Updating Your Employment Contracts in 2026: A Practical Checklist

The Employment Rights Act 2025 is coming into force in phases from 2026 onwards. Many smaller employers have yet to update their contracts - and the consequences of delay are now very real.

If you are one of our clients, you can relax as we are doing much of the heavy lifting for you. If you are not and need some help, however, pick up the phone and let’s see how we can help.

Why This Can't Wait

If you have not reviewed your employment contracts recently, they probably contain clauses that are now either, at worst legally incorrect or no longer enforceable. That matters for two reasons.

First, a contract that contradicts statutory rights does not protect you - the law simply overrides it, and the employee gets the statutory entitlement regardless. Second, documents that are obviously out of date signal to employees (and to the Fair Work Agency, which now has inspection powers) that your HR practices may not be up to scratch.

The good news is that for most smaller employers the changes are manageable. They require updates to existing documents, not a wholesale rewrite. This checklist walks through the key areas, in priority order.

⚠️ Quick check

If your contracts still refer to a three-day SSP waiting period, a 26-week qualifying period for paternity leave, or a two-year qualifying period for unfair dismissal protection — they need updating now.

1. Statutory Sick Pay (SSP) — Update Immediately

What changed: From 6^th April 2026, SSP is payable from the first day of absence. The three waiting days have been abolished. In addition, the lower earnings limit has been removed, meaning SSP now applies to all employees regardless of what they earn.

What to check in your contracts and handbooks:

• Remove any reference to a three-day waiting period before SSP begins.

• If your contract refers to a lower earnings threshold for SSP eligibility, remove it.

• If you operate a contractual occupational sick pay (OSP) scheme that runs alongside SSP, check whether the structure still makes sense. Some schemes were designed to "top up" SSP from day four — they will now need redrafting.

• Update any sickness absence policy that describes the waiting day rules.

Important: You can still offer more generous terms than the statutory minimum, and many employers do. But whatever your contract says, it must reflect the new statutory position.

2. Paternity and Parental Leave — Day-One Rights

What changed: From 6^th April 2026, both statutory paternity leave and unpaid parental leave are day-one rights. Employees no longer need to have completed 26 weeks of continuous service before they qualify.  There are also new rights day one for various forms of bereavement.

What to check:

• Any clause stating that paternity or parental leave is available after a qualifying period of service must be updated.

• If your handbook cross-references a 26-week qualifying leave period for either entitlement, revise it. NB:  Eligibility to statutory pay still stand at the 26-week period.

• Note that employees can also now take paternity leave before or after a period of shared parental leave - if your policy addresses SPL and paternity leave sequencing, review it for consistency.

📋 Practical tip

If you have employees who joined in the past six months, they now have family leave entitlements you may not have communicated to them. Making employees aware of the updated position is good practice - and demonstrates proactive compliance.

3. Unfair Dismissal Qualifying Period — Plan Ahead

What changed: This one is not in force yet, but it requires action now. From 1st January 2027, the qualifying period for ordinary unfair dismissal claims will be reduced from two years to six months.

Critically, the change applies to anyone whose dismissal takes effect on or after 1st January 2027 — which means any employee you hire from around July 2026 onwards will be within the six-month window from day one of 2027.

What to check:

• If your contract or handbook states that unfair dismissal rights apply after two years, update the language. It is better to remove the specific reference to a qualifying period altogether, or simply state that statutory rights apply.

• Review your probationary period structure. If you currently use a six-month probation with the assumption that the two-year qualifying period protects you from tribunal claims during that window, that assumption is about to become significantly less reliable.

• Ensure your probation review process is documented and genuinely applied - see the companion guidance on managing probation under the new rules.

⚠️ Compensation cap removed

Alongside the qualifying period change, the statutory cap on unfair dismissal compensation is also being removed from January 2027. Currently capped at one year's gross pay or £118,223, whichever is lower - from 2027, tribunal awards will reflect actual financial loss with no ceiling. For small employers, a successful unfair dismissal claim will become substantially more costly.

4. Written Statement of Particulars — Check the Basics

This is not a new requirement, but it is worth a review while you are updating other documents. Since April 2020, employers have been required to provide a written statement of employment particulars to all employees and workers from day one.

What to check:

• Do you issue contracts on or before the first day of employment? If not, you are already at risk.

• Does your written statement cover all the required particulars, including paid leave entitlements, any probationary period, and details of any training provided?

• Have you updated the contract template you use for new starters to reflect the 2026 changes?

5. What About the Employee Handbook?

Your employment contract and your Employee Handbook work together. A contract that correctly reflects the law but sits alongside a handbook full of outdated policies creates confusion — and can create liability.

Key policies to review alongside your contract update:

• Sickness absence and sick pay policy

• Paternity and parental leave policy, along with other new bereavement policies

• Disciplinary and grievance procedures (particularly around the new unfair dismissal landscape)

• Any dignity at work (harassment & bullying policy ahead of the October 2026 third-party harassment changes

🔵 How BackupHR can help

We offer a contract and handbook audit service tailored to small and medium employers. We will review your existing documents, identify the gaps, and provide updated versions that reflect the 2026 legislative changes. Contact us to find out more.

This article is for general guidance only and does not constitute legal advice. Employment law is complex and the facts of individual situations vary. If you are unsure how the changes apply to your business, please seek specific advice.