Employment Law Changes coming in 2026: What Early Years and Childcare Providers Need to Know
- Sally Gridley
- Feb 26
- 6 min read
From April 2026, several key employment law updates will come into force in the UK under the Employment Rights Act 2025.
These changes will affect how early years and childcare providers manage payroll, pensions, and workers’ rights. Understanding these updates early will help you plan ahead and stay compliant.
Below is a simple overview of what’s changing and what it means for you.
1. New Flexible Working Rights
From April 2026, flexible working will become a day-one right. This means all employees can request flexible working arrangements (such as part-time hours, adjusted start times, or remote work options) from their first day of employment.
What’s Changing
Employees will no longer need to have 26 weeks of service before they can make a flexible working request.
Employers must respond to flexible working requests within two months (currently three).
Employees can make two applications for flexible working in any 12-month period (currently one).
Employers will be required to set out the specific grounds relied upon when rejecting a flexible working request and must explain why they consider refusal on those grounds to be reasonable.
Employers must not reject a request for flexible working without consulting the employee first. The format for this is under consultation
Employers will be required to keep written records of the meeting and its outcome when rejecting a flexible working request in full or in part.
What This Means for You
You’ll need updated policies and procedures to manage flexible working requests fairly and consistently — especially if you rely on shift work or part-time staff to cover ratios.
Where requests for flexible working are agreed the employee’s terms and conditions of employment will need to be updated.
2. Statutory Sick Pay Reforms
From April 6th 2026, Statutory Sick Pay will be payable from day one.
What’s Changing
The three day waiting period for statutory sick pay eligibility will be removed, allowing employees to claim from the first day of illness.
The lower earnings limit will be removed making all employees eligible for SSP regardless of their earnings. Currently, employees must earn at least £125 per week to qualify for SSP.
The weekly SSP rate will be the lower of the flat rate (currently £118.75 per week) or 80% of the employees normal weekly earnings.
What This Means for You
Expect increased financial liability for SSP payments and greater support for employees phased returns to work.
Employees who are already claiming SSP before 6th April 2026 and continue to be off sick will receive the uprated flat rate during their continuous absence.
You may need to update policies, terms and conditions of employment and/or staff handbooks if waiting days are referenced.
3. Parental and Paternity Leave
From April 2026, employees will have day one rights to parental and paternity leave, removing qualifying periods and meaning they can take leave immediately upon starting a new position. These entitlements apply to children born or adopted on or after April 6th 2026.
What’s Changing
Fathers and partners no longer need six months of continuous service to take paternity leave.
New employees are entitled to the standard two weeks of paternity leave from day one, aligning it with maternity leave rights.
A shorter 28-day notice period applies for specific early births in 2026.
The restriction for paternity leave to be taken after shared parental leave will be removed providing more flexibility for employees to take advantage of the differing leave available.
Unpaid parental leave, which previously required one year of service, will be available from day one of employment.
Separate legislation for eligible fathers and partners to take up to 52 weeks of unpaid bereaved partner’s paternity leave if the mother or primary adopter dies. They must take this leave within 52 weeks of the child’s birth or adoption (or entry to the UK for overseas adoptions)
What This Means for You
You’ll need to update policies and employment contracts to reflect day one rights.
Train managers to handle leave requests sensitively and lawfully, especially in small teams.
4. Preventing Third-Party Harassment
Starting in October 2026, employers will be legally required to take all reasonable steps to prevent third-party harassment related to protected characteristics.
What’s Changing
Employers will be held directly liable for harassment of their employees by third parties if they fail to take all reasonable steps to prevent it.
The new legal framework will require employers to demonstrate that they have taken comprehensive measures to prevent harassment. This includes implementing policies, providing training and ensuring a safe working environment. The specifics of what constitutes ‘reasonable steps’ will be outline in future regulations.
Failure to comply with these new duties could result in increased compensation awards in harassment claims, potentially up to a 24% rise.
Impact for Providers
Employers will need to document their actions and maintain clear records to demonstrate compliance with the new standards.
What This Means for You
Begin preparing for these changes by reviewing current policies, enhancing training and ensure you have effective measures in place to prevent third party harassment.
