Employment law changes 2026: What manufacturing and supply chain leaders need to know

That’s why the latest employment rights reforms matter beyond the HR department, with potential implications for shift coverage, workforce availability, payroll processes and labour costs.

HR and payroll leaders in the sector now face the challenge of balancing stronger employee protections with the operational realities of shift work, seasonal demand and tight margins.

Here’s what manufacturing and supply chain leaders need to know about the Employment Rights Act changes in 2026 and beyond.

Day one rights change the employment journey

As of 6th April 2026, eligible employees receive day one rights to Statutory Paternity Leave and Unpaid Parental Leave. New starters can therefore qualify for leave much earlier than under the previous rules, making onboarding and workforce planning more important from the first day of employment.

For manufacturers, this could affect shift coverage, overtime budgets and skills availability. A new production operative or warehouse supervisor may now request leave before managers have built a complete picture of their availability.  

Payroll teams should also distinguish between the right to take leave and the separate eligibility rules for statutory pay. HR policies, payroll software and manager guidance must all reflect the difference.

Sick pay changes put absence processes under the spotlight

One of the most significant sick pay changes was the removal of the lower earnings limit and waiting period for Statutory Sick Pay. Since 6th April 2026, SSP has been payable from the first day of sickness absence, at the lower of £123.25 per week or 80% of average weekly earnings.  

This is particularly relevant to businesses with lower-paid employees, agency-to-permanent pathways and hourly production roles. The cost impact may be felt immediately, but effective absence management processes can help organisations manage disruption while supporting employee wellbeing.

Review absence reporting, occupational health referrals and return-to-work procedures. Managers should know when to record an absence, how to support recovery and when a pattern requires further action.

Paternity leave changes 2026: prepare for more flexibility

The paternity leave changes introduced in 2026 made paternity leave a day-one employment right, giving employees greater flexibility when welcoming a child. There are also new protections for bereaved fathers and partners, including extended leave in qualifying circumstances.

For supply chain employers, greater flexibility needs to be built into labour planning rather than handled as an exception. Cross-training, documented handovers and a reliable pool of trained relief staff can reduce disruption when leave is requested at short notice.

Zero-hour contract reform is coming, but not all at once

Reforms to zero-hours and similar contracts are also part of the wider employment rights changes. However, the right to guaranteed hours, reasonable notice of shifts and compensation for short-notice cancellations is scheduled for 2027, with further detail expected after consultation.

For employers that rely on variable-hours workers to respond to fluctuating production volumes, seasonal peaks or changing customer demand, these reforms could have a significant impact on workforce planning.

Now is a good time to review how these workers are engaged, including contracts, shift allocation practices and cancellation policies. Employers should also consider where greater predictability could support workforce retention without compromising the flexibility needed to respond to operational demand.

How People First can help you navigate these changes

Employment law changes add another layer of complexity to workforce planning, particularly for manufacturing and supply chain businesses managing shift-based teams, skills requirements and fluctuating demand.

People First brings HR, payroll and workforce management together, giving teams greater visibility of their people and the information they need to plan effectively. It can help you:

• Improve reporting and analytics visibility
• Maintain audit trails and workforce analysis in an easy-to-use platform
• Spend up to 60% less time in HR and payroll admin with AI support
• Understand workforce skills and gaps to support rota and shift planning
• Plan rotas and efficiently communicate shift availability and changes
• Provide easy access to HR policies and procedures
• See payroll changes and updates in real-time 

With People First, Karndean DesignFlooring implemented a centralised, user-friendly HR and payroll platform and saw significant improvements across efficiency, transparency and employee engagement.  

“People First is a fantastic tool for HR. You can have so much information in such a little space. It just makes it really easy for managers, employees, HR teams and payroll teams, all singing off the same hymn sheet.” – Molly Beck, HR manager, Karndean DesignFlooring.

Planning for the Employment Rights Act changes in 2026 and beyond

The message for manufacturing and supply chain leaders is clear: the Employment Rights Act is an operational change programme. Businesses that align payroll, workforce planning and manager capability early will be better placed to protect compliance, productivity and employee trust.

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.