Guide for business owners: Preparing for changes to UK employment law

The UK government is bringing in sweeping changes to employment law that will directly impact the way businesses operate. As a business owner, you have the opportunity to take proactive steps to prepare for these changes in advance, as they will have a big effect on how businesses operate. While these changes may seem challenging, it's important to embrace them as part of modernising your workplace.

The Employment Rights Bill introduces a range of reforms aimed at boosting employee protections, enhancing productivity, and making workplaces more adaptable to the needs of both employers and employees.

Whilst many of these changes will only be implemented in 2026, preparing now can ensure your business remains compliant, resilient, and a positive environment for both current and future employees. 

What's changing and how it affects you

1. Statutory sick pay (SSP) reforms

Statutory sick pay will now be payable from day 1 of sickness, removing the current three-day waiting period. The lower earnings limit (LEL) will also be removed, allowing more employees to qualify for SSP. This change aims to support employees who need to take time off for health reasons without financial penalty, especially benefiting low earners. This change aims to support employees who need to take time off for health reasons without financial penalty, especially benefiting low earners.

Proactive steps:

• Update policies: Revise your sickness absence procedures to reflect the new SSP rules.
• Adjust payroll systems: Ensure your systems can process SSP from day one.
• Communicate: Inform your employees about these changes so they're aware of their rights.

2. Day-one unfair dismissal rights

Employees will gain the right to claim unfair dismissal from day one of employment, rather than needing two years of continuous service as is currently the case. This will include a statutory probationary period with a 'lighter-touch' dismissal process for employers. However, a fair reason for dismissal will still be needed. The government has also proposed a 9-month probationary period, allowing for simplified termination without the full legal process, giving employers a window to properly assess new hires.

Proactive steps:

• Strengthen onboarding: Enhance your onboarding and probation processes.
• Set clear expectations: Establish performance goals and milestones for new hires.
• Document everything: Keep thorough records to mitigate risks of unfair dismissal claims.

3. Flexible working becomes the default

Flexible working requests will become a right from day one of employment. While there is still no absolute right to flexible working, employers must show both a valid ground for rejection and that the rejection is reasonable. This builds on the increased flexibility seen post-pandemic and aims to create a more balanced and adaptable workplace culture.

Proactive steps:

• Assess roles: Identify positions where flexible working is feasible.
• Create a policy: Develop a clear, fair policy for evaluating requests.
• Train managers: Ensure they understand how to handle requests appropriately.

4. Guaranteed contracts for regular hours

Workers with regular hours over a 12-week period will be able to request a guaranteed contract. There will also be a right to 'reasonable' notice of shift changes or cancellations, and a right to compensation for last-minute changes. The government will consult on what constitutes 'low hours,' how these review periods should work, and how the rules will apply to agency workers.

Proactive steps:

• Review contracts: Evaluate zero-hours contracts, especially in industries like hospitality or construction.
• Transition roles: Consider moving regular roles to guaranteed hours.
• Update scheduling practices: Ensure you provide adequate notice for shift changes.

5. Strengthened protections for new parents

Employees returning from family leave will be protected from dismissal for six months after their return. There will also be day-one rights to unpaid parental leave, two weeks' paternity leave, and one week of parental bereavement leave. The government is consulting on broader changes, such as extending statutory maternity pay from day one rather than after six months.

Proactive steps:

• Update policies: Revise your family leave and return-to-work procedures.
• Support managers: Train them on how to assist returning parents.
• Offer flexibility: Consider flexible arrangements to ease the transition back to work.

6. Third-party harassment and sexual harassment protections

The Equality Act 2010 will be updated to include explicit protections against third-party harassment. Additionally, large employers (with 250+ employees) will be required to develop annual action plans to address gender pay gaps and provide support for employees experiencing menopause.

Proactive steps:

• Revise policies: Include third-party interactions in your anti-harassment policies.
• Provide training: Educate staff on recognising and reporting harassment.
• Implement action plans: Develop strategies to address gender pay gaps and support menopausal employees.

7. The right to disconnect

he government is consulting on a code of practice that would establish an employee's right to disconnect, meaning they should not be contacted outside of working hours unless in exceptional circumstances. This is intended to support work-life balance and employee well-being by clearly defining boundaries between work and personal time. The government also intends to consult on how these rules can be tailored to fit different sectors, acknowledging unique operational needs.

Proactive steps:

• Set boundaries: Encourage employees to set communication limits.
• Develop a policy: Create guidelines for after-hours contact.
• Lead by example: Management should respect and model these boundaries.

8. Fire and rehire restrictions

The practice of 'fire and rehire' will be heavily restricted. Employers must demonstrate that the business's viability is at risk and consult staff while considering all reasonable alternatives before proceeding.

Proactive steps:

• Review practices: Examine your redundancy and restructuring policies.
• Consult thoroughly: Engage with employees before making significant changes.
• Explore alternatives: Document efforts to find other solutions.

9. Trade union changes

Enhancements to trade union access will make industrial action easier. Employers will be prevented from replacing striking workers with agency staff, increasing union influence.

Proactive steps:

• Open communication: Foster a transparent dialogue with your workforce.
• Address concerns: Be proactive in resolving issues that could lead to industrial action.
• Train managers: Equip them with negotiation and conflict resolution skills.

10. Long-term reforms on the horizon

The government has published a Next Steps paper outlining longer-term reforms:

• Parental and carer's leave:

Plans to review and extend these provisions.

• Single worker status:

Considering moving dependent contractors to full employment status, leaving only the genuinely self-employed without worker rights to benefits.

• TUPE simplification:

A call for evidence to holistically examine the Transfer of Undertakings (Protection of Employment) regulations, which may lead to simplification.

• Collective grievances:

Enabling employees to collectively raise grievances about conduct in the workplace.

Why are these changes taking place?

The Employment Rights Bill, introduced on 10 October, marks a major upgrade in UK employment law, aimed at addressing outdated regulations that have hindered economic growth and worker protections. The reforms are designed to tackle poor working conditions, support fair treatment of employees, and create a labour market that benefits both businesses and workers alike. The government is seeking to balance flexibility with security, giving workers more rights while ensuring businesses have the freedom to grow.

The introduction of these reforms comes in response to issues such as exploitative zero-hour contracts, unfair dismissal practices, and the need for greater support for workers with family responsibilities. By modernising these laws, the government aims to create an environment where workers feel secure and valued, ultimately boosting productivity and reducing staff turnover.

Five-step plan to prepare for the changes

• Review policies and contracts

Conduct a thorough audit of your existing employment contracts, policies, and procedures to ensure they align with the upcoming changes. It might be valuable to consult with an employment lawyer to make necessary amendments to stay compliant.

• Update training for management

Train your managers on the new employment rights, including day-one unfair dismissal, flexible working requests, and harassment protections. Effective management is crucial in adapting to these changes smoothly.

• Implement proactive communication

Keep your employees informed about the upcoming changes and how they may impact their rights and responsibilities. Open communication will help foster trust and ensure everyone is on the same page.

• Prepare for flexible working requests

Review your current flexible working policy and prepare to accommodate increased requests from day one of employment. Assess the impact on your operations and determine how flexibility can be effectively managed.

• Adopt a proactive approach

Embrace the changes positively and consider adopting policies like the right to disconnect, as well as enhancing employee support initiatives such as mental health resources and family leave protections. Creating a supportive culture will help ensure compliance, improve employee morale, and foster a productive work environment.