Employment Rights Act 2025: What SMEs Need to Do Now
If you run a UK SME, preparing for the Employment Rights Act 2025 now needs to move out of the policy folder and into the way your business actually works. The next significant changes arrive in October 2026, followed quickly by the new six-month unfair dismissal qualifying period in January 2027. The businesses that will find this easiest are the ones using the next few months to look at manager decisions, probation, record keeping and harassment risk, rather than trying to rewrite every HR document at once.
A policy can be amended in an afternoon. Changing the way 15 managers handle performance conversations, respond when someone raises a concern, document decisions and manage a new starter takes longer.
For a business with 25 to 200 people, that is where the Employment Rights Act 2025 starts to become very real.
What has already changed under the Employment Rights Act 2025?
Some of the Employment Rights Act 2025 is already in force, which is worth checking before focusing on October.
The Act received Royal Assent on 18 December 2025. During 2026, implementation has been phased rather than introduced on a single date. April brought several changes that should already be reflected in your day-to-day processes, including Statutory Sick Pay from the first qualifying day of sickness, the removal of the Lower Earnings Limit for SSP, day-one paternity and unpaid parental leave rights and the establishment of the Fair Work Agency.
That makes August a useful point to check what actually happened inside your business.
Did your handbook get updated, but nobody told managers?
Does your payroll process reflect the SSP changes?
Would a manager dealing with a new starter asking about parental leave give the right answer without checking three different documents?
Those are small questions, but they tell you far more about readiness than whether the latest policy template is sitting in SharePoint.
The next wave will test the same thing.
What are the October 2026 employment law changes for UK employers?
There are two October dates we think SMEs should have clearly marked.
From 1 October 2026, the time limit for bringing most employment tribunal claims increases from three months to six months. For breach of employment contract claims in Scotland, the change is currently scheduled for 9 November 2026.
Then, from 30 October 2026, several further measures take effect. Two of the most significant for many SMEs relate to workplace harassment.
Employers will need to take all reasonable steps to prevent sexual harassment of employees. The existing preventative duty requires reasonable steps. The wording changes deliberately raise that standard. Employers will also have an obligation not to permit harassment of employees by third parties, including people such as customers, clients or suppliers.
There are also trade union reforms from 30 October, including a new duty to inform workers about their right to join a trade union and changes to union access and representative rights. The detailed requirements around the written statement informing workers of their right to join a union are being set through secondary legislation, with further guidance expected.
We would not treat those as three isolated legal updates.
For most SMEs they create three practical questions:
1. Can you evidence why an employment decision was made six months later?
2. Can you show what you have actually done to prevent harassment?
3. Do managers know what has changed, rather than relying on HR to catch every issue after it happens?
That is the work to focus on now.
Why does the six-month tribunal time limit matter more than it sounds?
A longer claim window changes the practical value of your records.
From 1 October 2026, most employment tribunal claims will have a six-month time limit rather than three months.
Six months is quite a long time inside a growing business.
The manager who handled the issue may have moved roles. Someone involved may have left. Slack messages may be difficult to find. The founder who remembers exactly why something happened today may remember the broad picture in February, but probably not every conversation.
That is why we would use the October change as a reason to look at documentation rather than simply telling managers that tribunal deadlines are longer.
Good records do not need to mean pages of formal notes after every conversation.
They do need to make it possible to answer:
● What happened?
● What had the employee been told?
● What information did the manager use?
● What options were considered?
● What was agreed?
● When was it reviewed?
● Why was the eventual decision made?
That discipline becomes even more useful when the unfair dismissal qualifying period changes in January.
What does the October 2026 harassment duty actually require employers to do?
The important word is not policy. It is prevent.
From 30 October 2026, employers will be required to take all reasonable steps to prevent sexual harassment. Employers will also face a separate obligation concerning third-party harassment.
That should change the question you ask internally.
Not: Do we have a harassment policy?
But: Where could harassment realistically happen in our business, and what have we done about those particular risks?
For one business, the answer might involve client entertainment. For another, it may be junior employees working late with senior colleagues. For another, it could be customer-facing teams, WhatsApp groups, work travel, conferences, alcohol at events or contractors regularly spending time with employees.
