What Does the New Employment Rights Bill Mean for Small Businesses

The Employment Rights Bill represents the most significant update to workplace law in many years. Its aim is to provide greater job security, improve working conditions and give staff more consistent rights from the moment they start employment. While these changes strengthen protections for employees they also increase responsibilities for employers, especially small businesses that may not have dedicated HR teams.

This article breaks down what the Bill proposes, the practical impact on small employers, and what steps you should consider taking in advance.

Key Changes Small Businesses Need to Be Aware Of

Although legislation is still developing, several headline reforms are expected to affect smaller employers directly.

1. Stronger protections against unfair dismissal

The qualifying period for unfair dismissal claims is expected to reduce, meaning staff may obtain full rights sooner. For small businesses this increases the importance of managing performance, documenting issues and following fair processes even within the first year of employment.

2. Day one rights to request flexible working

Employees would be able to request flexible working from the first day of employment. This could include home working, different hours or adjusted patterns. Small businesses will continue to have the right to refuse requests for valid operational reasons, but responding promptly and fairly becomes more important.

3. Tighter rules on zero hours contracts

The Bill aims to restrict the use of zero hours and casual arrangements. Workers may gain rights to predictable hours, protection against last minute cancellations and clearer contracts. Businesses that rely on variable staffing will need to review how they schedule and pay workers.

4. Earlier entitlement to statutory sick pay

Statutory sick pay may become payable from day one of absence rather than after a waiting period. This increases short term absence costs for small employers and requires tighter sickness monitoring.

5. Stronger rights around parental and family leave

Parents and carers may gain greater access to leave and pay. This will increase administrative requirements and may affect staffing levels for small teams.

6. More HR documentation and processes

Many of the reforms require clearer procedures, better record keeping and more consistent contract terms. Small businesses with informal working arrangements may need to formalise their HR practices.

How These Changes Impact Small Businesses

Increased cost pressures

Stronger rights around sick pay, predictable hours and dismissal will increase employment costs. Even small increases feel significant for micro businesses operating with tight margins.

Reduced flexibility

If you rely on fluctuating hours, last minute shift changes or casual staffing, the Bill may restrict your ability to adapt quickly. Scheduling and forecasting become more important.

Higher administrative burden

Without dedicated HR support small employers will need to manage more paperwork, requests, contract variations and compliance steps. Policies may require updating each year as new rules are phased in.

Greater risk exposure

Early unfair dismissal rights mean businesses must be more careful when onboarding, training and managing employees. Probation periods must be handled with clear communication and recorded feedback.

Improved recruitment potential

There are positives too. Stronger employment rights may help small employers attract talent, especially where flexibility and good working conditions are valued by applicants.

Practical Steps Small Businesses Should Take Now

1. Review employment contracts

Ensure your contracts are clear, up to date and reflect:

• working hours

• notice periods

• flexibility terms

• probation arrangements

• variable or casual work where applicable

2. Prepare for more flexible working requests

Create a simple written process for handling requests and give managers guidance on how to assess what is reasonable for the business.

3. Audit your use of zero hours or casual work

Consider whether current arrangements remain suitable or whether staff should move to minimum guaranteed hours or different contract structures.

4. Strengthen performance and dismissal procedures

With earlier dismissal rights, having:

• regular check ins

• documented feedback

• clear expectations

• consistent processes

becomes essential.

5. Update sickness and absence processes

If statutory sick pay applies earlier, you will need a reliable system for recording absence, managing leave and planning cover.

6. Train line managers

Even brief training on handling flexible working, probation and early warnings will reduce risk and improve decision making.

7. Budget for increased costs

Set aside contingency funds for:

• additional sick pay

• possible contractual changes

• extra admin time

• legal or HR support if needed

8. Keep staff informed

Clear communication reduces uncertainty and helps maintain trust during the transition to a new legal framework.

What Will Not Change

Small businesses will still be able to:

• refuse flexible working requests for valid operational reasons

• dismiss employees fairly when misconduct or poor performance is documented

• offer part time, temporary or seasonal work

• manage staff in a way that reflects the needs of the business

The reforms do not remove employer rights. They simply create clearer minimum standards and faster access to protections.

Likely Implementation Timeline

The Bill will be rolled out in phases. Some changes may come into force sooner than others while others may require detailed secondary legislation. Small businesses should expect changes over a one to three year period rather than overnight shifts.

Conclusion

The Employment Rights Bill aims to modernise UK employment law by improving job security, increasing flexibility rights and creating fairer conditions for workers. For small businesses this brings both challenges and opportunities. Costs may rise, admin may increase and staffing models may need to adapt. However clear planning, updated contracts and good communication can help small employers transition smoothly.

By reviewing policies early, strengthening HR processes and keeping staff informed you can navigate the changes confidently and maintain a stable, compliant workplace.