Will the Employment Rights Act affect wages?

 

Statutory sick pay is the minimum that employees must be paid while they are sick. Employers may choose to go above the minimum, with arrangements set out in employment contracts. 

 

Previously, statutory sick pay was only available to those earning an average of £123 per week (this level is updated with inflation), and only once an employee had been ill for more than 3 days in a row (including non-working days). 

 

The Employment Rights Bill removes the minimum earnings limit making all employees eligible from 6th April 2026. Those who earn below the rate of statutory sick pay will be entitled to 80% of their normal weekly earnings. 

 

Statutory sick pay will also be available from the first day of illness. This means employees who only get statutory sick pay will no longer suffer financially during the first few days of illness. (This also takes effect on 6th April 2026). 

 

This could have positive effects, with employees less likely to attend work while unwell, reducing the risk of passing their illness to other staff. Rather than work through illness with reduced capacity, and potentially make their illness last longer, employees will be financially able to take time to rest and recover properly. This could make employees more productive while they’re at work. 

 

However, if there is no loss associated with taking time off, employees may be more inclined to call in sick when previously they would work through it. This could be the case in bug or minor illnesses. Some people have raised concern that employees will take advantage, costing their employer. 

 

If so, dishonesty and excessive sick leave can be dealt with through performance management, capability or disciplinary measures. Employers can begin preparing by making sure their relevant policies are effective and offering suitable training for managers. Employers will need to consider the risk of disability discrimination, as they already should when dealing with such issues. 

 

 

The current minimum wage varies depending on the age of the worker, with different rates for under 18s, those aged 18 to 20, and those aged 21 or over. The government proposed removing these age bands, creating one single minimum wage for all workers. 

 

However, this move is not mentioned in the Employment Rights Act. Gov.uk still has age bands in the listed minimum wages taking effect in April 2026. 

 

It is not clear whether this move has been abandoned or simply put off until later. 

 

 

The Employment Rights Act requires employers with more than 250 employees to produce and publish an equality action plan. The plan must show the steps they are taking regarding gender equality, particularly the gender pay gap and supporting employees with menstrual problems or disorders, and through the menopause. This will become mandatory some time in 2027. 

 

Separate regulations will provide details about the required form and content of plans and the consequences for failure. Regulations will also set how often these plans must be published or revised, though this will not be more than once every 12 months. 

 

The Equality (Race and Disability) Bill will extend pay gap reporting to ethnicity and disability for employers with more than 250 staff. Through this bill, the government also intends to ensure that employers can no longer use outsourcing of services to avoid paying equal pay and implement a regulatory and enforcement unit for equal pay. We don’t have much detail about the Equality (Race and Disability) Bill. The government is currently analysing feedback from their consultation on the issues. 

 

This adds some administrative burden for employers, but only larger companies. Employers will also have to update how they calculate their pay gap, to account for outsourced services. 

 

Openness around pay gaps may benefit firms who perform well on matters of diversity, helping to attract and retain talented staff.#