The government has announced amendments to the Employment Rights Bill, aiming to improve workers’ rights while supporting economic growth. The bill introduces significant changes that will affect SMEs, particularly around zero-hours contracts, statutory sick pay, and employment protections.
“These changes represent a shift towards greater job security and fairness in the workplace. While they bring benefits for employees, SMEs must be proactive in assessing how they implement these reforms without negatively impacting business operations,” says Paul Simpson, Head of HR, Beavis Morgan group.
Key Changes and Their Impact on SMEs
- Zero-Hours Contracts & Agency Workers – Workers will have the right to request contracts that reflect their actual working hours. While this brings stability for employees, SMEs relying on flexible work arrangements will need to reassess workforce planning.
- Statutory Sick Pay (SSP) Reforms – The bill proposes extending SSP to all workers, including those on lower wages. It will also apply from day one of sickness rather than the current waiting period. SMEs should review payroll and budget forecasts to manage these increased costs.
- Stronger Protection Against Unfair Dismissal – The bill introduces day-one protections against unfair dismissal, impacting how SMEs manage probation periods and terminations. A nine-month statutory probation period will provide some flexibility, but employers must ensure they have structured performance management processes in place.
- Collective Redundancy Rules – Employers making collective redundancies will now face stricter consultation obligations, with potential financial penalties for non-compliance. Businesses with fluctuating workforce demands will need to review their redundancy procedures carefully.
- Umbrella Company Regulation – New regulations will ensure that temporary workers receive comparable rights and protections to directly employed staff. This could increase compliance costs for businesses using umbrella companies.
What SMEs Should Do Next
- Review Employment Contracts: Ensure agreements align with the new legal standards.
- Update HR & Payroll Systems: Prepare for new sick pay entitlements and probationary period changes.
- Engage with Legal & HR Advisers: Ensure a smooth transition to the new regulations.
- Plan for Compliance Costs: Businesses should factor these changes into cash flow and workforce planning.
Paul Simpson adds: “The Employment Rights Bill reinforces best practices that many responsible businesses already follow. However, for SMEs, compliance costs and operational adjustments must be carefully managed. Now is the time to assess policies and ensure readiness for these changes.”
The Public Committee is reconvening on 11 March, so further developments are expected. We will continue to monitor these changes and provide insights on their impact.
At Beavis Morgan, we are here to support SMEs through these evolving employment regulations. If you need guidance on compliance, workforce planning, or HR strategies, contact Paul Simpson. Our BM Connect team is also available to assist with integrated, flexible and affordable payroll solutions. Contact Alex Nicholl, BM Connect Payroll Director, for advice and assistance.