How to prepare your small business for the Employment Rights Bill overhaul  

The Employment Rights Bill hit the headlines this week when The Resolution Foundation, a major think tank that champions worker rights, suggested the day one right to an unfair dismissal was a step too far.  

While emphasising that the Bill is 'important and welcome',  it also suggested that this one specific element , which is set to land in 2027  'has the potential to inhibit hiring, potentially getting the protection-flexibility balance wrong'.  

Its analysis warned that making this change would impact young people’s job prospects more than older workers and pointed out that in today’s economy, workers are already half as likely to lose their jobs as they were 30 years ago.  

But is that right? With the first phased implementation set for April 2026, we asked HR specialist and Enterprise Nation adviser Rona Loweth to help us work through the new legislation on a practical level – and help to get over any myths and misunderstandings.  

"The first point is not to panic because although there are lots of proposed changes, some will have less impact on small businesses," Rona said. "You need to consider what changes will have an immediate impact and are your priority. If you're an employer that aligns with best practice, a lot of the changes will actually complement what you're already doing.   

“These changes represent a fundamental shift towards promoting good working conditions and fair treatment, and they underscore the government’s commitment to updating employment practices, which can work to the advantage of good employers.”  

 She points out that many concerns about the legislation stem from misunderstanding. The day-one unfair dismissal right, for example, doesn't prevent fair employers from dismissing employees who do not meet probationary period requirements - it requires following robust procedures and that practice should already be in place, she said.   

Rona added: 

“Unfair dismissal on the grounds of discrimination is already a day-one right.  Guidance already in place today is to follow a fair and reasonable dismissal process for any termination to ensure decisions are balanced, fair and reduce risk.”  

“The proposed changes are not a 100% done deal,” she emphasised. “The government is listening, and employers still have an opportunity to input into consultations."  

With the aim of modernising workplace practices while ensuring fair treatment for employees, the new legislation is set to roll out in clear phases, giving companies the opportunity to prepare thoroughly and adapt to the evolving legal landscape.  

For statutory sick pay changes coming on April 6,  2026, there will be genuine cost implications for small businesses currently operating on statutory minimums, and the day-one right to paternity leave could have resourcing implications, she said.  

Rona, who works as HR services manager for McKinney HR, a Scottish HR consultancy with a core team of six, specialises in supporting small and medium-sized enterprises with outsourced HR services, said while the parental rights measures didn’t have huge cost implications, small firms need to be aware from a payroll, leave policy and procedure and resourcing perspective.  

She said: “Under the new legislation, employees can apply to take two weeks paid leave from day one, previously there had been 26 26-week qualifying period, as well as new starters being eligible for the weekly payment, it’s also something to be aware of from a resourcing perspective.”  

The day one right to request flexible working came into force earlier this year bu,t the further change planned for 2027 will make flexible working the “default”. This means small businesses will need to consider how flexible working could be possible in their business context. On the flip side, offering flexible working can be a competitive advantage.

Next year will see the implement of standardised regulations on zero‐hours contracts, aiming to clarify the responsibilities and rights of both employers and employees as well as enhanced whistleblowing protections designed to foster ethical practices in the workplace.  

The Employment Rights Bill is being implemented in phases, with commencement dates of 6 April and 1 October, which provides small businesses with time to prepare rather than face overwhelming changes all at once.   

“Early preparation is essential,” Rona added. “By breaking the legislation down into manageable phases, consulting the government’s roadmap and taking advice where clarity is needed, small businesses can update their policies and procedures, implement the changes smoothly, and ensure they remain competitive and compliant.”  

The government will continue to release guidance and conduct consultation sessions throughout 2025. [Last week, the Government opened four consultations under its Make Work Pay agenda.]  

Businesses are encouraged to participate, stay updated via the roadmap, and connect with local business support networks for expert advice.  

Rona's top tips for small businesses

• Don't panic – Look to break down the Employment Rights Bill into chunks that are your priority, rather than trying to tackle everything at once  

• Start with education - read the government roadmap document and seek expert advice to understand how the changes apply to your business  

• Focus on timing - Concentrate on changes coming in April 2026 first, as later measures may still be subject to changes after consultation  

• Do an impact assessment - identify which changes will impact your business and how, then prioritise accordingly  

• Participate in consultations - make your voice heard while there's still an opportunity to influence the legislation  

• Build good practices now - if you already have fair working practices, much of the legislation will complement what you're doing  

• Focus on people management essentials - for growing businesses, prioritise engagement, absence management and performance management as your key HR foundations