The Employment Rights Bill: What Small Business Owners Need to Know

The Employment Rights Bill 2024-25, introduced on 10 October 2024, represents the most significant shift in employment law for over 20 years. While many business owners assume employment law changes only affect large corporations, this couldn't be further from the truth. The economic analysis shows that "costs will be proportionately higher for small and micro businesses due to the fixed costs of admin and compliance burdens".

The majority of reforms will take effect no earlier than 2026, with unfair dismissal reforms taking effect no sooner than autumn 2026. This gives you time to prepare, but only if you start now.

Five Critical Changes That Will Impact Your Small Business

1. Day-One Unfair Dismissal Rights

Employees will get protection from unfair dismissal from day one of employment, marking the most significant shift in unfair dismissal law in over 50 years. Currently, employees need two years of service before they can claim unfair dismissal.

What this means for you: Although employers will be able to operate probationary periods with a lighter-touch process for dismissing employees who aren't right for the job, you'll need rock-solid recruitment, onboarding, and performance management processes from day one.

2. Enhanced Statutory Sick Pay

The bill removes the three-day waiting period for statutory sick pay (so employees are eligible from the first day of illness or injury) and the lower earnings limit test for eligibility. This means more employees are eligible for SSP, and could lead to higher rates of short-term sickness absence, particularly among low earners.

3. Strengthened Flexible Working Rights

The bill requires employers to justify the refusal of flexible working requests, with employers needing to explain why they consider it "reasonable" to refuse the request. Flexible working is to be seen as the default from day one, with employers having to say yes unless they can prove it's "unreasonable".

4. Enhanced Family Leave Rights

The bill removes the qualifying period for paternity leave and ordinary parental leave, so employees have these rights from the first day of employment. This represents a significant shift in how you'll need to plan for workforce coverage.

5. Zero-Hours Contract Restrictions

The bill introduces a right to reasonable notice of shifts and to be offered a contract with guaranteed hours, reflecting hours regularly worked. If you use casual workers or zero-hours contracts, this will require fundamental changes to your approach.

Why "We're Too Small" Isn't a Valid Excuse

The government analysis states: "Most measures need to apply in the same way to all businesses as we cannot create a 'two-tier' workforce (i.e. where some workers get access to rights and others do not)".

The reality is that small businesses often face disproportionate challenges because:

• Limited HR expertise: You likely don't have dedicated HR professionals who stay current with employment law
• Higher proportional costs: The total business costs for complying and administering the new rules will be up to £5bn a year, with costs proportionately higher for small and micro businesses
• Greater vulnerability: Employment tribunal claims can devastate a small business financially and operationally
• Resource constraints: You can't afford to get it wrong.

Your Action Plan: What to Do Now

Phase 1: Immediate Assessment (Next 60 Days)

• Conduct a comprehensive HR audit
• Review all current employment contracts
• Assess existing policies and procedures
• Identify immediate compliance gaps

Phase 2: Implementation Planning (Next 6 Months)

• Update contracts and policies
• Implement new procedures
• Train managers on new requirements
• Establish monitoring systems

Phase 3: Ongoing Compliance (Before 2026)

• Regular policy reviews
• Staff training updates
• Process refinements
• Preparation for specific deadlines
• 
  

Don't Wait Until It's Too Late

Ready to Protect Your Business?

The Employment Rights Bill isn't just about compliance—it's about building a stronger, more resilient business that attracts great people and grows sustainably.

An HR audit is your first line of defence and your roadmap to success. It will:

• Identify exactly what needs to change in your business
• Provide a clear, prioritised action plan
• Ensure you're ready for the new legislation
• Position you as an employer of choice
• Protect you from costly legal issues

Contact me today to discuss how an HR audit can protect your business and position you for success under the new employment rights legislation.

Let's schedule a confidential conversation about your specific needs and how we can ensure your business is ready for what's ahead. Your employees—and your bottom line—will thank you.

info@sandbeckgreen.com @askemmahr