{"id":5554,"date":"2026-07-01T10:32:10","date_gmt":"2026-07-01T09:32:10","guid":{"rendered":"https:\/\/www.goodmanjones.com\/blog\/?p=5554"},"modified":"2026-07-01T10:32:10","modified_gmt":"2026-07-01T09:32:10","slug":"the-employment-rights-act-2025-for-smes-a-new-era-for-uk-employers","status":"publish","type":"post","link":"https:\/\/www.goodmanjones.com\/blog\/the-employment-rights-act-2025-for-smes-a-new-era-for-uk-employers\/","title":{"rendered":"The Employment Rights Act 2025 for SMEs: A New Era for UK Employers\u00a0"},"content":{"rendered":"

By Tony Stedman, Goodman Jones HR\u00a0<\/strong><\/p>\n

The Employment Rights Act 2025 marks the most sweeping transformation of UK employment law in a generation. With over 60 new and amended provisions being phased in between 2025 and 2027, it\u00a0represents\u00a0a deliberate rebalancing of the employment relationship in favour of greater security, fairness, and transparency for workers.<\/span>\u00a0<\/span><\/p>\n

For employers, including UK subsidiaries of international groups, the Act is not simply a compliance exercise. It is a fundamental shift in how employment relationships are managed, documented, and governed day-to-day.<\/span>\u00a0<\/span><\/p>\n

A Higher-Risk Landscape<\/span>\u00a0<\/span><\/h5>\n

One of the most significant changes is the reduction of the qualifying period for unfair dismissal claims from two years to six months. Combined with the removal of the compensation cap, the abolition of tribunal fees, and the extension of limitation periods from three to six months, the practical impact is clear: more claims, brought earlier, with greater financial exposure.<\/span>\u00a0<\/span><\/p>\n

In practical terms, this means a poorly managed probation dismissal at month five could now result in a full unfair dismissal claim, something previously avoided by many employers. Similarly, a delayed grievance response or an inconsistent disciplinary process is more likely to escalate into formal proceedings, with fewer barriers to entry for employees.<\/span>\u00a0<\/span><\/p>\n

The question is no longer whether employers follow procedure at key milestones, but whether they can\u00a0evidence\u00a0\u201creasonableness\u201d from the outset of the employment relationship.<\/span>\u00a0<\/span><\/p>\n

Flexibility, Predictability and Day-One Rights<\/span>\u00a0<\/span><\/h5>\n

The Act also embeds a cultural shift towards flexibility and predictability.<\/span>\u00a0<\/span><\/p>\n

Flexible working becomes a day-one right, and refusals must not only fall within one of the eight statutory grounds but must also be demonstrably reasonable and clearly explained. For example, rejecting a request for hybrid working without documented operational justification, such as client-facing requirements or team supervision needs, is unlikely to withstand scrutiny.<\/span>\u00a0<\/span><\/p>\n

Zero-hours and shift workers gain strengthened protections, including rights to more predictable working patterns and reasonable notice of changes. Employers in sectors such as hospitality, retail, and care will need to reassess scheduling practices, particularly where shifts are routinely altered at short notice or cancelled without compensation.<\/span>\u00a0<\/span><\/p>\n

Closing Loopholes and Raising Standards<\/span>\u00a0<\/span><\/h5>\n

The legislation takes a firm stance on practices perceived as exploitative. \u201cFire and re-hire\u201d will become automatically unfair from January 2027 if used to impose detrimental contractual changes. This removes a tool that some organisations previously relied on during restructuring or cost-saving exercises.<\/span>\u00a0<\/span><\/p>\n

At the same time, duties around workplace conduct are significantly strengthened. Employers will be liable for third-party sexual harassment and may face compensation uplifts if they\u00a0fail to\u00a0take \u201call reasonable steps\u201d to prevent it. This could include scenarios such as inappropriate behaviour by clients or suppliers at events, or repeated low-level incidents that were not formally addressed but should have triggered preventative action.<\/span>\u00a0<\/span><\/p>\n

Family-friendly rights are also expanded. Statutory Sick Pay becomes a day-one entitlement with no lower earnings threshold, while bereavement leave, paternity leave, and parental leave all move to day-one rights. For employers, this increases both the administrative and cultural importance of consistent, empathetic handling of employee needs from the very start of employment.<\/span>\u00a0<\/span><\/p>\n

From Policy to Practice<\/span>\u00a0<\/span><\/h5>\n

Taken together, these changes demand a more proactive, disciplined, and evidence-based approach to people management.<\/span>\u00a0<\/span><\/p>\n

Employers should prioritise:<\/span>\u00a0<\/span><\/p>\n