Annual leave and holiday pay record keeping (effective April 2026)
From 6 April 2026, the Employment Rights Act 2025 introduces far stricter record‑keeping duties. As a result, employers must now maintain detailed records of annual leave, carried‑over holiday, and holiday pay. These records must remain accessible and accurate at all times. Crucially, employers must retain them for six years. Previously, the law created uncertainty around holiday record retention. However, this marks a decisive shift. The government now expects businesses to evidence full compliance. Failure to meet these requirements can trigger serious consequences. In particular, the Fair Work Agency can impose significant financial penalties. Therefore, employers must review existing systems urgently. Many organisations will need stronger payroll processes. Others may require new tracking tools. Overall, these employment law changes increase administrative responsibility. Nevertheless, they also aim to protect worker entitlements more effectively.
Redundancy consultation requirements and increased financial risk
Employers also face far greater exposure during collective redundancies. From April 2026, the maximum protective award doubles. It now reaches 180 days of gross pay. This penalty applies where employers fail to inform and consult properly. It affects redundancies involving 20 or more employees. Previously, errors already carried risk. Now, the financial impact becomes much harsher. Therefore, early planning is essential. Open communication reduces conflict. Meaningful consultation can also prevent disputes. These employment law changes strongly reward employers who engage early and document decisions carefully.
National Living Wage and statutory pay increases
Pay compliance remains another priority from April 2026. Employers must update payroll systems without delay. The National Living Wage rises to £12.71 for those aged 21 and over. Meanwhile, rates increase for younger workers and apprentices. Statutory maternity, paternity, and adoption pay also rise to £194.32 per week. Consequently, errors will attract scrutiny. Employers should therefore review budgets and contracts promptly. Accurate payroll records now connect directly to enforcement risk.
Guaranteed hours rights for flexible workers (from 2027)
Further reforms arrive in 2027 for zero‑hours and low‑hours workers. These individuals gain the right to request guaranteed hours. They also gain compensation when shifts change at short notice. Employers must pay for cancelled or reduced shifts. Additionally, employers must provide reasonable notice of schedules. Although the law has not defined “reasonable” yet, expectations will rise. Therefore, workforce planning must become more structured. Flexibility will still exist, but accountability will increase.
The expanded enforcement powers of the Fair Work Agency
To enforce these reforms, the government establishes the Fair Work Agency. This body combines wide‑ranging powers. It can inspect workplaces. It can audit payroll records. It can also bring court proceedings. In addition, trade union reforms lower recognition thresholds. Industrial action becomes easier to organise. As a result, employers must prioritise positive workforce relations. Proactive compliance now protects against future disputes.
