The Employment Rights Act 2025 UK is now law, and the practical impact for employers will arrive in phases. For many businesses, the biggest operational pressure won’t be “legal theory”—it will be how your payroll, policies, records, and processes adapt as changes land across 2026 and 2027.
In this article, we’ll walk through what the Employment Rights Act 2025 UK means in plain English, what payroll teams should prepare for first, and how to reduce compliance risk while keeping internal workflows smooth.
The rollout timeline: changes phased across 2026 and 2027
ACAS confirms the Act received Royal Assent on 18 December 2025 and that most changes will take place over a 2-year period, primarily in 2026 and 2027.
That phased approach matters because it gives employers time to:
review payroll and HR processes
update policies and contracts
test changes in payroll configuration before deadlines arrive
Why payroll is at the center of the Employment Rights Act 2025 UK
Many employment-law changes affect payroll directly because payroll is where policy becomes “real”:
eligibility rules must be applied correctly
statutory payments must be triggered at the right time
records must support audit trails and employee queries
So if you want to stay ahead of Employment Rights Act 2025 UK changes, the safest starting point is strengthening payroll readiness.
If you want support executing payroll changes cleanly, explore these UK payroll services to reduce admin burden and improve compliance consistency.
Key payroll impact area: Statutory Sick Pay (SSP) changes
One of the most practical payroll shifts relates to sick pay.
Current SSP baseline (what payroll systems often assume today)
GOV.UK guidance states SSP is generally paid when an employee is sick for more than 3 days (the “waiting days”), meaning it starts after that threshold.
What’s changing under the Act (what to prepare for)
A government SSP factsheet tied to the Employment Rights Act measures describes two important directions of travel:
removing the waiting period so SSP can be payable from the first day of sickness absence
expanding access by removing the Lower Earnings Limit requirement (bringing more low-paid workers into eligibility)
What employers should do now:
Audit your current sick pay workflow (policy + payroll configuration)
Ensure your payroll team can handle day-one triggers (if/when implemented)
Confirm your absence tracking feeds the right inputs into payroll (start date, qualifying rules, evidence requirements)
This is a core part of Employment Rights Act 2025 UK readiness because SSP is frequent, recurring, and highly process-driven.
Other areas employers are monitoring
The UK government’s announcement around the Act highlights changes aimed at modernising work practices—such as restrictions on exploitative zero-hours arrangements, stronger protections, and sick pay reforms.
Recent reporting also points to reforms being phased in, including tougher restrictions around zero-hours practices and other employment-rights adjustments that may increase admin requirements for employers.
Even when a change is “HR-led,” payroll usually still needs:
updated employee classifications
updated scheduling/contract assumptions (hours, eligibility, pro-rating)
cleaner recordkeeping to support disputes and compliance checks
Practical payroll checklist for Employment Rights Act 2025 UK readiness
Here’s a simple, actionable checklist you can apply now:
Map your statutory payment processes (SSP first, then other statutory items)
Review payroll data inputs (start dates, contract type, working pattern, sick absence rules)
Improve recordkeeping (payslips, payroll reports, change logs, policy versions)
Create a change calendar for 2026–2027 updates as guidance/commencement dates firm up
Train your admin team on what changes mean operationally (not just legally)
If you’re hiring UK talent without a UK entity and want help handling employment obligations as rules evolve, a structured EOR setup can remove a lot of friction.
Helpful official guidance to keep bookmarked
To track developments and reduce guesswork, these two resources are worth checking periodically:
Final thoughts
The Employment Rights Act 2025 UK is a phased transformation, not a single switch you flip. Employers who do best are the ones who treat this as a payroll-and-process project: tighten workflows, strengthen records, and prepare statutory pay handling early.