The risk profile is not the same in every company, which is precisely why copying a policy from somewhere else is not enough.
A sensible preparation exercise is to map the situations in which your people interact with colleagues and third parties, then ask what prevention looks like in each one.
If employees regularly work at client sites, for example, does your risk assessment cover client behaviour?
If junior employees attend evening events with customers, have managers been told what they are expected to do if something happens?
If someone raises a concern informally, does the manager understand that telling them to speak to HR themselves may not be enough?
The point is not to create paperwork for every possible scenario. It is to be able to show that you thought about the risks in your business and acted on them.
Case study: what Allay (UK) Ltd v Gehlen tells us about old training
A case we think is particularly useful here is Allay (UK) Ltd v Mr S Gehlen, UKEAT/0031/20/AT, decided by the Employment Appeal Tribunal in 2021.
The case concerned race harassment, rather than the new sexual harassment duty, so it is important not to pretend it decided the October 2026 rules. What makes it relevant is what the tribunal said about preventative training.
Allay had equality and harassment policies. Employees had also received equality, diversity, bullying and harassment training. But that training had taken place several years before the conduct at issue. The tribunal found that racist comments had been made regularly and that managers who became aware of what was happening did not respond properly.
The Employment Appeal Tribunal upheld the finding that the employer could not rely on the statutory “all reasonable steps” defence. The earlier training had become stale and refreshing it would have been a reasonable further step.
There is something very practical in that.
Training is not evidence of prevention simply because you can produce an attendance sheet.
The more useful questions are:
● Can people remember it?
● Do managers know what to do?
● Has the risk changed since the training was delivered?
● Has anything happened since that should have led you to refresh the approach?
For SMEs reviewing sexual harassment training before October, we would start there.
Case study: what the McDonald’s EHRC agreement shows about prevention
The Equality and Human Rights Commission’s work with McDonald’s gives another useful real-world example because it shows how wide prevention can become when regulators look at the way an organisation actually operates.
McDonald’s Restaurants Limited originally signed a legal agreement with the EHRC in February 2023 following concerns about the handling of sexual harassment complaints in UK restaurants. In November 2025, the EHRC announced that the agreement had been extended and its action plan strengthened following further serious allegations.
The strengthened measures were not limited to changing the harassment policy.
They included a safeguarding policy, external safeguarding expertise, an external audit of the complaints-handling unit, arrangements for complaints against managers to be investigated outside the restaurant, refreshed manager training, stronger risk assessments, quarterly staff surveys and clearer routes for people to report concerns.
McDonald’s is obviously a very different organisation from a 70-person founder-led business.
The principle still travels.
Prevention is a system.
It is the policy, but it is also who receives a complaint, what happens when the complaint concerns that person, what managers understand, what risks you have identified, how employees speak up and whether you learn from previous concerns.
For an SME, the system can be much simpler.
It still needs to exist.
Why should SMEs review probation before January 2027?
The change we would not leave until December is unfair dismissal.
From 1 January 2027, the qualifying period for ordinary unfair dismissal falls from two years to six months. The statutory cap on compensatory awards for unfair dismissal will also be removed.
Employees who already have six months' continuous service when the change takes effect will come within the new qualifying period. That means people employed from around July 2026 onwards may have ordinary unfair dismissal protection by January. GOV.UK has specifically encouraged employers to prepare now because existing employees will be affected, not only people hired after the new rules begin.
We think that changes the purpose of probation for a lot of smaller businesses.
Probation has often become a date in the diary.
Three months pass.
Everyone is busy.
The review moves.
Five months arrive and somebody finally says the role is not working.
That becomes a much less comfortable pattern when the ordinary unfair dismissal qualifying point is six months.
A better process starts much earlier:
● Define what good performance looks like when the person joins
● Give the manager clear expectations for the first weeks
● Have an early check-in rather than waiting for the formal probation meeting
● Raise performance concerns when they first become clear
● Give the employee a fair opportunity to respond and improve
● Record what was discussed
● Make decisions before deadlines make the decision for you
This is not about making every new starter relationship more formal.
Quite the opposite.
Early, clear conversations tend to prevent the sudden formal process that happens when everyone has avoided the issue for four months.
