admitted to neonatal care within 28 days of birth and who spend 7 or more continuous days in hospital.

This is in addition to existing maternity and paternity leave. The statutory pay rate will be set at the same level as other statutory family pay rates.

Who qualifies: employed parents and intended parents in surrogacy and adoption situations
When it applies: from the first day of employment (no qualifying period)
How it works: leave can be taken in non consecutive weeks and must be taken within 68 weeks of birth

What to do: update your family leave policies and employee handbook. Configure your leave management system to include neonatal care leave as a leave type.

3. Employer duty to prevent sexual harassment

The Worker Protection (Amendment of Equality Act 2010) Act 2023 created a new proactive duty on employers to take reasonable steps to prevent sexual harassment. This replaced the previous position where employers were only liable if harassment had occurred and they had failed to act.

Employment tribunals can now uplift compensation by up to 25% if an employer has breached this duty.

Employers must carry out risk assessments for harassment
Anti harassment policies must be up to date and actively communicated
Training must be provided to all staff, not just managers
Reporting mechanisms must be clear and accessible

What to do: review your anti harassment policy, conduct a risk assessment, and schedule training. The Equality and Human Rights Commission (EHRC) has published guidance on what "reasonable steps" means in practice.

4. Fire and rehire restrictions

The Employment Rights Bill introduces restrictions on the controversial practice of "fire and rehire," where employers dismiss employees and offer to rehire them on worse terms. Under the new rules:

Dismissing an employee for refusing to accept a change to their terms will be automatically unfair unless the business can demonstrate financial difficulties that threaten its survival
The threshold for justifying fire and rehire is much higher than before
Employers must demonstrate that they have exhausted all other options

What to do: if you are considering changes to employment terms, take legal advice. The new rules make it much harder to force through changes using dismissal as a tactic.

5. Statutory Sick Pay reform

The Employment Rights Bill proposes changes to Statutory Sick Pay (SSP):

Removal of the 3 waiting days: SSP would be payable from day one of sickness (currently it starts on the fourth day)
Removal of the Lower Earnings Limit: all workers would qualify for SSP, not just those earning above the threshold
A percentage of earnings would apply for lower paid workers (to avoid SSP exceeding their normal pay)

These changes are expected to come into force during 2026, but the exact timing may depend on parliamentary progress.

What to do: budget for the additional cost of paying SSP from day one. Update your absence management and payroll systems when the changes are confirmed.

6. Tips Act: allocation of tips

The Employment (Allocation of Tips) Act 2023 requires employers to distribute tips, gratuities, and service charges to workers in a fair and transparent way. Key requirements:

Employers must have a written policy on how tips are allocated
All qualifying tips must be distributed to workers by the end of the month following the month they were received
Employers cannot deduct administration costs from tips
Workers can request a copy of tipping records

What to do: if your business receives tips (hospitality, hairdressing, delivery services), create a written tipping policy and ensure your payroll process distributes tips on time.

7. Right to switch off (proposed)

The Employment Rights Bill includes a proposed right to switch off, giving employees the right to disconnect from work communications outside of normal working hours. While the details are still being finalised, the direction of travel is clear:

Employers will likely need a policy on out of hours contact
Employees should not be penalised for not responding outside working hours
Genuine emergencies may be exempt, but routine emails and messages would not be

What to do: even before this becomes law, consider adopting a policy on out of hours communication. It is good practice and supports employee wellbeing.

8. Zero hours contract reforms (proposed)

The Bill proposes reforms to zero hours contracts:

Workers on zero hours contracts would have the right to request a guaranteed hours contract after a qualifying period
The guaranteed hours would be based on the average hours worked during the reference period
Employers would need to give reasonable notice of shifts and compensate for cancelled shifts

What to do: review your use of zero hours contracts. If workers are consistently working regular hours, consider offering them guaranteed hours proactively.

9. Single enforcement body

The government plans to create a single enforcement body, the Fair Work Agency, which will combine the functions of HMRC's national minimum wage enforcement, the Employment Agency Standards Inspectorate, and the Gangmasters and Labour Abuse Authority. This will give a single body the power to:

Enforce minimum wage, holiday pay, and sick pay obligations
Investigate complaints from workers
Issue penalties for non compliance

What to do: ensure your pay and leave practices are compliant. With a single enforcement body, investigations are likely to be more coordinated and effective.

How Leavely keeps you compliant

Employment law changes often affect leave entitlements, policies, and record keeping. Leavely helps you stay on top of it:

Configurable leave types so you can add neonatal care leave and other new entitlements
Policy templates that reflect current UK law
Automatic calculations for entitlements, pro rata adjustments, and carry over
Audit trail that provides evidence of compliance if you are ever investigated
Regular updates to keep the platform aligned with legislative changes