What’s going on?
The Employment Rights Bill has stumbled at the final hurdle in Parliament. The Bill had reached the “consideration of amendments” stage in the House of Lords, but a number of changes were rejected. It must now return to the House of Commons for further debate before it can receive Royal Assent.
The Lords voted against:
- Requiring employers to offer guaranteed hours from day one
- Introducing a day-one right to unfair dismissal
- Keeping the 50% turnout threshold for industrial action ballots
- Automatically enrolling union members to pay a political levy
These decisions mean continued uncertainty for employers over the final form of the Bill.
Why this matters for SMEs
Although not yet law, these changes are likely to come, so it’s wise to prepare now. The Bill includes several measures that will directly impact SMEs, including:
- Zero-hours and guaranteed-hours contracts
- Unfair dismissal rights
- Trade union and industrial action rules
- Collective redundancies and TUPE
- Stronger enforcement via a new regulatory body
For SMEs with limited HR support, new requirements around tracking hours, shift notices, and consultation could mean increased admin and compliance risks.
Key proposed changes to watch
Unfair dismissal from day one: Protection could move from two years’ service to day one, with a short “probationary” period allowing simpler dismissal.
Guaranteed hours / zero-hours contracts: Employers may need to offer predictable hours after a set “reference period” if workers regularly exceed their contracted hours.
Harassment and third-party liability: Employers must take all reasonable steps to prevent harassment, including from customers or contractors.
Collective redundancies: The Bill proposes extending consultation rules across sites and increasing the protective award for non-compliance from 90 to 180 days’ pay.
New enforcement body – the Fair Work Agency: A new regulator will oversee areas like holiday pay, minimum wage and sick pay, with stronger inspection powers.
Trade union and industrial action law: Changes include lower thresholds for union recognition and simpler strike-ballot procedures.
Family-friendly rights: New rights include day-one eligibility for parental leave and paid bereavement leave (including pregnancy loss before 24 weeks).
Implementation timeline – GB
- Early 2026: Sick pay changes, day-one parental leave
- October 2026: Ban on most “fire & rehire”; expanded harassment liability
- 2027: Day-one unfair dismissal rights and guaranteed hours
Use this timeline to plan policy reviews, contract updates, and training ahead of time.
What should SMEs do now?
To stay prepared for the Employment Rights Bill, SMEs should focus on three key areas:
1. Review and update: Check contracts, policies, and procedures, including zero-hours arrangements, dismissal processes, and family-leave entitlements, to ensure they’re fit for upcoming changes.
2. Strengthen compliance: Keep accurate records, review HR risk areas like harassment and redundancies, and train managers on new rights and obligations.
3. Plan and communicate: Stay informed as the Bill progresses, budget for added admin and training, and keep staff updated to maintain trust and minimise disruption.
How BeyondHR can help
The Employment Rights Bill may have hit a stumbling block in Parliament, but it’s clear that major reform is still on the way. For SMEs, these changes could mean new HR processes, policy updates, and added administrative pressure. At BeyondHR, we help business owners prepare with practical, hands-on support, including:
- Our Free HR health check to assess where your contracts, policies, and procedures may need updating.
- Tailored contract and policy reviews to ensure compliance with upcoming legislation
- Ongoing legal updates and briefings so you’re never caught off guard by new requirements
We take the complexity out of employment law changes so you can stay compliant, protect your business, and focus on growth with confidence.
If you’d like tailored advice or to schedule a readiness review, get in touch with the BeyondHR team today on 0800 111 4461.