The Employment Rights Act is here. Will 2026 be the year that work gets better?

With the cost of living still high and job vacancies continuing to shrink, we’re emerging from a difficult year for workers. But 2026 is set to be one of the most consequential years for jobs and job quality in decades. The long-awaited Employment Rights Bill passed into law and is set to receive royal assent this December, and rather than a single “big bang” reform, the landscape will shift gradually as new rights take effect, and employers adapt over the months and years ahead.

So, what’s actually changing?

In April, statutory sick pay will become payable from day one of illness, ending the requirement to be ill for three days before a penny is paid. Crucially, the lower earnings limit will be scrapped, opening up sick pay to over a million low-paid and insecure workers, many of them young people juggling multiple jobs or zero-hours contracts. The rate of this sick pay remains low, however, and lags far behind that of our European neighbours.

Paternity and parental leave will also become day-one rights, helping working parents who are locked out of support due to being newly employed (a hazard of the job for the thousands trapped in the churn of temporary work). And later in the year, some deterrents to “fire and rehire” will be tightened, whistleblowing protections will extend to sexual harassment cases, and there will be a new negotiating body set up enable people working in care jobs to get a say on their pay and conditions. Protections for unionised workers will be strengthened, with employers required to tell staff about their right to join a union, and later, electronic voting will be introduced to give mobile and dispersed workers a stronger collective voice.

These changes inch the system towards greater fairness, but some of the biggest reforms, including the ban on exploitative zero-hours contracts and the right to flexible work, won’t land until 2027 and have been subject to ongoing debate.

This does all represent important progress – the Work Foundation at Lancaster University has estimated over one million insecure workers could stand to gain. But rights on paper do not automatically translate to better working lives. What about for the swathes of low paid sectors where work is transient and rule-breaking is easy?

This is where the creation of the Fair Work Agency comes in. By bringing today’s fragmented regulators under one roof, it will enforce the minimum wage, holiday and sick pay entitlements, and other basic rights. Done well, it could help restore workers’ confidence that the law is on their side, raising standards in sectors such as hospitality, retail, construction, and care.- But with limited resources the agency will need to work with community groups, worker and employer bodies, and local governments, to find and stamp out bad practice.

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A significant challenge remains – the ‘gig work loophole’. Will poor working practices be eradicated or might they shape shift instead? The government’s stalled review of employment status leaves an open door for employers to reclassify staff as self-employed contractors to avoid offering sick pay, leave or redundancy protection at all. We are already seeing signs that high street retailers and events companies are outsourcing their recruitment to app-based intermediaries.. The Employment Rights Act won’t reach people in these jobs, as by definition, they are not workers but independent contractors. 

A two-tier labour market must be avoided: whilst one group gaining new rights, another, disproportionately young, poorer and more diverse, become locked out. For young workers in particular, the stakes are high. This generation has weathered the worst of insecure work, pandemic disruptions, and now a decline in job vacancies. The litmus test for the government’s employment agenda is set: a genuine uplift in conditions or fewer jobs and opportunities overall?

The reality is both may well be true – which is why the government’s Youth Guarantee that, alongside other measures, proposes 55,000 state-backed jobs in struggling parts of the country could be an important step. It could help tackle entrenched regional inequalities, give young people job security and agency many have never experienced, and build a pipeline of workers into sectors that need it. But to be avoided is a re-run of ‘workfare’ compelling young people into any job or risk losing benefits.

This will require government, employers, and enforcement bodies to prioritise compliance over avoidance and to treat the Employment Rights Act as a starting point, not a conclusion. In 2026, clearer plans to reform employment status and targeted proposals to improve job quality and bolster jobs in hard-pressed sectors will be essential to genuinely expand secure, good-quality work for those at the margins of the labour market.

Alice Martin is head of research at Lancaster University’s Work Foundation.

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