It feels like employment law is changing every five minutes at the moment, and for many SMEs it can be difficult to know what you actually need to focus on.

Hannah Taylor, People Lead at Manchester-based FACT3 and employment law expert, offers some guidance….

Employment law is changing again – what should SMEs be doing now?

The Employment Rights Act 2025 is bringing in some of the biggest workplace changes we’ve seen in years. Some have already happened, with more coming throughout 2026 and into 2027.

The key thing for SMEs isn’t knowing every detail of the legislation. It’s understanding what these changes mean for your business, your managers and the decisions you make every day.

Haven’t some of the employment law changes already happened?

Yes, they have.

Back in April 2026 we saw a number of important changes come into force, including Statutory Sick Pay becoming payable from day one of sickness absence, the removal of the Lower Earnings Limit for SSP, and paternity and unpaid parental leave becoming day-one rights.

The Fair Work Agency was also created.

What I’m finding, though, is that most businesses aren’t struggling because they don’t know about the changes. They’re struggling because the changes haven’t fully filtered through into day-to-day practice.

It’s all very well updating a policy, but do your managers know what has changed? Does payroll? Are people applying the new rules consistently?

That’s usually where the risk sits.

What’s the next big change SMEs should be thinking about?

October is probably the next big milestone.

From 1^st October 2026, most Employment Tribunal claims will need to be brought within six months rather than three. That means potential issues can remain live for much longer.

Then from 30^th October, employers will be expected to take all reasonable steps to prevent sexual harassment, including harassment involving third parties such as customers, contractors and suppliers.

For me, this is where businesses need to think beyond policies.

If somebody raised a concern tomorrow, would managers know what to do? Do employees know how to report concerns? Has everyone had the right training? Are issues being dealt with consistently?

Those are the questions employers should be asking themselves now.

Why is everyone talking about January 2027?

Because this is the change that is likely to have the biggest impact on many SMEs.

From 1 January 2027, employees will gain protection from ordinary unfair dismissal after six months’ service instead of two years. At the same time, the cap on compensatory awards for unfair dismissal is due to be removed.

In simple terms, getting recruitment, onboarding and probation management right becomes even more important.

Too often I see probation reviews left until the last minute, or managers hoping issues will sort themselves out. By the time concerns are addressed, opportunities to support the employee or make informed decisions have already been missed.

The businesses that get ahead of this will be the ones having regular probation reviews, setting expectations early and dealing with issues when they arise, not six months down the line.

What else is coming?

There’s more on the horizon, including changes around flexible working, bereavement leave, protections for pregnant employees and new mothers, and rights linked to guaranteed hours and shift notice.

Not all of the detail has been finalised yet, so my advice isn’t to panic and start rewriting every policy in the business.

Instead, understand what’s coming, work out what will affect your workforce, and put together a sensible plan.

So what should SMEs be doing now?

Start with a simple health check.

Look at your contracts and policies but also look at what’s happening in reality. Are probation reviews actually taking place? Do managers feel confident handling difficult conversations? Would they know how to respond to a harassment complaint?

Employment law compliance isn’t just about having the right documents. It’s about making sure the people managing your teams know how to apply them.

The businesses that will navigate these changes successfully won’t necessarily be the ones with the thickest handbook. They’ll be the ones that equip their managers, deal with issues early and have good people practices in place.

At FACT3, we support SMEs as an extension of their business, helping them turn legal and HR requirements into practical solutions that work in the real world. As the employment law landscape continues to evolve, the goal isn’t to make things more complicated. It’s to help businesses make confident, fair and commercially sensible people decisions.

If you’d like to discuss how your business should approach the upcoming changes to employment law contact FACT3.