It may not have seemed like it was going to happen, but the Employment Rights Act managed to get across the line before the end of 2025.
With changes to how workplaces operate starting this year and spilling into the next, it is vital that you understand how payroll will be impacted and begin preparing accordingly.
What effect will the Employment Rights Act have on payroll?
The most pronounced impact will be the eventual change to zero-hours contracts.
As these often provide an employer with a more flexible way of getting work done that involves a less involved payroll process than full-time employment, any transition away from this will be notable.
The ability to request guaranteed hours will carry with it payroll implications as will the need to compensate workers for moved or cancelled shifts if they are done last minute.
While this will not take effect until 2027, it is worth determining the impact it will have on your payrolling processes now so you can stay compliant when the time comes.
More pressingly, April 2026 will see Statutory Sick Pay (SSP) become payable from the first day of sickness.
This means there will be less time to track whether SSP is applicable for a payroll period as there will no longer be the three-day waiting period in which you can get preparations squared away.
Instead, you will need to be more responsive to the evolving situation of your employees to ensure that you stay compliant, whether they are in work or experiencing a period of absence.
2027 will bring about Gender Pay Gap reporting that will require payroll records to compile.
This could end up being a lengthy administrative task if you currently employ a lot of people.
How can payroll processes stay compliant with the Employment Rights Act?
The simplest change to prepare for may actually be the Gender Pay Gap reporting.
If you review your payroll records now, you may be able to identify any instances of the Gender Pay Gap in action, then it is time to take reasonable steps to address it.
This will give you an opportunity to be proactive in correcting the practice before it is exposed through the Employment Rights Act.
With SSP and the changes to Zero-Hours contracts, it will be worth forecasting how this may impact your payroll using data from last year and from this year.
This will allow you to budget for any changes so that you do not risk non-compliance when the changes come into effect.
Preparation with the assistance of expert professional support remains the best way to stay on top of your payroll obligations.
Our team can help you understand how the Employment Rights Act may affect your specific business and what changes should be made to your payroll practices.
Speak to our team today to stay confident with your payroll processes.