How should SMEs prepare for the Employment Rights Act 2025?
We would separate the work into four areas: people, process, documents and evidence.
If you only review documents, you will miss most of the operational risk.
1. Check what changed in April actually made it into practice
Start with the reforms already in force.
Check SSP, family leave, payroll instructions, manager guidance and any employee-facing information that should already have changed.
Do not assume that because HR knows the answer the organisation knows the answer.
2. Map your harassment risks before changing the policy
Look at how your people actually work.
● Client and customer interaction
● Work events
● Alcohol
● Travel
● Messaging platforms
● Home working
● Contractors
● Junior or vulnerable employees
● Power imbalances
● Lone working
● Complaints involving managers
Then decide what reasonable preventative action looks like for each material risk.
A generic risk assessment that says “sexual harassment: low” without explaining why will not tell you much.
3. Refresh manager training and test whether it landed
Do not measure training only by attendance.
Give managers scenarios.
Someone tells you a client made an inappropriate comment. What do you do next?
An employee says something happened but they do not want to make a formal complaint. What do you do?
The person accused is your biggest client contact. Does that change anything?
If managers cannot answer those questions, another policy update will not solve the problem.
4. Rebuild probation around six months, not around the old two-year assumption
Take every employee who joined from around July 2026 onwards and map their service date.
Then review:
● Probation end date
● Scheduled check-ins
● Outstanding concerns
● Performance objectives
● Manager notes
● Any agreed extension
Do not use that list as a dismissal exercise.
Use it to identify where conversations have not happened yet.
5. Review the quality of employment records
The six-month tribunal time limit makes good records more valuable.
Pick three recent employment decisions and try to reconstruct them from the file without asking the manager what happened.
If you cannot understand the reasoning, the file probably needs improvement.
6. Prepare for the October trade union information requirements
From 30 October, employers will have a new duty to give workers written information about their right to join a trade union. The detailed content and mechanics are being set by secondary legislation, and further guidance is expected.
You do not need to invent the final wording before government publishes it.
You can identify now:
● Who owns the update
● Where it will sit in onboarding
● Which template will need changing
● How you will communicate any wider workforce requirement
That means guidance can be implemented properly when it arrives rather than becoming an urgent job the day before commencement.
7. Identify 2027 issues without trying to solve every one now
Several further measures are scheduled for 2027, including guaranteed-hours rights and shift-notice protections, changes to collective redundancy consultation, strengthened flexible-working provisions, bereavement leave and additional protection for pregnant women and new mothers. Some of the detail is still being consulted on.
For now, identify where those reforms touch your business.
If you use zero-hours or low-hours arrangements heavily, that work belongs higher up your list.
If you do not use them at all, it does not.
That sounds obvious, but it is a much better use of time than trying to give every reform equal attention.
What should an Employment Rights Act 2025 checklist for employers include?
For most SMEs, this is the checklist we would use between now and January. The first priority is to confirm that the April 2026 changes are operating correctly, with HR or payroll checking the updated processes, payroll settings and manager guidance. Before October, HR and leadership should complete the workplace harassment risk assessment and retain a dated assessment together with a record of the actions taken. Manager harassment training should also be refreshed before 30 October, with HR and managers keeping a training record and practical guidance for managers. By the same date, HR and commercial leads should review third-party harassment risks and ensure appropriate controls are in place for clients, customers, events and contractors. HR should also prepare for the union-right information duty by identifying a clear owner and ensuring onboarding materials are ready for the final guidance.
Alongside these deadlines, managers and HR should audit probation arrangements for recent starters, including review dates, objectives, notes and any follow-up actions, and improve the documentation of people decisions so there is a clear record of decisions and the reasoning behind them. Leadership and HR should review the organisation’s exposure for 2027 during Q4 2026 and produce a prioritised list of relevant reforms. Finally, HR should set a quarterly legal-content review date, with a named owner and a clear review calendar.
The temptation with legislation this size is to create a very long project plan.
We would rather see nine things properly owned than 40 things sitting in a spreadsheet with nobody quite sure what “done” means.
What should small businesses avoid doing?
Three things to avoid are waiting until every last regulation has been published; updating every policy now and assuming the job is finished; and turning the whole exercise into a legal process rather than an operational one.
