Day 1 employment rights are expanding under the Employment Rights Act 2025, which received Royal Assent in December 2025 and introduces some of the most significant employment law reforms in decades.
A central theme of the legislation is the expansion of “Day 1 rights”, meaning certain employee entitlements will apply from the first day of employment rather than after a period of service.
For employers, these changes are not simply legal updates. They have direct implications for payroll administration, statutory payments and internal policies, particularly from April 2026 onwards.
If your business employs staff, these changes may require updates to payroll systems, processes and compliance checks. For those using a payroll bureau, it is important to ensure your provider is aware of the changes and able to implement them correctly.
Below are the key updates employers should be aware of.
Day 1 Employment Rights for Paternity Leave and Parental Leave
Effective from 6 April 2026
Under the new legislation, employees will gain Day 1 access to both paternity leave and unpaid parental leave, removing the previous service requirements.
Previously, employees needed to meet minimum service thresholds before becoming eligible for these leave entitlements. From April 2026, employees will be able to request this leave from the very start of employment.
However, employers should be aware of an important distinction between leave entitlement and statutory pay.
While the right to take paternity leave becomes a Day 1 entitlement, Statutory Paternity Pay (SPP) will still require employees to meet the existing eligibility criteria. This includes:
- 26 weeks’ continuous service by the qualifying week
- Earnings above the Lower Earnings Limit
This means an employee may be entitled to take leave but not eligible for statutory pay, which can cause confusion if the difference is not communicated clearly.
From a payroll perspective, employers should ensure that payroll systems and processes allow for this distinction and that statutory payments are only applied where the qualifying criteria are met.
Statutory Sick Pay (SSP) Reforms
One of the most significant operational changes introduced by the Act relates to Statutory Sick Pay (SSP).
The reforms are expected to introduce three major changes:
- SSP payable from Day 1 of sickness absence
- Removal of the current three waiting days
- Removal of the Lower Earnings Limit
Currently, employees must be absent for four consecutive qualifying days before SSP becomes payable, with the first three days treated as unpaid waiting days. Under the new rules, this waiting period will be removed entirely.
For employers, this means sickness absence may trigger statutory sick pay immediately, which will affect payroll calculations and absence management processes.
The removal of the Lower Earnings Limit is also significant. Many lower-paid workers who were previously excluded from SSP will now become eligible.
Businesses that employ part-time staff, flexible workers or employees on variable hours contracts may see the largest increase in SSP eligibility.
Employers should review how sickness absence is currently recorded and ensure payroll systems are able to correctly calculate SSP from the first day of absence once the changes take effect. These changes form part of the broader expansion of day 1 employment rights, giving employees access to certain entitlements from the start of employment.
Flexible Working and Day 1 Employment Rights
Flexible working is often discussed alongside the Employment Rights Act changes, but it is worth noting that this right already became a Day 1 entitlement in April 2024.
Employees can now request flexible working arrangements from the start of employment, and employers must follow the statutory process when considering those requests.
While this is not a new change introduced by the Employment Rights Act 2025, it remains an important consideration for employers. Flexible working arrangements can affect working hours, salary structures, overtime and payroll calculations.
Unfair Dismissal and the New Qualifying Period
There has been considerable discussion about the possibility of unfair dismissal becoming a Day 1 right. However, the final legislation does not introduce Day 1 unfair dismissal protection.
Instead, the Act reduces the qualifying period for unfair dismissal claims from two years to six months, with the change expected to take effect from January 2027.
While this change does not directly affect payroll calculations, it does mean employers will need to ensure that employment processes, documentation and probationary procedures are clearly managed.
What Employers Should Be Doing Now
Although some provisions do not take effect until April 2026, it is sensible for businesses to begin preparing now.
Practical steps employers should consider include:
- Reviewing how sickness absence is tracked and reported
- Ensuring payroll systems can support SSP from Day 1
- Updating parental leave policies and employee guidance
- Training internal teams on the difference between leave entitlement and statutory pay eligibility
- Assessing how SSP changes could affect businesses with large part-time or lower-paid workforces
Preparing early will help ensure payroll processes remain accurate, compliant and efficient once the legislation takes effect.
Preparing for the 2026 Changes
The Employment Rights Act 2025 represents one of the most significant employment law reforms in decades, particularly in expanding access to certain entitlements from the very start of employment.
For many businesses, the most noticeable operational change will be the reform of Statutory Sick Pay, alongside the expansion of Day 1 leave entitlements.
By reviewing processes early and ensuring payroll systems are prepared, employers can avoid disruption when the new rules take effect.
If you would like to understand how these changes may affect your payroll processes or statutory payment obligations, our team would be very happy to help.
How We Support Employers
Keeping up with employment legislation can be challenging, particularly when changes directly affect payroll compliance and statutory payments.
At The Arkk Alliance, our payroll team works with employers from our offices in Leamington Spa, supporting businesses across Warwickshire and the wider UK.
We help employers stay compliant by:
- Implementing payroll updates to reflect changes in statutory payments
- Ensuring SSP, maternity and paternity payments are calculated correctly
- Monitoring legislative changes that affect payroll
- Providing guidance on the practical payroll impact of new employment laws
Our goal is to ensure payroll remains accurate, compliant and straightforward, reducing the administrative burden on employers.
