With the Government finalising the Employment Rights changes, we take a look at the likely impact this could have on small and medium sized businesses.
Employment Rights Bill – Impact Assessment for SMEs
Introduction: Impact of the Employment Rights Bill on Employers
The Employment Rights Bill was initiated by the Labour Government when it took office in 2024.
The Bill comprises 28 proposed law changes, with the overall aim of improving employment rights for employees and workers.
The Bill is currently in a period of consultation between the House of Commons and the House of Lords, as well as with trade unions and businesses.
The first tranche of changes has entered the Royal Assent and Consultation phase, meaning that these changes are expected to be approved imminently.
The implementation of the Bill is likely to commence in 2026 and run through until 2028. The contents of the bill are likely to change by being strengthened, weakened or possibly even dismissed.
A tracker showing the progress of the Employment Rights Bill can be found here.
Our recommendation to small and medium-sized companies (SMEs) is not to wait for the laws to be enacted, but to proactively take steps to prepare for the changes so that they have as little impact on the operations and finances of the business as possible.
This Report details all of the current published proposals and assesses the potential impact on SME companies and organisations.
Included below are likely impacts that our clients may take, together with suggested timelines for those actions as requested.
Employment Rights Bill Impact Assessment and Actions
The following analysis takes the current proposals from the Employment Rights Bill and details the estimated impact on SMEs. The analysis outlines the likely impact and an assessment of what the changes mean for an SME.
We would advise you to implement any changes to your employment policies, procedures and employment management approach in advance of the proposed law changes taking effect so that you have time to adjust your workforces and carry out any necessary training. We would advise all companies and organisations to engage in professional help in order effect these changes.
Employment Rule Changes In Royal Assent and Consultation Now
| Change Proposed | Impact | Impact Assessment |
| Repeal the Strikes (Minimum Service Levels) Act 2023 | Low | Assuming your company or organisation does not recognise any Trade Unions at present, minimal impact. If you do currently recognise Trade Unions, then you should contact us. |
| Repeal the Majority of Trade Union Act 2016 | Low | As above |
| Protections against dismissal for taking industrial action | Low | As above |
| Removal of ten-year ballot requirement for trade union political funds | Low | As above |
| Simplifying Industrial action notices and ballot notices | Low | As above |
Employment Rights Bill Changes – April 2026
| Change Proposed | Impact | Impact Assessment |
| Simplifying Trade Union recognition process | Low | This could impact a company if the employees decide they want to join a recognised Union |
| Electronic and Workplace Balloting | Low | Allows for easier access to employees in the workplace when voting |
| SSP from day one | High | Large impact when not paying company sick pay. Will mean that every sick day will be paid. |
| Remove Lower Earnings Limit | High | Even very low-paid employees will receive payment from day one of sickness absence. |
| Maximum Period of Collective Redundancy Protective Award Doubled to 180 Days | Medium | Currently 90-day penalty for failure to consult on group redundancies. Fine is doubled in proposal. |
| Paternity Leave Day One Right | Medium | Currently, need 26 weeks prior to 15th week before birth, i.e. 41 weeks to qualify for SPP |
| Unpaid Parental Leave Day One Right | Medium | Currently, 1 Year to qualify for this benefit. Will mean no waiting for parents wishing to take unpaid leave |
| Protection of Sexual Harassment to that of whistleblowing | High | Any complaints of sexual harassment will mean that the Complainant will be protected against Termination or Detriment. |
| Establishment of Fair Work Agency | High | Will exist to streamline and enforce national minimum wage, holiday pay, sick pay and modern slavery laws |
| Voluntary Gender Pay Gap and Menopause Action Plan Publication | Low | Impact unknown, but thought to be very low based on this being a voluntary requirement |
Employment Rights Bill – October 2026
| Change Proposed | Impact | Impact Assessment |
| Duty to Inform Workers of Their Right to Join a Trade Union | Medium | This could persuade certain employees to join a Trade Union. |
| Strengthen Trade Unions Rights of Access | Medium | A company could be forced to allow Trade Union representatives to visit the workforce |
| New Rights and Protections for Trade Union Reps | Medium | There are likely to be restrictions around actions a company will be able to take against Trade Union reps. |
| Extending Protections Against Detriments for Taking Industrial Action | Medium | There are likely to be restrictions on actions a company will be able to take for lost time and inefficiencies. |
| Restrict The Use of Fire and Rehire | Medium | Will no longer be able to enforce contract changes except in certain circumstances. |
| Extending Time Limit to Bring Tribunal Claims to Six Months | High | Currently, three months, but will allow employees more time to lodge a claim. |
| Tipping | Low | Already implemented in October 2024 under the Employment (Allocation of Tips Act) 2024 |
| Requirement for Employers to Take all Reasonable Steps to Prevent Sexual Harassment | High | Raises the bar on the actions employers are expected to take to stop all forms of sexual harassment |
| New Provision to Require Employers to Prevent all Forms of Sexual Harassment from a Third Party | High | Will include employer’s liability for sexual harassment endured by clients, suppliers and associates. |
Employment Rights Bill – 2027 Onwards
| Change Proposed | Impact | Impact Assessment |
| Strengthening Blacklisting Protections | Low | Places duties on a company to not discriminate against employees with Trade Union involvement. |
| Collective Redundancy Consultation Threshold | Low | A 20-or-more-employee limit applies to the whole company, not to individual Sites. |
| New Powers to determine if Employer has Taken “All Reasonable Steps” to Prevent Sexual harassment | High | Places a significant burden on the employer to train staff and take proactive steps to show they have complied with requirements. |
| Remove Two Year Unfair Dismissal Time Frame to a Statutory Probation Period | Very High | Employer will be restricted to removing an employee without following the disciplinary or capability policies to a prescribed probation period |
| Give Zero-Hours and Casual Workers Right to Request Guaranteed Hours | Medium | Employees will be given the right to request a fixed-hour contract where a working pattern can be ascertained |
| Make Flexible Working a Day One Right | High | Already implemented in the law |
| Gender Pay Gap & Menopause Action Plan Publication to Become Mandatory | Low | Only applicable to companies with more than 250 employees |
| Making it Unlawful to Dismiss Employees on Maternity Within Six Months of Their Return to Work | High | All employees returning from maternity protected from redundancy with some caveats |
| Introduction of Day One Right for Unpaid Bereavement Leave of at Least One Week | High | Currently at the discretion of the employer, but would normally expect to be day of funeral |
| Industrial Relations Framework | Low | Impact unknown at this time but sets out to adjust the balance between Trade Unions, employers and employees |
| Regulation of Umbrella Companies | Low | No impact unless you are an umbrella company employing people |
Summary
Not all of the above proposed changes will affect all companies and organisations.
Many of the proposed changes are smaller changes to existing legislation, and some of the final laws may be different from the above after any consultation and amendments.
We would advise companies to review their recruitment, policies and procedures and employee management processes to be ready for any day one rights. You should look at current SSP arrangements, pay rates and holiday pay within the business as a priority.
Should you need any advice or help on this matter, please contact Jon Rush at jon@hrsmartuk.com or call us on 01903 754107.
The information and sources used to compile this report have been taken from GOV.UK and CIPD.
Tags
- Employment Law, HR Advice, New Employment Rules