Employment Rights Act 2025: what SMEs must do before April

What actually changes for you

The Employment Rights Act 2025 is the biggest piece of UK employment legislation in a generation. The headlines have been everywhere; the practical detail less so. If you run an SME, here is what changes in the next twelve months - and what you should be doing now.

1. Unfair dismissal - a day-one right

The two-year qualifying period is gone. From the first day of employment, your team can bring an unfair dismissal claim.

What this means in practice: the probation conversation matters more than ever. The Act preserves a "statutory probation period" (expected to be nine months) during which a lighter touch dismissal process applies - but it still has to be fair, documented, and based on capability or conduct, not gut feel.

If you currently treat probation as "we'll see how it goes for six months," rewrite that this quarter. You need structured probation reviews at week 4, week 12 and week 24.

2. Sick pay from day one

Statutory Sick Pay no longer waits for day four. From April 2026, SSP is payable from the first day of absence, and the lower earnings limit is being scrapped - so part-time and lower-paid staff who were previously excluded will be eligible.

For most SMEs this is a small cost increase but a real cashflow change. Build it into your 2026 budget now, not in March when payroll panics.

3. Fire-and-rehire - effectively banned

The "fire and rehire" tactic (dismissing employees and re-engaging them on worse terms) becomes automatically unfair in almost all cases. There is a narrow exception where the business would otherwise become insolvent, but the evidential bar is very high.

If you have ever changed terms unilaterally - pay structure, shift patterns, holiday accrual - and relied on a "fresh contract" to get there, that route is closed. From now on it is genuine consultation and agreement.

4. Flexible working - day-one and twice a year

The flexible working request right is now available from day one (no 26-week qualifying period) and can be exercised twice in any 12-month period. You still have the eight statutory reasons to refuse - but you must consult before refusing, and document why a specific business reason applies.

Practical move: build a single-page "flex request decision sheet" your managers fill in. Consultation date, reasons considered, trial period discussed, decision rationale.

5. Zero-hours - guaranteed hours offer

After a 12-week reference period, workers on zero-hours or low-hours contracts must be offered a contract reflecting the hours they actually worked. They can decline. But you must offer.

This affects hospitality, care, retail, logistics most. Build the reference-period tracker into your rota software now.

The five-step SME action plan

1. Rewrite probation. Structured 4 / 12 / 24-week reviews with documented evidence.
2. Refresh your contracts to reflect SSP-from-day-one and remove any fire-and-rehire wording.
3. Manager training. Line managers need to understand that day-one rights apply to dismissals, flex requests and SSP.
4. Audit your zero-hours population. Identify who is approaching the 12-week threshold.
5. Update your employee handbook - both EN and PL versions if you employ Polish-speaking staff.

Cue HR clients on Standard and Full plans are already in the middle of this rewrite. If you would like the same - without the legal-jargon overhead - we can typically turn around a full contract and handbook refresh in three weeks.