The government’s new Employment Rights Bill is one of the biggest shake-ups in employment law for decades.
It’s designed to give workers stronger rights and fairer treatment — but for small business owners, it also brings new legal responsibilities and extra admin.
Here’s a breakdown of what’s coming, when to expect it, and how Tower HR can help your business stay compliant once the Bill becomes law.
What Is the Employment Rights Bill?
The Employment Rights Bill is part of the government’s “new deal for working people.”
It’s expected to become law in late 2025, with key changes rolling out through 2026 and 2027.
The goal is simple: fairer workplaces and better protections for workers.
But it also means small businesses need to be proactive about updating contracts, payroll, and policies.
Key Changes Coming for Small Businesses
Statutory Sick Pay (SSP) from Day One
Sick pay will start immediately — no more three-day waiting period.
Lower-paid staff who currently don’t qualify will now be eligible.
Impact: You’ll need to adjust your payroll system and budget for an increase in sick pay costs.
Day-One Rights for Parental and Paternity Leave
Employees will be entitled to certain types of leave (including paternity and unpaid parental leave) from their first day of employment.
Impact: Employment contracts, policies, and onboarding materials will all need updating.
Unfair Dismissal Protection from Day One
The current two-year qualifying period for unfair dismissal claims will be removed.
Impact: Dismissal procedures must be clear, consistent, and fully documented to avoid legal risk.
Reform of Zero-Hours and Variable Contracts
“Exploitative” zero-hours contracts will be banned.
Workers will have the right to request guaranteed hours that reflect their normal working pattern.
Short-notice cancellations may also require compensation.
Impact: Businesses that rely on flexible staffing — such as retail, care, or hospitality — will need to rethink their scheduling and shift management.
Stronger Rules on Harassment and Discrimination
Employers will have a legal duty to prevent workplace harassment, including from third parties (like customers or suppliers).
Whistleblower protections will also be expanded.
Impact: You’ll need to review your policies, train your team, and ensure a safe reporting culture.
A New Enforcement Body – The Fair Work Agency
A new Fair Work Agency will oversee employment rights enforcement, combining several regulators.
Impact: Expect increased compliance checks and the need for accurate record-keeping on pay, contracts, and hours.
When Will the Employment Rights Bill Take Effect?
Date Key Milestone
Late 2025 Bill expected to become law (Royal Assent)
April 2026 Day-one sick pay and parental leave start
October 2026 – 2027 Zero-hours, unfair dismissal, and harassment reforms phased in
How Small Businesses Can Prepare Now
Getting ready early will save you stress (and possible penalties) later.
Here’s how to start preparing:
Review employment contracts and handbooks – Update clauses on sick pay, leave, and dismissal.
Check your payroll systems – Make sure they can handle new day-one entitlements.
Train managers – Help them understand the changes and handle requests correctly.
Update HR policies – Especially around flexible working, equality, and harassment.
Plan for cost impacts – Budget for increased sick pay, leave, and guaranteed hours.
How Tower HR Can Help
At Tower HR, we specialise in helping SMEs across the North West navigate employment law changes with confidence.
We’ll make sure your business is fully compliant before the Employment Rights Bill comes into force.
Here’s what we can do for you:
✅ Employment Contract & Policy Review – We’ll check and update your documents to meet new legal standards.
✅ HR Compliance Audit – A full review of your HR setup to identify and fix any gaps.
✅ Training & Briefings – We’ll equip your managers with the knowledge they need to apply the new rules correctly.
✅ Ongoing HR Support – As new parts of the Bill are introduced, we’ll keep you updated with practical, jargon-free advice.
The Bottom Line
The Employment Rights Bill will change how UK businesses employ, manage, and support their people.
For small businesses, it doesn’t have to be daunting — with early preparation and the right HR support, you can stay compliant, protect your reputation, and focus on running your business.
Tower HR is here to guide you through every step, keeping your business compliant and your people supported.
Let’s Get Your Business Ready
Want peace of mind before the new laws take effect?
Get in touch with Tower HR today for friendly, practical support.