UK Employment Law Guide 2026

Major changes in 2026 include the Employment Rights Bill (day-one unfair dismissal rights, fire-and-rehire restrictions, zero-hours contract reforms), day-one SSP from April 2026 with removal of the lower earnings limit, employer NI rising to 15% with a reduced secondary threshold of £5,000, National Minimum Wage increasing to £12.21/hour for workers aged 21+, and Employment Allowance rising to £10,500.

The Employment Rights Bill is landmark legislation currently progressing through Parliament. Key provisions include day-one unfair dismissal rights (removing the current two-year qualifying period), restrictions on fire-and-rehire practices, reforms to zero-hours contracts giving workers the right to guaranteed hours, and stronger protections for pregnant employees and new parents.

Day-one Statutory Sick Pay is expected to take effect from April 2026. Currently, SSP is only payable from the fourth day of sickness (with three "waiting days"). The change will remove waiting days entirely. The lower earnings limit (£123/week) is also being removed, meaning all employees will qualify for SSP regardless of earnings. The SSP rate for 2025/26 is £118.75 per week.

From April 2025, the National Minimum Wage rates are: £12.21/hour for workers aged 21 and over (National Living Wage), £10.00/hour for 18–20 year olds, £7.55/hour for under-18s, and £7.55/hour for apprentices. These rates apply until March 2026, when new rates will be announced.

From April 2025, employer National Insurance contributions are charged at 15% on employee earnings above the secondary threshold of £5,000 per year (£417/month). This was increased from 13.8% with a threshold of £9,100. The Employment Allowance of £10,500 can offset NI costs for eligible businesses.

The Employment Allowance for 2025/26 is £10,500. This allows eligible employers to reduce their employer NI liability by up to £10,500 per year. To qualify, your employer NI bill in the previous tax year must have been under £100,000. The allowance was increased from £5,000 in the October 2024 Budget to help offset the NI rate increase.

The ACAS Code of Practice on disciplinary procedures requires: (1) Establish the facts through investigation, (2) Inform the employee in writing of the issue, (3) Hold a formal meeting where the employee can be accompanied, (4) Allow the employee to state their case, (5) Decide on appropriate action, (6) Provide the right to appeal. Failure to follow the ACAS Code can result in tribunal awards being increased by up to 25%.

TUPE (Transfer of Undertakings - Protection of Employment) Regulations 2006 protect employees when a business or service provision changes hands. It applies in business takeovers, mergers, outsourcing, and changes in service contracts. Under TUPE, employees transfer to the new employer on their existing terms and conditions. Dismissals connected to the transfer are automatically unfair unless there is an economic, technical, or organisational reason.

During their notice period, employees retain full employment rights including: the right to be paid at their normal rate, accrual of annual leave, continuation of benefits (pension, healthcare), the right to work or be paid in lieu of notice, protection from unfair treatment, and the right to take any accrued but unused holiday. Statutory minimum notice is one week per year of service, up to 12 weeks maximum.

To stay compliant: (1) Keep employment contracts up to date with current legislation, (2) Follow ACAS codes of practice for disciplinary and grievance procedures, (3) Maintain accurate records of working hours, pay, and leave, (4) Conduct right-to-work checks for all new hires, (5) Ensure GDPR compliance for employee data, (6) Stay current with annual rate changes (NMW, SSP, SMP, NI), (7) Use HR software like Grove to automate compliance tracking and flag upcoming changes.