In this month’s highlights, our team summarises the latest developments in UK employment law and their implications for employers. Catch up on February's highlights here.
ERA 2025 Brings Changes to Employment Laws, Compensation Limits and Statutory Payment Rate Updates Effective Starting April 2026
A number of significant reforms will take effect this April including reforms to family-related leave, bereavement rights, statutory sick pay, protective awards, whistleblowing, employer obligations around gender and menopause action planning, and record-keeping for annual leave.
Employment reforms under ERA 2025
1. Family-related leave
Paternity leave:
- Paternity leave will become a "day one" right, removing the current qualifying service requirement of 26 weeks. The restriction on taking paternity leave after a period of shared parental leave will also be removed. These new paternity leave rules only apply to children born or placed for adoption on or after 6 April 2026. They also apply to children born before 6 April 2026, but whose expected week of childbirth is on or after 5 April 2026.
Bereavement leave:
- Fathers and partners will be entitled to up to 52 weeks’ unpaid bereaved partner’s paternity leave where the mother or primary adopter dies, provided the leave is taken within 52 weeks of the child’s birth, adoption placement, or (for overseas adoptions) entry into Great Britain. This entitlement applies only where the death occurs on or after 6 April 2026.
Unpaid parental leave:
- Unpaid parental leave will also become a "day one" right, which removes the current qualifying service requirement of one year.
2. Statutory sick pay (SSP)
SSP will become applicable from the first day of illness, removing the current three-day waiting period. The lower earnings limit will also be removed; workers must currently earn a minimum amount to qualify for SSP.
3. Maximum protective award
The maximum protective award for failure to consult will double from 90 days' pay to 180 days' pay.
4. Protections for whistleblowing relating to sexual harassment
Under the new whistleblowing rules, sexual harassment will be considered a "qualifying disclosure." This protects whistleblowers from detriment and unfair dismissal if they make a disclosure relating to sexual harassment.
5. Menopause & gender pay gap
In 2027, employers with 250 or more employees will be required to produce action plans which address menopause and gender pay gaps. Employers can get ahead of this by voluntarily producing an action plan, which they can do starting 6 April 2026.
6. Record-keeping
Employers must keep annual leave records for at least six years.
Changes to compensation limits
- The compensatory award cap for unfair dismissal will increase from £118,223 to £123,543.
- The new award applies where the “appropriate date” for a relevant cause of action (e.g., an unfair dismissal claim) falls on or after 6 April 2026. If the appropriate date falls before 6 April 2026, then the previous limits still apply, regardless of when compensation is actually awarded.
- The limit on “a week's pay” for the purposes of calculating statutory redundancy payments and the basic award for unfair dismissal will increase from £719 to £751 from 6 April 2026.
Changes to statutory payment rates
From 5 April 2026:
- Statutory maternity pay after the first six weeks will rise from £187.18 to £194.32 per week (or 90% of the employee's average weekly earnings, whichever amount is lower).
From 6 April 2026:
- Statutory adoption pay, statutory paternity pay, statutory shared parental pay, statutory neonatal care pay, and statutory parental bereavement pay will increase from £187.18 to £194.32 per week.
- SSP will increase from £118.75 to £123.25 per week.
Vento bands (injury to feelings)
For claims presented on or after 6 April 2026, the Vento bands for injury to feelings awards are updated as follows:
- Lower band (less serious cases): £1,300 to £12,600
- Middle band (cases that do not merit an award in the upper band): £12,600 to £37,700
- Upper band (most serious cases): £37,700 to £62,900
Certain exceptional cases may also be capable of exceeding the upper band limit of £62,900.
How employers can prepare
Employers should make sure to review and update their HR policies, employee handbooks, and template contracts to reflect the new day-one rights to paternity leave and unpaid parental leave, the new entitlement to bereaved partner's paternity leave, the removal of the waiting period and lower earnings limit for SSP, as well as the new whistleblowing protections relating to sexual harassment. Grievance and whistleblowing procedures should also be updated to account for sexual harassment as a qualifying disclosure. Line managers and HR teams should also receive training regarding these new rights and obligations to ensure consistent implementation.
The increase in the maximum protective award from 90 to 180 days’ pay significantly elevates the financial exposure associated with any procedural defect in a large‑scale restructuring. Even relatively minor failings in the collective consultation process may now result in substantial, multi‑employee liabilities running to many months of payroll cost. Employers must therefore ensure that collective consultation is genuine, meaningful and demonstrably compliant with statutory requirements, with careful attention to timing, information disclosure, and consideration of employee representations, in order to mitigate the risk of punitive protective awards.
