Beyond the Payslip: How the Employment Rights Act 2025 Redefines Payroll

The Employment Rights Act 2025 is no longer a future prospect—it is the current law of the land. This legislation has shifted the burden of proof and the speed of entitlement, turning payroll from a monthly task into a daily compliance challenge.

The Removal of Waiting Days Historically, Statutory Sick Pay (SSP) involved “waiting days” where the first three days of illness were unpaid. In 2026, this is gone. Employees are now entitled to SSP from Day One. Furthermore, the Lower Earnings Limit (LEL) has been removed, meaning even your part-time staff earning less than £123 per week must now be processed for SSP.

Day One Leave Entitlements Paternity Leave and Ordinary Parental Leave have also become “Day One” rights. Previously, employees needed 26 weeks of service to qualify. Now, a new hire can technically request these leaves within their first week of employment.

• Payroll Impact: Your systems must be able to trigger statutory payments immediately upon hire.
• Record Keeping: Tracking “shared parental leave” across different employers has become more complex.

The Death of “Fire and Rehire” The Act has effectively banned the practice of “fire and rehire,” making contract changes much more difficult. If you are adjusting pay scales or hours, the payroll data must reflect a clear, mutually agreed-upon transition to avoid “Unfair Dismissal” claims from the very first day of employment.

Conclusion The 2026 landscape demands a payroll system that is integrated with HR data. Payroll Guaranteed provides the technical infrastructure to manage these “Day One” rights, ensuring that your statutory payments are triggered accurately and legally.

References: UK Parliament – Employment Rights Bill, Statutory Sick Pay Reform Guide.