The UK’s biggest overhaul of employment law in decades is now underway — and for small and medium-sized businesses, the changes could have a significant impact on how staff are recruited, managed and supported over the next two years.
The Employment Rights Act 2025 officially received Royal Assent in December 2025 and introduces a wide range of reforms designed to strengthen worker protections and modernise workplace rights. While many of the changes will be phased in throughout 2026 and 2027, some measures are already in force.
For SMEs across Sheffield, Barnsley, Doncaster and Rotherham, understanding these changes early will be critical. Many smaller employers don’t have in-house HR teams, yet they will still be expected to comply with the same legislation as large national organisations.
According to UK government business statistics, SMEs account for 99.8% of all UK businesses and employ around 61% of the private sector workforce. That means the vast majority of employers will need to review contracts, policies, recruitment practices and management procedures over the next 18 months.
The Key Changes Employers Need to Prepare For
One of the biggest changes relates to unfair dismissal rights.
Currently, employees generally need two years’ service before they can bring an ordinary unfair dismissal claim. Under the new legislation, that qualifying period will reduce to six months from January 2027.
For small businesses, this means probation periods, onboarding processes and performance management procedures will become even more important. Employers will need to ensure managers are documenting concerns properly, carrying out regular reviews and following fair processes from a much earlier stage of employment.
The CIPD has warned employers that preparation cannot wait, encouraging organisations to move “from speculation to preparation” as implementation dates approach.
The Act will also introduce stronger protections around:
- Zero-hours and low-hours contracts
- Flexible working requests
- Sexual harassment prevention
- Bereavement leave
- Pregnancy and maternity protections
- “Fire and rehire” practices
- Shift cancellation compensation
- Day one family leave rights
- Statutory sick pay reforms
Changes Already in Force
Some elements of the legislation have already taken effect.
In December 2025, rules relating to minimum service levels during strikes were removed. In February 2026, protections linked to industrial action and trade union activity were expanded.
From April 2026, paternity leave became a “day one” right, allowing employees to access leave from the start of employment rather than after a qualifying period.
Additional reforms are expected throughout 2026 and 2027, meaning businesses must continue monitoring updates carefully.
Employment Rights Act 2025 – Implementation Timeline
Already Implemented
- December 2025 – Employment Rights Act receives Royal Assent
- December 2025 – Minimum service level strike rules removed
- February 2026 – Expanded industrial action protections introduced
- April 2026 – Day one paternity leave rights introduced
Expected During 2026
- Stronger workplace harassment obligations
- Trade union access reforms
- Extended tribunal claim time limits
- Further statutory sick pay changes
Expected During 2027
- Unfair dismissal qualifying period reduced from two years to six months
- Zero-hours contract reforms
- Bereavement leave rights introduced
- New flexible working requirements
- Enhanced pregnancy and maternity protections
- Restrictions on dismissal and rehire practices
What This Means for Small Businesses
For many SMEs, the challenge won’t simply be understanding the legislation — it will be finding the time and expertise to implement the changes correctly.
Employment tribunals can already be costly, time-consuming and damaging for business reputation. The TUC has highlighted that millions of workers will gain stronger employment protections under the new legislation, increasing the importance of fair and compliant people management practices.
At the same time, organisations like Acas and the CIPD are encouraging employers to review their HR documentation, manager training and workplace procedures now rather than waiting until the final implementation deadlines arrive.
For smaller businesses without dedicated HR support, that can feel overwhelming.
That’s why many South Yorkshire employers are choosing to work with experienced local HR consultants who can help them navigate the changes practically and proactively. From updating contracts and employee handbooks to reviewing disciplinary procedures and management training, having expert support in place can reduce risk, save management time and ensure compliance.
The Employment Rights Act 2025 represents a major shift in the UK employment landscape. Businesses that prepare early will be in the strongest position to protect themselves, support their people and continue growing with confidence.
If your business would benefit from support reviewing policies, procedures or employment practices ahead of these changes, contact South Yorkshire People Partners for practical, commercially focused HR support tailored to your business.
