Employment Law Update 2026: What Engineering Employers Need to Know

For engineering and manufacturing employers, the key employment law changes in 2026 are the ones that affect payroll, absence, family leave, redundancy risk and day-to-day people management on the shop floor. A number of reforms are already in force, and more are landing in phases through 2026 under the Employment Rights Act 2025.

1. Payroll costs are rising again

From 1 April 2026, the National Minimum Wage for workers aged 21 and over increases to £12.71 per hour. From 6 April 2026, Statutory Sick Pay rises to £123.25 per week, and most statutory family payments rise to £194.32 per week. For engineering businesses with shift workers, overtime-heavy teams or large production headcounts, this means payroll budgets, charge rates and labour forecasts should already be under review.

2. Sick pay rules are changing

From 6 April 2026, SSP becomes payable from the first full day of sickness absence, and the Lower Earnings Limit is removed. That brings more workers into scope, including lower-paid and part-time employees. Employers should update sickness policies, return-to-work procedures and payroll settings before the new tax year starts.

3. Family leave is expanding

Family-related rights continue to grow. Neonatal Care Leave and Pay has been in force since 6 April 2025, giving eligible parents up to 12 weeks of leave where a baby requires neonatal care. Then from 6 April 2026, employees can give notice for Paternity Leave and Unpaid Parental Leave from day one of employment. A new Bereaved Partner’s Paternity Leave right also starts on the same date. For employers, the priority is making sure policies, manager training and payroll processes reflect these changes.

4. Redundancy mistakes will cost more

From 6 April 2026, the maximum protective award for failing to meet collective redundancy consultation rules increases from 90 days’ pay to 180 days’ pay per affected employee. That is a major risk for engineering firms facing restructures, site moves, programme changes or reductions in headcount. If you are proposing 20 or more redundancies, consultation processes need to be watertight.

5. Harassment prevention needs more than a policy

Employers have already been under a duty since 26 October 2024 to take reasonable steps to prevent sexual harassment at work. From 6 April 2026, workers who report sexual harassment gain clearer whistleblowing protection. Later reforms are also scheduled to strengthen prevention duties further. For engineering employers, this matters in workshops, site-based roles, customer environments and male-dominated teams where culture, supervision and reporting routes are critical.

What engineering employers should do now

Review pay rates and payroll settings ahead of April changes. Update sickness, parental leave and redundancy policies. Train line managers on consultation, absence handling and harassment reporting. And if you rely on agency, seasonal or shift-based labour, keep a close eye on the next phase of Employment Rights Act reforms due across 2026 and 2027.

Need Expert Advice on Navigating These Changes?

Contact us today for tailored advice on staying compliant and thriving in 2026.