Employment Rights Act: key changes you need to act on

June 23, 2026

If you run an electrical contracting business, the Employment Rights Act isn’t one to park. It reshapes holiday pay, sick pay and family leave – with tougher enforcement from 2026-2027. Acting now helps protect cashflow, reduce disputes and avoid penalties as the Fair Work Agency steps up checks. Here, Catherine Watt, Director of Employment and Skills at ECA, provides a practical summary of what’s live now, plus a checklist to make your payroll, policies and records inspection-ready.

April 2026 marked the first major phase of Employment Rights Act reforms, with more changes due later in 2026 and into 2027.

Key dates at a glance

6 April 2026: Statutory Sick Pay (SSP) reform took effect, with day-one rights for Paternity Leave and Unpaid Parental Leave (plus the new Bereaved Partner’s Paternity Leave).
7 April 2026: Fair Work Agency established (bringing together enforcement activity).

What has changed?

1. Holiday pay records: new legal duty – and a criminal offence if you get it wrong

Keep six years of records showing statutory leave entitlement/taken, how holiday pay was calculated (and which pay elements were included), and any payment for untaken statutory leave on termination – enough to evidence compliance if inspected.

Important: failure to keep adequate holiday records is now a criminal offence, punishable by an unlimited fine – even if the underlying holiday pay calculation is correct.

Holiday pay is where contractors get caught out because pay can be complex. Regular overtime/allowances can change what counts as ‘normal remuneration’. Treat this as a this-week check.

Common slip-ups:

Different parts of statutory leave can be paid differently – be clear what leave is being taken and how it’s paid.
Where pay varies, statutory holiday pay may need to reflect ‘normal remuneration’, not basic pay only.

What to do now:

Confirm payroll captures variable pay correctly for holiday calculations.
Spot-check three to five people with regular overtime/allowances and make sure the record trail is there.

2. Statutory Sick Pay (SSP): bigger cost exposure from day one

SSP is likely to hit contractors fastest: day-one entitlement increases immediate cost and can disrupt cover across live jobs. Two core rules have changed:

SSP is payable from day one of sickness absence (the ‘waiting days’ have been removed).
The Lower Earnings Limit has been removed, meaning more workers qualify.

Guidance also reflects a new calculation: SSP is the lower of 80% of average weekly earnings or the flat weekly rate (guidance references £123.25). Transitional protections apply for anyone already on SSP when the rules changed.

What to do now:

Update payroll and absence processes so SSP applies from the first qualifying day.
Brief supervisors so day-one SSP is handled consistently (evidence, reporting, return-to-work).

3. Family leave: ‘day-one’ rights and greater flexibility

More family leave rights now start from day one – which can mean earlier requests and faster resourcing decisions on jobs.

Paternity Leave: the current 26-week qualifying period is removed.
Unpaid Parental Leave: the current one-year service requirement is removed.

Practical steps:

Update policies/manager notes for day-one eligibility and timing.
Plan cover for earlier leave requests.

What to do now:

Update your handbook/contract pack and brief managers so you can give consistent answers when a request comes in.

4. New Bereaved Partner’s Paternity Leave (day one)

Since 6 April 2026, Bereaved Partner’s Paternity Leave gives a day-one right to time off if the mother or primary adopter dies within the first year after birth/adoption (timing-dependent, potentially up to 52 weeks). Guidance notes there’s no automatic statutory pay, so any paid leave depends on your policy.

Practical steps:

Set a simple process and a single HR contact.

5. Other changes employers should note (even if not ‘leave/pay’)

Two other changes can raise risk (and cost) quickly:

Collective redundancy: the maximum protective award is doubled to 180 days’ pay (raising exposure where consultation rules are not followed).
Fair Work Agency (since 7 April 2026): enforcement is consolidated, increasing the likelihood and pace of activity around rights such as holiday pay and SSP.

Employer checklist: what to update now

Payroll: SSP day-one settings, eligibility and calculation.
Policies: sickness absence and family leave updated for day-one rights (including bereavement).
Holiday pay: confirm what pay elements must be included, and keep a six-year record trail.

Bottom line

This isn’t a headline issue – it’s the everyday processes that keep jobs profitable and teams available. The April 2026 changes are live, and enforcement is becoming more joined-up.

This week: check SSP settings, tighten holiday pay records, and update leave policies so you’re not firefighting later.

eca.co.uk

ECA Member support
Need help? ECA has support materials for Members available at: eca.co.uk/member-support/employee-relations/contracts-handbook/employment-law-update – use them now, before a payroll query or inspection escalates.

This article appeared in Electrotechnical News May/June 2026 edition – read it here