Don't get caught out by employment law change

Over the next year, SMEs will face a generational shift in employment law.

From April, both statutory sick pay and unpaid parental leave become day one rights, as does paternity leave eligibility.

Then, from January 1, the change that has grabbed the most headlines comes into force; workers can claim they have been unfairly dismissed after just six months in a job – compared to the current two-year minimum – and possibly without a compensation ceiling.

For any business, these changes matter.

However, for an SME, where teams and bank balances are smaller, the impact could be seismic.

Understandably, many entrepreneurs are anxious.

What if you hire the wrong person? What if you don’t have someone available to do the job?

Will it be easier for staff to take the business to a tribunal?

I've spent decades in HR, providing in-house expertise to major organisations including Renault and Toshiba.

Since 2010, I’ve operated Outsourced HR, working exclusively with North East SMEs.

What has surprised me is how many organisations aren’t aware of how consequential these changes could be.

Take the changes to unfair dismissal.

The eligibility period has changed but the biggest impact could be if an unfair dismissal claim is upheld.

Compensation is currently capped at 52 weeks’ gross pay – up to a maximum of £118,223.

That is vanishing.

Considering so many SMEs are already feeling the pinch, that’s a potential hammer blow.

Leave eligibility is also widening, which could dent smaller teams.

For instance, 15 weeks before the due date, new fathers must have worked somewhere for 26 weeks to qualify for paternity leave.

However, two weeks’ unpaid paternity leave will now be a day one right, as will parental leave rights.

The law presently allows parents with one year of service to take up to 18 weeks’ unpaid leave for a child aged under 18 – up to four weeks each year.

But, from April 6 – much like the paternity change – that’s a day one right.

And this is just the start.

Government reforms under the Employment Rights Act 2025 introduce the new Fair Work Agency, consolidating enforcement powers for minimum wage and labour standards.

Some employers are already acting, though. As are we.

At Outsourced HR, we've launched practical, manager-focused HR training to help SMEs prepare.

They want to know what they can do on a Thursday morning if someone unexpectedly raises a grievance, or if the new hire reveals in his induction that his partner may give birth this weekend.

This isn’t scaremongering. It is a wake-up call for businesses to act now.

Update documents. Train managers.

And don't get caught out.

Sasha Warr is founder of Darlington-based Outsourced HR

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