I’ve run businesses for 25 years. These Employment Law changes are the biggest I’ve seen

Written by Jon Batchelor, Strategic Director at Farnworth Rose Solicitors

I’ve owned or led businesses for 25 years. I have also acted as a consultant to others at board level for much of that time. And I can say with confidence that the Employment Rights Act changes coming into effect throughout 2026 and 2027 are the most wide-reaching I’ve ever seen.

I sat down with Louise Payne and Micky Marsden from JaRo HR for a Live Q&A on LinkedIn about what’s changing and what employers should be doing about it. You can catch up on the recording here if you like:

Since first learning from them about the changes coming as part of the Act, I have come to understand how wide ranging and potentially risky the new reforms are for employers.

This isn’t intended to be political, it’s just an assessment of the possible risks as we see them and how businesses owners can mitigate them.

It’s harder than ever to run a business

Increases in minimum wage. Increases in national insurance. Rising costs across the board.

Businesses have had a lot of costs piled onto them lately.

The Employment Rights Act, to me, just feels like part of a bigger picture.

And that picture is one where it’s harder than ever to run a business.

It’s important that business leaders and owners are, firstly, aware of the changes and, secondly, best prepared for handling them.

However, like a lot of things in business, they aren’t a real-enough risk to reach the top of your to-do list. Until, of course, they do become real in a time consuming and potentially expensive way.

And many businesses are left wishing they’d mitigated the risk ahead of time instead trying to fix it afterwards.

New risks to be aware of as a business, why they matter and how to mitigate them

We covered a few of these in the live session, but here’s run through.

You must pay Statutory Sick Pay from Day 1 of every absence. As per our calculator, this could cost a 20-person business an additional £1,400-£2,800 in additional SSP costs, before considering lost productivity or sick cover.

The risk flagged in our session was that some businesses could see an increase in absence rates.

In the session and the checklist created with JaRo HR, ways businesses effected by this can manage it by:

• Reviewing sick pay policy and ensure it’s clear and sets the right expectations around absence reporting and track absence rates.

• Implementing mandatory face-to-face conversations on return to work.

• Train managers and supervisors on how to explain policies and procedures, and potential consequences of abusing the system

We created an SSP Calculator that you can use to get an idea of the extra costs you could be facing from 6th April 2026. Try it out here.

The cap on unfair dismissal claims has been removed. This means that a badly handled dismissal by you or one of your managers could result in six-figure claim.

But this can be managed by:

• Auditing your current contracts and ensuring your have the right protective clauses and definitions included.

• Review your dismissal processes and manager training in order to make sure everything is fair and fully documented.

• Check your insurance policies include employment tribunal claims, should they be needed.

From October 2026, the timeframe for an ex-employee to bring a tribunal claim is doubling from three months to six. To mitigate this risk, be sure to create an auditable paper trail of every employee exit (resignation letter (when applicable), exit interview, final payslip, return of property form), train your managers on the process and keep your records 12 months minimum.

Flexibility of zero-hours contracts is being removed. So, if you and your employees rely on flexibility or have casual workers, it’s necessary to make sure you have compliant contracts and policies in place.

And two-year’s service rights now apply from six months. Which means that the typical six month probation period takes on heightened importance and shouldn’t be taken lightly.

Whilst employers and employees can usually work out if the role is right for them well within six months, it’s now crucial that businesses have watertight documentation in place to avoid being exposed to unfair dismissal claims.

The underlying point that Louise stressed in our live session was that this comes into effect on 1st January 2027 but applies instantly to your employees who’ve been in the business six months already.

Watch the live session and get specialist advice

The session we ran with JaRo HR gave some strong generalised advice.

• How to structure probation reviews.

• Why return-to-work meetings matter.

• What "all reasonable steps" means for sexual harassment prevention.

I'd encourage anyone who employs people to watch it.

But what businesses are advised to do now is get their documentation right and ensure their team and managers are aware of what’s changing and why it’s important the business handles it properly.

Use contracts that reflect the new reality. Follow policies that are robust enough to protect you if things go wrong. Probation structures that give you enough time to make fair, documented decisions within the new six-month window.

And get expert advice where needed before it becomes a problem.

Use the tools we have put together with JaRo HR

If you want to start understanding your exposure, here's what's available:

1. The SSP Calculator helps you estimate the additional cost of Day 1 SSP for your business.

2. The Risk Mitigation Checklist walks through the five biggest risks and the steps to address each one.

3. The full recording of our live Q&A with JaRo HR covers all of this in more detail.

And if you want to talk any of this through, you can reach me or the team at Farnworth Rose on 01282 695400 or get in touch here.