Preparing for new UK employment law changes

A Practical Guide for SMEs Without an HR Department

UK employment law is changing rapidly, and for small and medium-sized businesses, keeping up can feel daunting, especially without an internal HR team. But preparing early makes compliance simple, protects your business from risk, and gives your employees confidence that they are being treated fairly and professionally.

This blog will help you understand the biggest employment law changes coming in 2026 and 2027, what they actually mean in practical everyday terms, and how your business can prepare with minimal disruption. This guide is designed for business owners who want to do the right thing, support their teams, and avoid HR problems before they arise.

Why Employment Law Changes Matter—Especially for SMEs

Unlike larger organisations, SMEs often don’t have specialist HR teams monitoring legislative updates. That means changes can sneak up on you, leaving businesses exposed to:

• Tribunal claims
• Payroll errors
• Compliance breaches
• Employee grievances
• Operational disruption

The good news? Most employment law changes become easy to manage with the right preparation, clear communication with employees, and simple processes.

Key Employment Law Changes Coming in 2026–27

Arguably the most impactful incoming change is due in January 2027, affording employees with only 6 months service to bring claims for unfair and constructive dismissal. This is being reduced from the current 2-year window. This adds the importance for employers to actively manage probation periods and assess if the employee is suited for the role and company. It is vital that processes are in place, transparent and followed to the letter.

Below are further changes most relevant to SMEs. While legislation can continue to shift, these reforms represent the direction UK employment law is moving toward. Greater employee protections, more day-one rights, improved work-life balance, and stronger compliance expectations for employers.

Day-One Rights for Parental Leave and Paternity Leave Coming April 2026

One of the most significant changes is the introduction of day-one rights for statutory paternity leave – down from 26 weeks continuous employment, and, basic parental leave – down from 52 weeks continuous employment.

What this means:

• Any new parent, regardless of length of service will be entitled to leave.
• You must be prepared to handle parental leave at very short notice.
• Your policies and employment contracts must be updated.
• Line managers need training on eligibility, notice, and process.
• Workforce planning becomes more important, especially in small teams.

Practical steps to prepare:

• Update your parental leave and paternity leave policies.
• Train managers on how to manage requests and conversations.
• Plan cover arrangements—temporary redistribution of work, bank staff, or cross-training.
• Review your onboarding materials to ensure employees understand these rights clearly.

Statutory Sick Pay (SSP) From Day One and Removal of Lower Earnings Limit Coming April 2026

SSP reform is aimed at increasing financial support for sick employees. Two major changes; SSP will be payable from day one, not day four, and the lower earnings threshold will be removed, meaning all employees qualify.

This has a potential significant cost impact on all SMEs with employees.

SME preparation checklist:

• Train managers on absence conversations and return-to-work procedures
• Revisit and update your absence policies
• Update your payroll system
• Implement a simple, consistent system for recording absences
• Consider wellbeing initiatives to reduce short-term sickness

Many SME Directors are becoming increasingly worried about the cost implications this will have on their business. The approximate SSP cost for a full-time employee per day is £24 and by implementing a sickness absence management policy the costs can be controlled to limit any expenditure. An employee could be managed out in as few as 7 days of absence! For this, HR advice is essential.

Predictable Working Pattern Rights Strengthened

While the Day 1 right to request Flexible Working was introduced in 2024, the new regulations are expected to be strengthened and fully embedded in 2027. Employees, including agency workers and zero-hours staff, can request a predictable working pattern if their current pattern is “uncertain”.

What SMEs should do now:

• Review how you schedule shifts or rotas
• Decide what level of predictability you can reasonably offer
• Document your process for handling requests
• Train managers on giving fair, consistent decisions

For SMEs with fluctuating workloads, this area requires especially careful handling to avoid claims. In 2027 we will see further legislation around working patterns, with employees becoming entitled to payment if shifts are moved or cancelled with late notice, and the right for zero hours employees to have guaranteed hours.

Enhanced Redundancy Protections for Pregnant Employees and New Parents

Protections introduced in 2024 will expand further next year, giving longer periods of priority status during redundancy selection for pregnant employees & employees returning from maternity, adoption, or shared parental leave

What does this mean…

You will be required to offer any suitable alternative vacancy before selecting them for redundancy, if one exists. SMEs should start to get ready by:

• Training managers on fair selection criteria
• Creating job descriptions which can be used to evaluate “suitability” in the future

TUPE Changes for SMEs

TUPE rules (protecting employees when a business changes ownership or transfers services) have historically been complex for small businesses.

The legislation applies usually when a business is bought or sold, and employees transfer over to the new owner. Similarly, if a portion of a business, or a contract for a service e.g. Cleaning, moves to a new company, TUPE applies.

Upcoming reforms will simplify consultation rules for businesses with fewer than 50 employees, reduce administrative obligations, allow more direct consultation with employees rather than formal representatives

For SMEs, this is one of the most business-friendly changes on the horizon.

Strengthened Enforcement and Compliance Expectations

Government strategy indicates stronger enforcement of existing rules we use every day including right to work, holiday pay, working time rules, minimum wage.

SMEs often fall foul of rules simply due to gaps in documentation or inconsistent processes, not intentional wrongdoing.

How SMEs Can Prepare Without Becoming Overwhelmed

You don’t need complex frameworks or advanced HR systems to stay compliant. Here’s what does make a difference:

Update Your HR Documentation. 

This includes: contracts of employment, employee handbook, probation processes. Outdated documents are one of the most common causes of risk in SMEs. Train Managers, giving them the practical tools to manage their teams. Most HR problems arise because line managers avoid conversations, feel nervous about doing the “wrong thing”, don’t document decisions and inconsistently enforce policies.

Build simple, repeatable processes, starting with:

• Recording absence consistently
• Logging flexible working requests
• Documenting decisions
• Using a standard return-to-work form
• Following a clear disciplinary/performance procedure
• Consistency equals compliance

• Payroll changes
• Statutory increases
• Holiday year rollover
• Performance reviews
• Policy reviews
• Training refreshers
• This prevents reactive HR and builds confidence across the business.

Seek HR Support When Needed. This doesn’t mean outsourcing everything but having a consultant can save time, reduce risk, and protect your business and they can support in: 

• Updating document
• Provide advice on complex issues
• Train managers
• Handle investigations or restructures
• Conduct audits

Final Thoughts

Employment law changes can feel intimidating, especially if you’re juggling operations, costs, and people management without an internal HR team. But with the right preparation you reduce risk, build employee trust, strengthen your employer brand, create clarity for managers, avoid last-minute stress.

Confused by upcoming employment law changes? We help SMEs stay compliant without adding stress or cost.

Get in touch with the team at [email protected]