Employment Rights Act 2025 is here – How employers can prepare their payroll

Employment Rights Act 2025 is here – How employers can prepare their payroll

The Employment Rights Act 2025 has reached the end of its parliamentary debate and is set to bring significant changes to UK Employment Law.

Employers are now faced with a limited window to prepare their payroll systems and processes for the upcoming reforms.

What reforms will the Employment Rights Act 2025 bring?

The Employment Rights Act’s regulations will mainly come into effect on the common commencement dates of 6 April or 1 October.

From April 2026, Statutory Sick Pay (SSP) will become more accessible as the Lower Earnings Limit (LEL) and waiting period will be removed.

Paternity leave and unpaid parental leave will become day-one rights, requiring payroll and leave-tracking systems to apply statutory entitlements from the start of employment.

A new Fair Work Agency (FWA) will be established, alongside a simplified trade union recognition process, shorter employment tribunal time limits and stronger whistle-blowing and sexual harassment protections.

From October 2026, changes to tipping laws will require fair distribution of tips through payroll in sectors such as hospitality.

These reforms will have a knock-on effect on your payroll system and careful planning is required to stay compliant.

How can you prepare your payroll?

These reforms will bring additional payroll and compliance implications, so employers should start by reviewing employment contracts and payroll policies to ensure that they align with the new legislation.

Clear communication with employees can help them to understand any changes to their pay, benefits and statutory entitlements and reduce the risk of potential disputes.

Our payroll specialists can help you to ensure that your payroll function is always compliant, even when legislative changes are enacted quickly.

For expert payroll advice and support, and to ensure you are in a position to comply with the changes included in the latest Employment Rights Act, contact our team today.