Having received Royal Assent at the end of 2025, the Act marks the most significant reform of UK employment law in a generation. While not all changes take effect immediately, the direction of travel is now clear. Over the next 18–24 months, SMEs will need to adapt how they recruit, manage and support their people.

What’s important to understand is that this legislation isn’t just aimed at large corporations. In many ways, SMEs will feel the impact more sharply. Because smaller teams often rely on flexible arrangements, informal processes and lean HR support.

One of the most notable changes is around unfair dismissal. Historically, employers have had a two-year window before employees gained the right to claim unfair dismissal. Under the new Act, that qualifying period will be reduced to six months. While this stops short of the originally proposed “day-one” right, it still represents a major shift. For SMEs, this means that decisions made during probation periods will need to be better documented and more defensible than ever before.

Flexible working is another area where the law is moving from option to expectation. Although employees already have the right to request flexible working from day one, the new legislation strengthens this further by tightening the grounds on which employers can refuse requests. In practice, this means businesses will need to show clearer, evidence-based reasons if they say no.

The reforms also significantly reshape how zero-hours and low-hours contracts can be used. New rights around predictable working patterns, notice of shift changes and compensation for cancelled shifts are designed to curb exploitative practices. However, for many SMEs, this will mean revisiting long-standing ways of staffing rotas.

Alongside this, the Act strengthens family-friendly rights. Perhaps the most important shift underpinning all of these changes is enforcement. The new framework gives regulators stronger powers and introduces tougher penalties for non-compliance. This means that even small oversights - outdated contracts, unclear policies, poorly handled dismissals - could have far greater consequences than they might have in the past.

If you’re unsure how these changes apply to your business, or you simply want reassurance that you’re on the right track, this is exactly what our HR Clinic is designed for. It’s a practical, supportive space where you can explore what the Employment Rights Act 2025 means for you, ask real questions, and leave with clear next steps, not legal jargon.