Employment Rights Bill 2025/2026 — What Every UK SME Needs to Know
The Employment Rights Bill is the most significant overhaul of UK employment law in over two decades. For SME business owners, the implications are real, immediate, and in some cases urgent. This guide cuts through the legal language and tells you exactly what is changing, what it means for your business, and what you need to do before it takes effect.
Day one unfair dismissal rights
What is changing?
Currently, employees need two years of continuous service before they can bring an unfair dismissal claim against their employer. The Employment Rights Bill removes this qualifying period entirely. From the moment an employee starts work, they will have the right not to be unfairly dismissed.
What does this mean for your business?
This is one of the most significant changes in the Bill and one that will affect almost every SME immediately. The two-year qualifying period has historically given employers a degree of flexibility during the early stages of employment — time to assess whether a hire was right, and to part ways cleanly if not. That flexibility disappears.
This does not mean you cannot dismiss an employee in their first two years. It means that every dismissal, from day one, must be handled fairly and for a legitimate reason. Without documentation, a structured probation framework, and a proper process, you are exposed to a tribunal claim regardless of how long someone has been with you.
Flexible working as the default
What is changing?
Flexible working requests are becoming a day one right. Employees will no longer need 26 weeks of service before making a request. More significantly, the grounds on which an employer can refuse a flexible working request are being reviewed and tightened. Employers will need to consult with employees before refusing, and any refusal will need to be objectively justified.
What does this mean for your business?
For many SMEs, flexible working requests have been manageable because relatively few employees qualified to make them. That changes. A new starter on week one can now formally request a change to their working pattern, and you will need a documented process for considering and responding to it.
Zero-hours contracts reformed
What is changing?
The Bill introduces the right to a guaranteed hours contract for workers on zero-hours or minimal-hours arrangements, where those hours reflect a regular working pattern over a reference period. In addition, workers must be given reasonable notice of their shifts, and will be entitled to compensation if shifts are cancelled at short notice.
What does this mean for your business?
If your business uses zero-hours workers in any capacity — in hospitality, care, retail, events, or any other sector where variable hours are common — this change has a direct operational impact. Workers who consistently work a regular pattern will be entitled to have that pattern reflected in their contract. Last-minute shift changes will carry a financial penalty.
Plus more on:
- Strengthened trade union access
- Fire and rehire restrictions
- How APHR can help
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"In this new era of employment law, the 'probation period' has effectively moved from the office into the interview room. Success in 2026 isn't just about finding a role or filling a seat—it’s about the precision of the partnership from Day One."
