Contracts do they need updating?

The answer is yes!

A Practical Guide for UK Employers

2026 marks the most significant shift in UK employment law in over a decade. As the Employment Rights Act 2025 begins to take effect, employers across the country are being urged to review and update their employment contracts, policies, and onboarding documentation to remain compliant.

For many organisations—especially SMEs—this isn’t optional. Several of the new statutory rights coming into force directly affect contractual terms, and outdated wording could expose employers to avoidable risk.

This article outlines the key changes taking effect in 2026, why they matter, and what employers should be doing now to prepare.

What’s Changing in 2026?

The Employment Rights Act 2025 received Royal Assent in December 2025, with major reforms rolling out throughout 2026 and into 2027. Several of these changes require employers to update their contracts and HR documentation.

1. Statutory Sick Pay (SSP) Reforms

From April 2026, SSP becomes payable from day one of sickness absence, removing the current three waiting days. The Lower Earnings Limit is also being abolished, bringing around 1.3 million additional workers into eligibility. 

Any contract or policy referencing old SSP rules will need updating to avoid contradictions with statutory rights.

2. Day-One Rights for Paternity and Parental Leave

From April 2026, paternity leave and unpaid parental leave become day‑one rights, removing the previous 26‑week and one‑year qualifying periods.

This change affects:

• Employment contracts
• Family leave policies
• Onboarding documentation
• Workforce planning processes

3. Establishment of the Fair Work Agency

A new enforcement body—the Fair Work Agency—launches in April 2026, consolidating oversight of minimum wage, holiday pay, and SSP compliance. 

This signals a shift toward more proactive enforcement, meaning outdated contracts could attract scrutiny.

4. Strengthened Protections Against Harassment

Employers now have a reinforced duty to prevent workplace sexual harassment, requiring updated policies and clearer contractual expectations. 

5. National Living Wage Increase

The National Living Wage rises to £12.71 per hour from April 2026. If pay rates are written into contracts, they must be updated accordingly. 

Why Employers Must Update Their Contracts

Outdated contracts create three major risks:

• Legal non‑compliance
  : Any clause contradicting statutory rights becomes unenforceable.
• Employee relations issues
  : Conflicting documents cause confusion and erode trust.
• Enforcement exposure
  : With the Fair Work Agency’s expanded powers, employers relying on old templates are more vulnerable to investigation.

Sprintlaw highlights that one of the biggest traps for small employers in 2026 is continuing to use outdated contract templates that no longer reflect current law. 

What Employers Should Update Now

A comprehensive review should include:

Employment Contracts

• Sick pay clauses
• Family leave eligibility
• Pay and working hours
• References to qualifying periods
• Any outdated statutory references

Employee Handbook

• Absence management
• Family leave policies
• Conduct and harassment policies
• Flexible working processes

Onboarding Documentation

• Offer letters
• Day‑one rights summaries
• Induction materials

Internal Processes

• Manager training
• Payroll configuration
• Leave approval workflows

How Motion HR Supports Employers Through the 2026 Changes

At Motion HR, we help organisations stay compliant, confident, and protected. Our support includes:

• Full contract and handbook audits
• Updated, legally compliant contract templates
• Bespoke policy drafting
• Manager training on the new rules
• Ongoing HR advisory support

The 2026 reforms are wide‑ranging, but with the right guidance, they don’t need to be overwhelming. Updating your contracts now ensures your business is protected before the changes take effect.