5. Automatic Enrolment Pensions – Lower Age Limit Removed
The government has confirmed an expansion of automatic enrolment for workplace pensions from April 2026. The lower age limit of 22 will be removed, meaning all qualifying employees aged 18 and over will be automatically enrolled.
What’s Changing
Minimum age for automatic enrolment reduced from 22 to 18.
The earnings threshold for qualifying staff will remain under review.
Impact for Providers
If you employ apprentices, trainees, or young practitioners between 18 and 21, you’ll need to start contributing to their workplace pensions from 2026. This may increase your payroll costs, so it’s worth planning your budgets early.
6. PAYE and Payroll Reporting Updates
From April 2026, the government will require real-time digital payroll reporting improvements as part of HMRC’s Making Tax Digital (MTD) initiative.
What’s Changing
PAYE submissions will need to include more detailed employee-level data (for example, hours worked or specific pay period details).
Payroll software may need upgrading to meet new HMRC data standards.
What to Do Now
Speak with your payroll provider or accountant to ensure your systems will be compliant.
Schedule time for training or updates before the 2026 rollout.
7. National Minimum Wage and Pay Transparency
Although annual National Minimum Wage (NMW) rates are reviewed each April, from April 2026, expect continued focus on pay transparency and fair distribution of tips or bonuses.
New transparency rules will strengthen requirements for:
Clear pay information in job adverts.
Consistency in pay across comparable roles.
New rates from 1st April 2026
National Living Wage – aged 21 and over - £12.71 per hour
National Minimum Wage – aged 18 to 20 - £10.85 per hour
National Minimum Wage – aged 16 to 17 - £8.00 per hour
Action Points
Review your pay structures to ensure fairness and compliance.
Getting Ready for April 2026
Early years and childcare settings should start preparing now by:
Reviewing contracts and staff handbooks.
Budgeting for changes to pension contributions and payroll.
Updating HR systems to process new flexible working and leave entitlements.
Keeping an eye on the official gov.uk employment law updates page and ACAS for final details as implementation dates approach.
What’s expected in 2027
Zero-hours Contracts
The complete ban on zero-hour contracts reported to be implemented has been watered down, however as part of the plans to address one-sided flexibility the following could become legislation:
Workers gain the right to request predictable working hours.
Restrictions could be introduced to prevent employers varying hours with little notice and consultation with the employee.
Workers will be entitled to compensation when shifts are cancelled at short notice.
A consultation on the changes was due to be published in Autumn 2025 but at the date of publishing this blog is still awaited.
Unfair Dismissal Rights
There will be a whole package of changes relating to this coming into force together, thought to be from 1st January 2027, but the key point is the reduction in protection.
Currently 2 years, this will reduce to 6 months allowing an employee to bring an unfair dismissal claim earlier in their employment. Additionally, there will be no cap on any unfair dismissal compensatory award. Until the changes come into affect this award is capped at the lower of £118,233 (2025-2026) or 52 weeks’ pay.
Fire and Rehire Restrictions
Deferred from October 2026 these restrictions will come into effect on 1 January 2027. These include:
Employers can not dismiss an employee to then re-engage them on less favourable terms such as lower pay or reduced hours.
Employers will also be unable to dismiss employees to then replace them with agency staff or contractors.
Dismissal and re-engagement may be allowed but only in cases where there is financial distress and genuinely no alternative. There is currently no guidance as to what constitutes financial distress.
Bereavement Leave Enhancements
The existing two weeks of parental bereavement leave will be broadened to general bereavement leave. This will be a day one entitlement.
At least one week of unpaid bereavement leave will be available for employees experiencing pregnancy loss before 24 weeks, covering various scenarios such as unsuccessful IVF and terminations.
Annual Leave and Pay Record Keeping Obligations (Commencement date and further details awaited)
Employers must maintain records for all annual leave entitlements and pay
Employers must maintain records for payment in lieu of outstanding annual leave upon termination, to cover both regular and irregular/part year workers.
These records must be retained for 6 years from creation. Failure to comply with these obligations is an offence punishable by a fine.
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