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Huge changes to your business... from Monday, as Employment Rights Act kicks in

ended 02. April 2026

Huge changes are coming to your small business from Monday 6 April due to the Employment Rights Act. 

  1. Statutory Sick Pay (SSP) reforms: SSP will be payable from the first day of sickness absence, removing the current three-day waiting period. The reform removes the lower earnings limit, making SSP a "day one" right for all employees, regardless of income.
  2. Day-one right to paternity leave and unpaid parental leave: Statutory paternity leave and unpaid parental leave are now a right from day-one of employment. A bereaved partner, someone who dies in connection with childbirth, will also be entitled to take up to 52 weeks of unpaid leave.
  3. Increased protective award for collective redundancies: Significantly increases the maximum compensation payable where an employer fails to comply with its collective redundancy information and consultation obligations. The maximum that may be awarded by an Employment Tribunal in respect of that failure increases from 90 to 180 days' full pay per affected employee.

This comes as small businesses will have to pay more wages to employees. Around 2.7 million people will receive a pay rise this week as the national minimum wage goes up by 50p to £12.71 for over 21s.

Workers aged 18-20 will see an 85p rise to £10.85, and under-18s and apprentices will get 45p more to £8 an hour.

  • What is your reaction as a small business to the Employment Rights Act?
  • Will you be forced to stop hiring? Is it more of a risk to hire?
  • What other consequences are there for your business? How will it affect your business?

Responses by the morning.

5 responses from the Newspage community

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Justin Moy
Managing Director at EHF Mortgages
As usual, small business owners are having to foot the bill for improved pay and remuneration for their workforce, without any support from the government to cover this extra cost. The basic needs for good income and sickness benefits are well-intentioned without doubt, but as the government looks to raise business costs through additional taxation, NI and business rates, many businesses will choose not to grow and even to cut major costs, such as the wage bill. AI tools are becoming more popular and less expensive, serving as an alternative to employment, and it won't take long for businesses to streamline their operations accordingly.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
With increased taxes on businesses and business owners, along with heavier regulation; it's no wonder that many small businesses are more cautious when it comes to hiring and expansion. It feels as though there's increasingly less incentive for business owners to grow or increase their workforce. Without small businesses creating more job opportunities, this has wider impacts on the reliance on state support from job hunters.
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Wesley Davidson
Director at Fox Davidson
These changes make hiring a bigger risk for small businesses, full stop. Day-one sick pay, day-one parental leave, doubled compensation for redundancy failures and a minimum wage rise all hitting at once is a lot to absorb. I won't pretend it doesn't change the way you think about taking someone on. When the liability starts from day one, you think harder before you commit. The conversation around AI and automation in small businesses has shifted. It used to feel like something for bigger companies with bigger budgets. It doesn't any more. When the cost and complexity of employing people keeps going up, the case for investing in technology that reduces that reliance gets stronger. That's just the reality of where we are. The numbers are pushing small business owners in a direction, and it would be naive to pretend otherwise.
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Karen Watkins
Founder at Rowan Consulting
While the updates coming into effect on 6 April are interesting and will undoubtedly add further administrative burden and cost for SMEs, there’s a much bigger issue that seems to be flying under the radar. Very little attention is being given to the introduction of the Fair Work Agency and the potential impact this could have on small businesses across the UK. Launching in April 2026, the agency has been designed to track down “non-compliant” businesses. Inspectors will be able to visit workplaces, bring claims on behalf of employees and, to top it off, fines are going up. This shift could be far more consequential than the April changes themselves, particularly for smaller organisations that will undoubtedly already be stretched on compliance. The joy of owning a small business just got harder.
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Rohit Parmar-Mistry
Founder at Pattrn Data
Small firms do not object to paying people properly. The real anxiety is unpredictability. When wage floors jump, sick pay becomes day-one, and redundancy penalties double, every hire feels like a longer-term liability. That pushes cautious owners towards overtime, contractors, or simply doing less. The fix is not to freeze hiring but to professionalise how small businesses manage work: clearer roles, better rostering, sensible absence processes, and earlier conversations when performance dips. In practice, many firms will lean harder on automation for admin and scheduling just to keep up, but the risk is they automate the wrong bits and lose trust. If Government wants jobs, it should pair rights with practical support: templates, guidance and enforcement that targets bad actors without drowning everyone else in paperwork.