Payroll systems should be updated to reflect the new statutory payment rates. This includes the revised compensation limits, the increased weekly statutory pay rates, and the removal of the lower earnings limit for SSP. Employers should also review their annual leave record-keeping practices and implement systems to retain records for the new minimum six-year retention period.
Employers with 250 or more employees should begin preparing for the mandatory gender pay gap and menopause action plans due in 2027, taking advantage of the ability to produce voluntary action plans from 6 April 2026.
Unfair Dismissal and Indirect Sex Discrimination: NHS Requirement to Work Flexibly on Weekends was Justified
In Dobson v North Cumbria Integrated Care NHS Foundation Trust (NHS), the Employment Appeal Tribunal (EAT), upholding an Employment Tribunal (ET) decision, held that the NHS' policy requiring nurses to work flexibly (including weekends) was a proportionate means of achieving its legitimate aims and therefore did not amount to indirect sex discrimination or unfair dismissal.
What led to the dispute, and why is the outcome significant for employers?
The appellant, Mrs Dobson, was employed by the respondent, the NHS, as a community nurse. From the birth of her first child (who was disabled), Mrs Dobson had a fixed working arrangement to work 15 hours per week and only on Wednesdays and Thursdays.
The NHS later introduced a new staff rostering policy which required all community nurses to be available to work flexibly, including weekends. Following this, the NHS asked Mrs Dobson to work an occasional weekend no more than once a month. Mrs Dobson refused all changes to her prior working arrangement.
The NHS then gave Mrs Dobson notice to terminate her employment and offered her re-engagement on new terms which would require flexible working, which Mrs Dobson did not accept.
Mrs Dobson’s employment was terminated, and she brought claims of indirect sex discrimination and unfair dismissal arguing that the flexible work requirements were a provision, criterion, or practice (PCP) that put women, who have greater childcare duties than men, at a particular disadvantage. The ET initially dismissed Mrs Dobson’s claims.
On appeal, the EAT disagreed, finding the ET had wrongly concluded that there was no evidence of group disadvantage arising from childcare disparities between men and women. The case was remitted back to the ET to determine whether the NHS could show that the PCP was a proportionate means of achieving a legitimate aim.
The ET held that the PCP was a proportionate means of achieving the NHS' legitimate aims of providing 24/7 care, balancing team workload, and saving costs, and that the dismissal was fair.
On balance, the ET came to this conclusion based on the following factors:
- The NHS showed that Mrs Dobson's fixed working pattern led to significant operational difficulties and higher costs, as senior staff needed to cover weekends and public holidays.
- The NHS employed 278 Band 5 community nurses (178 part-time), and none of them had a fixed working pattern nor had to leave employment due to the flexible working requirement.
- Mrs Dobson's disadvantage was not significant. She could have worked occasional weekends, as her husband could have provided childcare.
- On this matter, the NHS had made extensive efforts to reach accommodation with Mrs Dobson, but Mrs Dobson was "intransigent" and refused to modify her position.
Mrs Dobson appealed a second time to the EAT, arguing that the ET wrongly put too much focus on the PCP's disadvantage to her individually instead of the wider affected group generally, and her responses during the consultation process. The EAT dismissed the appeal and upheld the ET's finding that the PCP was justified, setting out the following:
- The disadvantage to both the group of persons sharing the protected characteristic and the individual claimant must be considered under Section 19 of the Equality Act 2010.
- The ET was correct to take Mrs Dobson's intransigence and unwillingness to suggest alternatives during consultation into account. While it is the employer's burden to provide justification, it is the employee's burden to challenge the assertion that there is nothing else the employer could do.
- Where the law does not stipulate a precise level of "focus" to be placed on the group or the individual, the Tribunal has discretion on how to approach the available evidence. In this case, they were allowed to give greater focus on the evidence, which predominantly dealt with the impacts of the PCP on Mrs Dobson individually.
- The EAT held that the ET was entitled to extrapolate from its findings on justification in relation to the claimant's immediate team and apply those conclusions to the broader pool of community nurses across the Trust, even in the absence of detailed evidence covering the entire workforce.
- The NHS is not required to undertake forensic analysis and collect evidence relating to all the different ways that all its employees affected by the PCP individual circumstances across the thousands of employees to whom the PCP was applied to, as this would be an unreasonable burden.
Takeaways
A well-documented business case can justify a PCP relating to flexible work, even where it is acknowledged to place some groups at a particular disadvantage. Employers are not required to produce an exhaustive forensic analysis of the PCP's impact on every individual within the affected group in order to justify the PCP.
Employers should maintain a robust and well-documented business case setting out the operational reasons for the PCP and engage in meaningful consultation with affected employees. Employers should also document the consultation process carefully, as an employee's intransigence can be a relevant factor in the ET's assessment of justification and may ultimately support the employer's case.