The Employment Rights Act reforms are nearly here: Is your payroll prepared?
The Employment Rights Act 2025 is fast approaching and some of the most important reforms are coming into effect on 6 April 2026.
While much of the attention has focused on the legal implications, law firms must also consider the impact on their payroll and how to remain compliant.
If your firm employs solicitors, support staff, paralegals or consultants, these reforms will require careful payroll planning to ensure accurate statutory payments.
What Employment Rights Act reforms are coming into effect from April 2026?
From April 2026, several important changes will take effect, including:
- Statutory Sick Pay (SSP) will become payable from day one of illness, with the Lower Earnings Limit removed. Employees will no longer need to earn above a minimum threshold to qualify.
- Paternity leave and unpaid parental leave will become day-one rights, meaning eligibility applies from the start of employment.
- A new Fair Work Agency will be established to consolidate enforcement of employment rights, including holiday pay and statutory payments.
As you know, further changes will come into effect in October 2026, but you must ensure your payroll is ready for the upcoming reforms.
How will the Employment Rights Act reforms affect law firms?
The Employment Rights Act reforms will directly affect your payroll calculations and record-keeping processes.
The removal of the SSP waiting period and earning threshold will likely increase the number of employees eligible for sick pay and the overall cost to the firm.
Payroll systems must be updated to ensure your SSP is calculated from the first day of absence.
Day-one rights to paternity and unpaid parental leave will also require payroll systems to apply to statutory entitlements immediately upon employment.
This removes the flexibility that firms previously had to apply qualifying service periods.
In addition, the Fair Work Agency is taking a more proactive enforcement role and payroll errors relating to statutory payments may face more scrutiny.
How can you prepare your payroll for the Employment Rights Act?
Law firms must act now to ensure their payrolls remain compliant. You should be:
- Reviewing payroll software to ensure it can accommodate day-one SSP and removal of the Lower Earnings Limit
- Auditing current sick pay and parental leave processes
- Aligning HR and payroll systems to ensure eligibility tracking
- Updating internal payroll policies and controls
Clear communication with employees will be essential to reduce the risk of misunderstandings about new entitlements and errors in record-keeping.
How can we support your new payroll requirements?
While your firm may already be prepared for the contractual and policy changes, our payroll specialists can help support the financial implications of the Act.
We can review and update your payroll systems, forecast the financial impact of increased SSP eligibility and strengthen your payroll compliance and controls.
If you do need support in preparing or upgrading your payroll software, our cloud accounting team is here to help you choose the right payroll software for your business.
April is just around the corner and your payroll processes must be as up-to-date as your legislative advice.
If your firm needs further payroll advice, contact our legal accountants today.