How the Employment Rights Act 2025 impacts business services

Whether your organisation delivers consultancy, financial services, legal support, IT services, facilities management, recruitment, customer contact or outsourced operations, workforce availability directly affects client satisfaction and commercial performance.

That makes the latest employment rights reforms more than a compliance exercise. The Employment Rights Act changes in 2026 will affect payroll costs, absence management, parental leave, workforce planning and the way HR teams support employees from their first day.

For HR and payroll leaders, the key question is not simply “What has changed?” It is: “How will these changes affect our people, clients and operating model?”

Here is a practical overview of the employment law changes UK professional services employers need to understand. 

Day one rights raise the standard for onboarding 

One of the key developments in the Employment Rights Act 2025 is the expansion of day one rights.

From 6th April 2026, eligible employees gain day one rights to Statutory Paternity Leave and Unpaid Parental Leave. Employees no longer need to complete a qualifying period before they can access these forms of leave. The reforms are designed to give teams greater flexibility, but they also create a new workforce planning consideration for employers.

In professional services, new starters are often brought into client-facing roles quickly. For example, a consultant may be assigned to a major project within weeks, or a customer service adviser may be trained for a specific account.  

This means HR teams should build leave planning into onboarding and resource allocation from the beginning. Managers also need clear guidance on how to respond when a relatively new employee requests leave. 

Sick pay changes will affect absence budgets

The sick pay changes introduced in April 2026 are particularly significant for employers with hourly-paid, lower-paid or variable-hours staff.

From 6th April 2026, Statutory Sick Pay (SSP) is payable from the first day of sickness absence. The lower earnings limit and previous waiting period have been removed.  

For business services organisations, the financial impact will vary. A professional services firm with predominantly salaried staff may see a limited direct change. A recruitment agency, media firm or contact-centre provider with a portion of their workforce being hourly-paid may experience a more noticeable increase in statutory payments.

Now is the time for leaders to review:

• Absence reporting processes
• Payroll calculations and eligibility checks
• Return-to-work conversations
• Occupational health referral criteria
• Absence trends by team, manager, location and contract type

Managers should also understand that paying SSP from day one does not remove the need for appropriate absence evidence and consistent record keeping. 

Statutory maternity pay in 2026: accuracy matters

The statutory maternity pay rate is currently £194.32 per week, or 90% of average weekly earnings where that is lower, after the initial six weeks of Statutory Maternity Pay. Statutory Shared Parental Pay is also £194.32 per week, or 90% of average weekly earnings if lower.

Although these rates may look straightforward, business and professional services payroll teams often manage complex pay arrangements. Employees may receive bonuses, commission, overtime, allowances or client-related premiums. Some may work across different entities or move between assignments.

Payroll leaders should confirm how average weekly earnings are calculated and check that payroll systems are applying the correct rate for the relevant pay period. Employees should also receive consistent guidance about how maternity leave interacts with annual leave, shared parental leave and company-enhanced benefits.

A well-managed process is not only about avoiding underpayments. It also helps maintain trust with employees during a highly sensitive stage of their working lives. 

Paternity leave changes in 2026 support a more flexible workforce

The paternity leave changes introduce day one entitlement to paternity leave for eligible employees. The reforms also include new rights for bereaved fathers and partners in qualifying circumstances.

This is a significant cultural shift for employers that have historically treated parental leave as something employees become eligible for only after their time with the business. It also matters in firms competing heavily for skilled professionals.

Employees increasingly assess employers on flexibility, wellbeing and the practical support available when life changes. A clear and accessible parental leave policy can therefore support recruitment and retention, particularly where competitors are offering similar salaries.

For business leaders, the practical priorities are:

• Update parental leave policies and guidance
• Train managers not to discourage or delay requests
• Make leave-request processes easy to follow
• Build cover planning into client and project management
• Check that payroll deductions and statutory payments are correct
• Keep enhanced company benefits aligned with statutory rights

Wider compliance changes to watch

The 2026 timetable also includes other reforms that may affect business services employers.

From 1st October 2026, the time limit for bringing an Employment Tribunal claim has increased from three to six months. This gives employees more time to bring claims and means employers should retain clear records for longer.

The Fair Work Agency has also been established, bringing together enforcement functions and increasing the focus on compliance. Employers should expect greater scrutiny of pay, working time and employment rights.

From 30th October 2026, employers must take all reasonable steps to prevent sexual harassment and must not permit harassment by third parties. This is especially relevant for customer-facing teams, consultants working at client sites and outsourced workers dealing with members of the public.

Turning compliance into a competitive advantage with MHR

The Employment Rights Act 2025 changes will create additional work for HR and payroll teams, but they also offer an opportunity to improve how business services organisations operate.

Accurate payroll, fair scheduling, well-managed absence and genuinely supportive parental policies can strengthen employee trust. That trust can improve retention, reduce recruitment costs and help organisations deliver a more consistent client experience.

With People First, HR and payroll teams can improve reporting and analytics visibility, maintain audit trails and workforce analysis in an easy-to-use platform and spend up to 60% less time in HR and payroll admin with AI support.

For example, when working with MHR, BB7 Consultancy found that People First was a massive upgrade on their existing platform. It instantly enhanced and automated a range of processes across the HR team, from recruitment and onboarding to talent management and policies monitoring.

The strongest employers will not treat the employment law changes 2026 UK programme as a one-off policy update. They will connect compliance with workforce planning, leadership capability and service delivery.

For business and professional services leaders, that is the real opportunity: to make employment rights part of a better, more resilient operating model. 

The information contained in this article was correct at the time of publishing. This article provides general information and is not legal advice. Employers should review the latest government guidance and seek specialist advice on their specific workforce arrangements.