Important updates to parental and sick pay

As we approach the 2026–27 tax year, the Department for Work and Pensions has published the new statutory pay rates set to take effect from 1 April 2026. At the same time, employers must prepare for changes under the phased roll-out of the Employment Rights Act (the “ERA”). This follows the ERA introduction of new rights relating to parental leave and statutory sick pay (“SSP”) in February 2026 and, again in April 2026.

Here’s what’s changing and what it means in practice.

What are the new rates?

The key changes to the new rates, published on 30 January 2026, are set out below:

This represents a 3.8% increase from the old rate, matching the annual Consumer Prices Index (CPI) inflation rate for September 2025.

It has been confirmed that the minimum weekly earnings for all types of parental pay will increase from £125 to £129 gross. This means that employees must earn at least this amount in order to claim parental pay.

A note on the Employment Rights Act

Alongside these new statutory rates, the rights of employees as concerns parental leave and SSP will be updated under the new ERA.

Paternity and parental leave

As of 18 February 2026, the transitional notice window opened, when employers should prepare for leave requests from employees from this date, because employees who are newly entitled under the reforms will be able to give notice of their intention to take paternity leave or unpaid parental leave. From 6 April, paternity leave and unpaid parental leave became day-one entitlements. This follows the ERA’s removal of the 26-week continuous service requirement, which had previously restricted eligibility. As a result, employees will be able to start taking this leave as early as 6 April 2026.

At the same time, the ERA will remove the restriction which had prevented employees from taking paternity leave if they had already taken shared parental leave. This follows the government’s intention to ‘provide more flexibility for employees to take advantage of the different types of leave available to them to care for their child’.

Statutory sick pay

SSP is also set to change under the ERA from April 2026. Crucially, the ERA will remove the Lower Earnings Limit as an eligibility requirement for SSP, meaning that all employees who qualify for SSP will be entitled to it regardless of their weekly earnings. As well as this, SSP will be payable from the first rather than the fourth (waiting) day of the employee’s absence.

In practice, this means that, from April 2026, eligible employees will receive either the statutory flat weekly rate (as set out in the table above) or 80% of their average weekly earnings, whichever is lower.

What these changes mean for employers

Ahead of the new statutory rates and new ERA rules, employers should review and adjust their payroll and workplace procedures to ensure compliance. This helps safeguard employers from claims relating to underpayment of statutory rates, or denial of SSP or parental pay entitlements. Key steps employers can take include:

• Reviewing and updating workplace policies and procedures to reflect the new rates and rules
• Checking affected employees’ pay and updating payroll systems accordingly
• Communicating the changes to HR, payroll staff, and employees
• Monitoring ongoing compliance for new hires and future pay adjustments
• Providing training and guidance on SSP, paternity, and parental pay changes
• Documenting all updates and communications to maintain evidence of compliance.

If you have any questions about how these changes may affect your workplace or if you require assistance in implementing these changes, please do contact a member of our Employment team.