Payroll Beyond 6 April: The Employment Rights Act Has More Coming Than You Think
6 April was a major payroll date, but it was not the finish line. The Employment Rights Act 2025 received Royal Assent on 18 December 2025, which means the legal framework is now in place. The real challenge for payroll teams is that several provisions are being phased in, so compliance does not stop with one payroll update.
The most immediate payroll impact remains Statutory Sick Pay. The Act includes provisions headed “Statutory sick pay in Great Britain: removal of waiting period” and “Statutory sick pay in Great Britain: lower earnings limit etc”. The legislation removes the three waiting days and changes the earnings test so that lower-paid employees can qualify.
In practice, payroll teams now need to focus on the sickness absence start date, linked periods of incapacity, normal weekly earnings and whether the employee should receive the statutory SSP rate or, for lower earners, 80% of normal weekly earnings where that is lower.
A typical example: an employee working limited hours may previously have fallen outside SSP because their earnings were too low. Under the new framework, that same employee may now qualify, but the amount may be restricted to 80% of their normal weekly earnings.
Important payroll checks:
• SSP system rules for day-one entitlement
• Lower-paid worker calculations
• Absence start dates and linked absences
• Manager reporting accuracy
• Audit trails explaining every SSP decision
Family leave is also now firmly on the payroll radar. ACAS confirms that paternity leave and ordinary parental leave are affected by the Employment Rights Act, with paternity leave becoming available from the first day of employment. The Act itself includes “Paternity leave: removal of qualifying period”.
This creates an important distinction. Leave entitlement and statutory pay entitlement do not always move together. A new starter may have the right to take leave, while payroll still needs to check whether statutory pay conditions are met.
Three more Royal Assent changes payroll should watch next:
• Guaranteed hours and shift protections
The Act contains provisions on “guaranteed hours” and rights relating to shifts, including agency workers. These are likely to affect variable hours, casual arrangements, rota data and payments linked to cancelled, moved or curtailed shifts. Payroll should start checking whether time and attendance systems can evidence hours offered, hours worked and short-notice changes.
• Unfair dismissal and compensation exposure
The Act includes “Right not to be unfairly dismissed: qualifying period and compensatory awards”. This is payroll-relevant because disputes often rely on pay records, service dates, notice pay, benefits, deductions, holiday pay and final pay calculations. Payroll data may become central evidence if a dismissal is challenged.
• Pregnancy and family leave dismissal protection
The Act also includes provisions on “Dismissal during pregnancy” and “Dismissal following period of statutory family leave”. Payroll should expect closer scrutiny of dates, absence codes, maternity and family leave records, return-to-work dates and termination payments where an employee has been pregnant or on family-related leave.
Practical next steps for payroll:
• Build an Employment Rights Act tracker beyond April
• Match each legal change to payroll system rules
• Separate leave entitlement from statutory pay entitlement
• Test SSP, family leave and final pay scenarios
• Keep records clear enough to support tribunal-level questions
The key message is simple: 6 April changed payroll processing, but Royal Assent has locked in a wider programme of reform. Payroll teams that prepare now will be in a far stronger position when the next wave lands.