UK Legislation Road Map 2026-2027 | What We're Building and Why

Overview

The UK employment landscape is undergoing one of its most significant periods of change in recent years. The Employment Rights Act (ERA) 2025 introduces new statutory rights for workers around guaranteed hours, shift notice, and holiday record-keeping. At the same time, HMRC is mandating that all employers process Benefits in Kind through payroll rather than via annual P11D returns, with full compliance required by April 2027.

During our roadmap webinar earlier this year, we were transparent that our second-half 2026 plans were dependent on the details of the Employment Rights Act being confirmed. Much of that detail has now been received, and the scope is substantial.

As a result, our product teams are fully committed to this legislative programme for the foreseeable future. Every feature we describe in this article is driven by a legal or regulatory requirement - not a product choice. We want to keep you informed of what is changing, why it matters, and what Fourth is building to help you stay compliant.

In this article, several product features are listed against the following statuses:

• 🟢 In Progress - our development teams are actively working on these features
• 🟡 Planned - these features are scheduled to be worked on, following the current 'In Progress' ones
• 🔵 Backlog - committed work that has not yet been formally scheduled

Employment Rights Act 2025

The Employment Rights Act 2025 is the most significant piece of UK employment legislation in a generation. It introduces new legal rights for workers in three key areas:

• The right to guaranteed and predictable working hours
• The right to reasonable notice of shifts and compensation where shifts are cancelled or curtailed
• New obligations on employers to maintain adequate records of holiday entitlement

The Act is particularly relevant for businesses in hospitality and retail, where variable hours, casual contracts, and flexible working patterns are common. For many of our customers, it will require changes to how contracts are offered, how shifts are managed, and how holiday is calculated and recorded.

Fourth is actively working to ensure the platform supports your compliance obligations as the legislation comes into force.

Predictable & Guaranteed Hours

Under the ERA 2025, workers on variable hours will have the legal right to be offered a contract that reflects their regular working pattern. Employers will also be required to give reasonable notice of shifts and to compensate workers where shifts are cancelled or curtailed at short notice.

Before any of this compliance logic can be built, the platform needs reliable data about which workers the legislation applies to and a complete record of shift changes as they happen. Fourth is already working on both of these foundations.

The full guaranteed hours and shift compensation features - including calculations, notifications, and payroll processing - are dependent on final government regulations, which are yet to be confirmed. We will update you as soon as implementation dates are known.

• 🟢 In Progress: Worker Type Classification
• 🟢 In Progress: Shift Change Logging
• 🔵 Backlog: Guaranteed Hours Calculations
• 🔵 Backlog: Shift Compensation

Holiday Record Keeping

Section 35 of the Employment Rights Act 2025 introduces a new legal obligation for employers to maintain adequate records of workers' holiday entitlement and pay. These records must be retained for a minimum of six years.

For businesses with variable-hours workers, casual staff, and flexible contracts - common across hospitality and retail - this represents a significant new compliance requirement. Fourth is building a dedicated audit output that will produce the evidence you need, per employee, on demand.

• 🟡 Planned: Entitlement & Accrual Audit - a per-employee record of how holiday entitlement was calculated, accrued, and closed each year
• 🟡 Planned: Leave & Holiday Pay Audit - a record of every leave instance and the pay calculation applied
• 🟡 Planned: Export to Excel, PDF, and CSV

Payrolling Benefits in Kind (PBIK)

From April 2027, HMRC is making it mandatory for all employers to process Benefits in Kind through payroll, rather than reporting them via annual P11D returns. This is a significant change that will affect every employer who provides benefits to their workforce.

In practice, this means the value of benefits such as company cars, private medical insurance, and other non-cash perks will need to be calculated and reported to HMRC in real time through each payroll run, rather than at the end of the tax year.

Fourth has been building PBIK functionality ahead of the mandatory deadline, and this programme will continue throughout 2026 and 2027. The work spans both our HR and Payroll platforms.

