The Employment Rights Bill (ERB) has arrived. This means important changes to employment law which will affect high-growth SMEs – the main changes affecting SMEs relate to extended rights for unfair dismissal claims, changes to parental leave and statutory sick pay, and changes to zero-hours contracts and the status of employees. Failure to comply could lead to financial penalties and reputational damage.

SMEs can best implement the changes by auditing, updating and communicating changes to existing employee documentation such as contracts and policies. Managers should be trained on the key changes and proactive record-keeping is encouraged to reduce compliance risk.

Here is a brief summary of the key employment rights and timelines for implementation over the coming years. 

New single status of worker

The Next Steps document discusses plans to move to a two-tier system, removing the distinction between ‘employees’ and ‘workers’. This means that gig/casual workers will have more employment rights than under the previous system. The date of this change is not known yet.

Parental leave (This will take effect in April 2026)

The ERB will remove any length of service requirement for parental and paternity leave. Employees will now be able to take paternity leave and pay even after they have taken shared parental leave and pay.  

Statutory sick pay reforms (This will take effect in April 2026)

SSP will become payable from day 1 of sickness and payable for the first 3 qualifying days of sickness. In addition, the lower earnings limit will be removed, meaning that all eligible employees, regardless of earnings, will be entitled to SSP.

Holiday (entitlement and pay) records

The ERB imposes a new specific obligation on all employers to keep records demonstrating compliance with holiday entitlement (including the amount of leave and pay). There’s no set format for these records, but they must be kept for six years, and failure to comply will be a criminal offence punishable with (potentially unlimited) fines. The date of this change is not known yet.

Collective redundancy (Expected April 2026/2027)

The maximum ‘protective award’ for failure to consult in collective redundancy is expected to double from 90 days’ pay to 180 days’ pay. Employers will need to consider the total number of redundancies across their whole organisation, not just individual workplaces – currently, collective redundancy rules only apply to individual workplaces.

Extension of time limits for bringing tribunal claims (This will change in October 2026)

Time limits for making a claim to an employment tribunal will increase to 6 months for all claims. The current time limit for most claims is 3 months.

Restrictions on ‘fire and rehire’ (Expected October 2026)

Dismissing someone then rehiring them on worse terms and conditions is expected to become an automatically unfair dismissal in most cases.

Right not to be unfairly dismissed (Expected January 2027)

Protection from unfair dismissal is expected to become a right after 6 months of being in a job. Currently, the time worked for an employer is 2 years before claiming unfair dismissal. Included in this is a provision to remove the statutory cap on compensatory awards for unfair dismissal, meaning that paying out for a claim would be significantly more expensive. 

Ban on zero-hours contracts (Expected in 2027)

Workers on zero-hours contracts are likely to get the right to guaranteed working hours, if they want them.

Increased pregnancy and maternity rights (Expected in 2027)

The ERB intends to strengthen protections against dismissal for pregnant workers and those returning from maternity leave.

Flexible working (Expected in 2027)

If an employer rejects a flexible working request because of a genuine business reason, they will have to:

  • state the reasons
  • explain why they believe their refusal is reasonable

Gender pay (Expected in 2027)

New regulations will require employers with 250+ employees to publish “equality action plans” including gender pay gap action plans. The regulations will include specific penalties for not doing so. Regulations will also require employers to identify the providers/employers of contract workers.

Harassment (Expected in 2027)

The ERB would make employers liable for third party harassment unless the employer took all reasonable steps to prevent this. This covers all types of harassment not just sexual harassment. The Bill would also add disclosing sexual harassment to the list of what counts as a qualifying disclosure, making it more explicit that this can amount to whistleblowing.

Bereavement leave (Expected in 2027)

A new right to statutory bereavement leave is expected. It’s not known yet whether this will be paid or unpaid leave.

Compensation for cancelled shifts (Expected in 2027)

It’s expected that workers will have the right to be paid if a shift is cancelled, moved to another date, or cut short by an employer.

Non-disclosure agreements

A change to the law around non-disclosure agreements (NDAs) is also expected. This will void clauses that would prevent workers from alleging or disclosing work-related harassment or discrimination. The date of this change is not known yet.

Trade unions (2026/27)

Anumber of trade union changes are planned over the course of 2026 and 2027, including:

  • simplifying how a trade union can gain recognition in a workplace
  • allowing trade union members to vote electronically
  • a new duty for employers to inform workers of their right to join a trade union
  • updated rules on a trade union’s right of access to the workplace
  • a new right to reasonable accommodation and facilities for trade union representatives carrying out their duties
  • a new right to time off for union equality representatives to carry out their duties
  • the time needed to give notice of industrial action will reduce to 10 days, instead of 14 days
  • unions will need a simple majority to vote for industrial action
  • picket supervisors will no longer be required

Family rights (2027)

The Act will strengthen protections against dismissal for pregnant workers and those returning from maternity leave.