2026 Changes to Employment Law: Expert Insight for SME Owners
- Irina Inayat
- 1 day ago
- 3 min read
With significant employment law reforms on the horizon, Penn Accounts recently spoke with Emma Lee, Dispute Resolution Solicitor at Penn Chambers, to understand what the upcoming changes could mean in practice for small and medium-sized businesses.
The Employment Rights Act 2025 represents one of the most substantial shifts in UK employment law in recent years. While most of the reforms are expected to come into force from April 2026, many businesses are already reviewing their contracts, policies and people processes to ensure they are prepared and not exposed to unnecessary risk.
As Emma explains, “Businesses that take time to prepare early are generally able to implement changes smoothly. Those that leave matters until the last minute often find themselves under pressure, making rushed decisions (and mistakes) that could otherwise have been avoided.”
What Is Changing? A Practical Overview for Employers
Although some detail is still being finalised, several key developments are already clear and should be firmly on employers’ radars.
Day-One Statutory Sick Pay
Under the proposed reforms, employees are expected to become entitled to Statutory Sick Pay from their first day of absence, removing the current waiting period.
Emma notes, “This change is not just a payroll issue. Employers should consider how sickness absence is managed day to day and ensure managers understand how to respond consistently to short-term absences.”
Day-One Family Leave Rights
Employees are expected to gain immediate access to paternity leave and unpaid parental leave, with no qualifying length of service.
“Many businesses currently rely on service thresholds written into contracts or handbooks,” Emma says. “These provisions will need to be reviewed to ensure they remain compliant.”
Extended Employment Tribunal Time Limits
Most Employment Tribunal claim deadlines are expected to increase from three months to six months.
“This gives employees more time to bring claims,” Emma explains, “which means employers should ensure records are kept for longer and that issues are properly documented, even where matters appear resolved.”
Restrictions on ‘Fire and Rehire’
The practice of dismissing and re-engaging employees on less favourable terms is likely to be banned or significantly restricted, with only limited exceptions.
Emma adds, “Any business that relies on contractual changes as part of restructures or cost-saving exercises should be reviewing its approach now, as the scope for making unilateral changes will become far more limited.”
Greater Protection for Zero-Hours and Irregular Workers
Proposals include:
Guaranteed minimum working hours
Reasonable notice of shifts
Compensation for cancelled work
“For businesses that depend on flexible staffing models, careful planning will be essential,” Emma says. “The aim will be to strike the right balance between operational flexibility and legal compliance.”
Changes to Employment Law - Does This Affect Your Business?
According to Emma, these 2026 changes to employment law are particularly relevant for businesses that employ staff on zero-hours or irregular contracts, rely on short service periods in contracts or policies, have managers dealing with sickness, family leave, or contractual changes, and have not reviewed contracts or employee handbooks in the last 18 to 24 months.
If any of these apply, it is worth carrying out a sense check sooner rather than later.
What Should Employers Be Doing Now?
These reforms will affect:
Employment contracts
Staff handbooks and workplace policies
Payroll processes
Day-to-day people management decisions
Although implementation is expected from April 2026, Emma advises early preparation.
“Making measured updates now allows businesses to stay in control, rather than reacting under pressure closer to the deadline. In many cases, relatively small changes can significantly reduce risk.”
Next Steps
If you would like a short, no-obligation conversation to understand how these changes may affect your business, or simply to confirm that you are already in a strong position, you can speak with us.
As Emma concludes, “Early advice is often the most effective way to prevent disputes and provide certainty for both employers and their teams.”
We thank Emma Lee for her time and insight. If you have any questions, please do not hesitate to contact us.
0207 183 6623
The information provided in this article is not intended to constitute professional advice and you should take full and comprehensive legal, accountancy or financial advice as appropriate on your individual circumstances by a fully qualified Solicitor, Accountant or Financial Advisor/Mortgage Broker before you embark on any course of action.