• 🟢 In Progress: Core payroll reporting and BIK calculations
• 🟢 In Progress: Support for mid-year customer onboarding
• 🟢 In Progress: Salary sacrifice and Optional Remuneration Arrangement support
• 🟡 Planned: Class 1A NIC calculations and HMRC submissions
• 🟡 Planned: FPS corrections and year-end processing
• 🔵 Backlog: Employee payslip BIK breakdown
• 🔵 Backlog: DVLA integration for vehicle management
• 🔵 Backlog: April 2027 FPS reporting requirements

Absence & Sick Pay Enhancements

Accurately calculating sick pay for employees on variable or flexible working patterns has always been complex. These changes ensure that statutory sick pay (SSP) and company sick pay (CSP) are calculated correctly regardless of how an employee works - whether that's fixed hours, part-time, casual, or flexible shifts.

These updates are particularly relevant for hospitality and retail businesses where shift patterns vary significantly across the workforce.

• 🟢 In Progress: Recording absences in hours rather than whole days, ensuring SSP eligibility and CSP deductions reflect actual hours worked
• 🟢 In Progress: Half-day absence recording, allowing shifts to run alongside a part-day sickness absence
• 🟢 In Progress: Company Sick Pay aligned to contracted working patterns, giving fairer outcomes for part-time employees
• 🟡 Planned: CSP entitlement tracked in hours
• 🟡 Planned: Wage Cost reporting aligned exactly to what payroll will pay

Holiday Allowance & Pay Enhancements

As predictable hours become the norm under the ERA 2025, the way holiday is calculated for hourly paid and flexible employees needs to keep pace. Fourth has anticipated what this means for holiday fairness and is building greater flexibility into the platform in advance.

For employees who consistently work above their contracted hours, their holiday allowance and pay can reflect that. And where hours fall below contract for any reason, entitlement will never drop below what the contract provides.

• 🟢 In Progress: Flexible holiday allowance calculations based on contracted hours and FTE, with options to reflect consistently worked additional hours
• 🟡 Planned: Holiday pay calculations aligned to contracted working patterns, with the ability to reflect higher consistently worked hours
• 🟡 Planned: Casual employees able to book holiday before full accrual, with a detailed week-by-week accrual breakdown for managers

Statutory Leave Changes

The government has introduced a new statutory leave entitlement, and existing parental pay rate structures are also being updated. Fourth will be supporting both changes within the platform.

• 🔵 Backlog: Bereaved Partner's Parental Leave - a new statutory right introduced from 6 April 2026, allowing a partner to take up to 52 weeks of leave where the mother or main carer of their child passes away. Fourth will support recording, managing, and booking this leave, including scheduling integration and salary offset for salaried employees
• 🔵 Backlog: Statutory Parental Pay Rate Updates - updates to Shared Parental Pay and Statutory Neonatal Care Pay to reflect new independent rate structures following HMRC's April 2026 changes

Annual Compliance Updates

Every April, Fourth updates the platform to reflect the latest government rates, thresholds, and reporting requirements. These updates are non-negotiable and are built into our annual delivery cycle.

• 🔵 Backlog: Year-End Rates & Thresholds - updates to tax bands, NIC thresholds, statutory pay rates, and government allowances
• 🔵 Backlog: P11D Annual Updates - updates to company car benefit percentages, benefit values, and HMRC reporting fields

What This Means for You

Everything outlined in this article is driven by a legal and regulatory requirement - it reflects the reality of the UK legislative environment over the next two years.

If you have outstanding requests or ideas that are not covered here, please speak with your Fourth contact. All requests are logged and reviewed through our standard prioritisation process. The focus of the HR and Payroll teams within Fourth is regulatory and legislative compliance. Therefore, other ideas will fall behind these priorities.  Our current estimate is that this work will be the focus of the HR and Payroll roadmap until the second half of 2027.

For anything marked as Backlog, we will continue to update you as plans progress.

For features dependent on final government regulations, we will communicate updates as soon as guidance and implementation dates are confirmed.

We appreciate your patience and understanding as we work through one of the most significant legislative periods that our industry has faced.