The Governments’ roadmap for the Employment Rights Bill and how it affects your business

A New Era for UK Workplaces: What the Employment Rights Bill Means for SMEs

The UK Government has unveiled its roadmap for the Employment Rights Bill, marking the most sweeping overhaul of employment law in a generation.

With changes rolling out from late 2025 through to 2027, small and medium-sized enterprises (SMEs) must prepare for a new legal landscape that prioritises fairness, flexibility, and worker protections.

Here’s what you need to know, and how it could affect your business.

Key Dates and What’s Changing

From April 2026:

•              Statutory Sick Pay (SSP): The lower earnings limit and three-day waiting period will be scrapped. This extends SSP to over 1.3 million low-paid workers.

•              Paternity and Parental Leave Rights: Employees will be entitled to paternity leave and unpaid parental leave from their first day on the job.

•              Whistleblowing Protections: New safeguards will protect workers who report wrongdoing.

•              Collective Redundancy: The protective award for failing to consult properly will double from 90 to 180 days’ gross pay.

•              Fair Work Agency: A new body will oversee compliance with employment laws, including holiday pay and minimum wage.

From October 2026:

•              Fire and Rehire Ban: Dismissing staff to rehire them on worse terms will be unlawful, except in extreme financial hardship.

•              Sexual Harassment: Employers must take “all reasonable steps” to prevent harassment, including from customers and suppliers. Further changes expected in 2027.

•              Tipping Rules: Businesses must consult staff on how tips are distributed.

•              Trade Union Rights: Employers must inform staff of their right to join a union and include this in employment contracts.

•              Tribunal Time Limits: Employees will have six months (up from three) to bring most claims.

From 2027:

•              Unfair Dismissal: Protection from unfair dismissal will apply from day one of employment.

•              Zero-Hours Contracts: Employers must offer guaranteed hours to workers who regularly work consistent shifts.

•              Flexible Working: Access to flexible arrangements will be improved.

•              Bereavement Leave: New entitlements available to all will be introduced.

•              Gender and Menopause Action Plans: Voluntary in 2026, these may become mandatory in 2027.

What This Means for SMEs?

1. Increased Costs and Admin

Removing the SSP threshold and introducing day-one rights will likely increase payroll costs and HR workload. SMEs without dedicated HR teams may struggle to keep up with the paperwork and policy updates.

2. Greater Legal Risk

With longer tribunal timeframes and stricter harassment duties, employers face a higher risk of legal claims. Failing to update contracts or train staff could prove costly.

3. More Oversight

The Fair Work Agency will have powers to enforce compliance. Expect more scrutiny, especially around pay, working conditions, and union access.

4. A Push for Fairer Workplaces

While the reforms may feel burdensome, they aim to level the playing field. Responsible employers will no longer be undercut by those cutting corners.

How to Prepare

•              Review Contracts and Policies: Update them to reflect day-one rights, union information, and new leave entitlements.

•              Train Managers: Ensure they understand the new rules, especially around harassment and dismissal.

•              Audit Pay and Hours: Check for compliance with SSP, tipping, and zero-hours reforms.

•              Engage Early: Consult staff on changes and involve them in shaping fairer practices.

Final Thoughts

The Employment Rights Bill is a bold attempt to modernise the UK’s labour market. For SMEs, it brings both challenge and opportunity. Those who act early by updating systems, training staff, and embracing fairer practices will not only stay compliant but also build more resilient, attractive workplaces.

The Government has promised clear guidance and support, including from Acas. But the clock is ticking. Now is the time to get ahead.

Want to stay informed? Follow us for updates, practical tips, and expert insights as the reforms roll out.