Some details are still being consulted on, and the government has been clear that future dates may change. That does not stop you strengthening probation, reviewing harassment risk, improving manager capability or checking that April's reforms are already working.
October's harassment changes are the clearest example of why that does not work. The question will increasingly be what you actually did.
SMEs have an advantage here. You are often close enough to the business to change behaviour quickly.
A founder can sit down with eight managers and explain what needs to change.
A People lead can review every current probation case.
A leadership team can identify which client relationships create third-party harassment exposure.
You do not need a huge compliance programme.
You do need someone to own it.
How should SMEs prepare when some Employment Rights Act details are still changing?
Prepare for what is known and create space for what is not.
We think that distinction matters.
The latest government timetable confirms the six-month tribunal claim period from 1 October, the harassment and trade union measures scheduled for 30 October and the six-month unfair dismissal qualifying period from January 2027. It also makes clear that other measures remain subject to further consultation and parliamentary process.
So build the foundations now.
For something like guaranteed hours, where regulations will determine important operational detail, understand your workforce and current working patterns rather than trying to write the final policy.
For harassment, where the direction and October date are much clearer, move now.
For probation, do not wait. People you employ today will be affected by the January change.
That is the balance.
Not panic, and not wait and see.
Know what is settled, know what still needs confirming and give every item an owner.
How JourneyHR can help
The Employment Rights Act 2025 touches contracts, policies, payroll, management, performance, recruitment, workplace culture and employee relations. For a smaller organisation, the difficult part is often deciding which of those deserves attention first.
We work with founder-led and growing businesses to turn employment law changes into a practical plan for the organisation you actually have. That can mean an Employment Law Compliance review, checking contracts and policies, reviewing probation and performance processes, assessing harassment risk or helping managers understand what will change in the conversations they are responsible for.
You may already have most of the right things in place.
Sometimes the useful piece of work is simply finding the gaps before October and January arrive.
Get in touch: JourneyHR contact page or email enquiries@journeyhr.com.
For the latest official implementation guidance: Acas Employment Rights Act 2025 guidance
Final thought
The Employment Rights Act 2025 is a large piece of legislation. Your preparation does not have to feel equally large.
We would start with the moments where somebody in your business has to make a decision: a manager dealing with a concern, a new starter who is struggling, someone raising harassment, an employee taking leave or a founder considering a change to somebody's employment.
Get those moments working properly first.
The policy tends to follow.
FAQs
What should SMEs do first to prepare for the Employment Rights Act 2025?
Start by checking that the April 2026 reforms are already reflected in payroll and manager processes, then focus on the next two operational risks: the October harassment duties and the January 2027 unfair dismissal change. Review recent starters, probation dates, manager training and harassment risks before spending time rewriting every policy. The government is introducing the Act in phases, so preparation should be phased too.
What Employment Rights Act 2025 changes happen in October 2026?
From 1 October 2026, the time limit for bringing most employment tribunal claims increases from three months to six months. From 30 October, employers will need to take all reasonable steps to prevent sexual harassment, new third-party harassment obligations take effect and several trade union reforms begin, including a duty to inform workers about their right to join a union.
Does unfair dismissal become a day-one right under the Employment Rights Act 2025?
No. The final Act does not introduce ordinary unfair dismissal protection from day one. From 1 January 2027, the qualifying period falls from two years to six months. Employees who already have six months' continuous service at that point will come within the new qualifying period, so employers should review probation and early performance processes now rather than waiting for January.
Do small employers need to prepare for the new sexual harassment duty?
Yes. The October 2026 preventative duty is not limited to large employers. Businesses should identify their actual harassment risks, including risks involving clients, customers and other third parties, then decide what preventative measures are reasonable for their circumstances. Policies and training matter, but evidence that risks were assessed, managers understood their responsibilities and action was taken will be important too.
Should employers update their policies now if some of the Employment Rights Act details are still being consulted on?
Update what is already known and avoid guessing at detail that has not been finalised. You can act now on probation, manager capability, harassment risk, records and the April 2026 changes. Where regulations are still required, identify the process, document or system that will need changing and assign an owner, then complete the wording when the final government guidance is published.
