Businesses today are having to navigate significant and ongoing changes to employment law, driven by the Labour government’s Plan to Make Work Pay and wider regulatory reforms.
Whilst larger employers generally have dedicated in-house HR teams responsible for keeping on top of employment law changes, things can be rather different for smaller owner-managed businesses. Employment issues and regulatory changes are often handled by a director, office manager or finance team, alongside their other responsibilities, making it harder to keep pace.
In this article, we explore five important employment law changes that SME owners and senior leaders should have on their radar this autumn. Whilst not every change will affect every business, there are some significant developments worth understanding and practical steps employers can take to prepare.
Contents:
- Longer time limits for Employment Tribunal claims
- Right to work checks now extend beyond traditional employees
- Stronger duties to prevent workplace harassment
- Changes to trade union rights and protections
- Major changes to unfair dismissal protections
1. Longer time limits for Employment Tribunal claims
In force since: 01 October 2026
What’s changed?
The time limit for bringing many Employment Tribunal claims increased from three months less one day to six months less one day. This generally applies to incidents occurring on or after 01 October 2026. Where a claim concerns a series of acts or omissions, the date of the latest incident will generally be used. Deadlines can vary depending on the claim and Acas Early Conciliation rules.
Why does this matter for SMEs?
Employment Tribunal claims can now be brought much later, making it harder for managers to recall events or locate important records, particularly in smaller businesses without a dedicated HR team or established processes.
What should SMEs do?
- Document important decisions as they happen: Keep detailed, dated records of disciplinary meetings, grievances and dismissals, including recording the reasons decisions were made.
- Retain supporting evidence: Preserve relevant documents, correspondence and other communications so they are available if a decision is subsequently challenged.
2. Right to work checks now extend beyond traditional employees
In force since: 01 October 2026
What’s changed?
Right to work checks have been extended beyond traditional employees to include individuals engaged under a worker’s contract, individual subcontractors and certain online matching services.
Businesses engaging people without permission to work in the UK could face significant financial penalties. Carrying out the required checks can provide a legal defence against these penalties.
Why does this matter for SMEs?
Many SMEs rely on freelancers, subcontractors and other self-employed individuals. Depending on the nature of these arrangements, businesses may now have additional responsibilities for checking their right to work in the UK.
What should SMEs do?
- Review existing arrangements: Identify whether the new requirements apply to any freelancers, workers or subcontractors you engage. Seek legal advice if you are unsure.
- Update onboarding procedures: Ensure the appropriate right to work checks are completed and recorded before individuals begin working.
- Avoid discrimination: Apply checks consistently and fairly, regardless of an individual’s nationality or background.
3. Stronger duties to prevent workplace harassment
Effective from: 30 October 2026
What’s changing?
Two changes are being introduced to strengthen protections against workplace harassment:
- Preventing sexual harassment: Employers will be required to take ‘all reasonable steps’ to prevent sexual harassment, rather than simply ‘reasonable steps’. It’s a small but significant change in wording.
- Third-party harassment: Employers have an obligation to take all reasonable steps to prevent third parties from harassing their employees in the course of employment. The new provision covers sexual harassment and harassment related to protected characteristics covered by the relevant Equality Act 2010 harassment provisions. Pregnancy and maternity, and marriage and civil partnership, are not included in that statutory harassment definition.
What amounts to ‘all reasonable steps’ depends on the size, resources and circumstances of the employer, as well as the risks within its workplace. There is no one-size-fits-all answer.
For example, hotels, pubs and restaurants may face greater risks when employees deal with customers late at night or where alcohol is involved. Professional practices may need to consider the risks associated with client entertaining, conferences or social events. Businesses whose employees work alone or visit customers may face a different set of risks.
Why does this matter for SMEs?
Having an anti-harassment policy alone is unlikely to be sufficient. Businesses will need to consider the specific risks their employees face, including when dealing with people outside the organisation, and take appropriate preventative measures.
What should SMEs do?
- Assess workplace risks: Identify where employees could experience harassment, particularly when dealing with customers, clients or other third parties.
- Review policies and training: Ensure harassment policies, reporting procedures and staff training reflect the new requirements.
- Prepare managers to respond: Make sure employees know how to report concerns and managers understand how to prevent and address incidents involving colleagues or third parties.
4. Changes to trade union rights and protections
Effective from: 30 October 2026
What’s changing?
Several reforms are being introduced, including strengthened rights of access for trade unions, changes to the recognition and derecognition process, new rights and protections for trade union representatives and protection against certain detriments connected with industrial action.
From 01 January 2027, employers will also be required to inform workers of their right to join a trade union.
Why does this matter for SMEs?
For many SMEs without a trade union presence, these changes may have little immediate impact. However, growing businesses and those operating in sectors where unions are more common should understand their new responsibilities.
What should SMEs do?
- Review existing arrangements: Ensure any trade union policies and procedures reflect the new requirements.
- Prepare for January: Update staff communications to inform workers of their right to join a trade union.
5. Major changes to unfair dismissal protections
Effective from: 01 January 2027
What’s changing?
At present, employees generally need two years’ continuous employment before acquiring ordinary unfair dismissal protection, although there are important exceptions where no qualifying period applies. From 01 January 2027, this will reduce to six months. The existing cap on compensation awarded for unfair dismissal will also be removed.
The new rules will apply to dismissals taking effect on or after 01 January 2027, including employees who joined before that date. Existing protections against discrimination, whistleblowing and certain automatically unfair dismissals will remain unchanged.
Why does this matter for SMEs?
Employers will have less time to assess an employee’s suitability and performance before they gain protection against ordinary unfair dismissal, making effective management during the first six months increasingly important.
What should SMEs do?
- Review probationary periods: Ensure they are appropriate under the new six-month qualifying period.
- Address issues early: Identify and document performance, capability or conduct concerns as they arise, following fair procedures.
- Review existing employee issues: Employers should take advice on the transitional arrangements for the new regime, particularly where employees will have accrued around six months’ service when the changes take effect.
Navigating the changing employment law landscape
Employment law is changing rapidly and, as the Labour government continues to roll out its Plan to Make Work Pay, employers can expect further reforms on the horizon.
Keeping on top of these developments can be challenging, particularly for businesses without an in-house HR team. At Scott Bailey, we help owner-managed businesses and SMEs navigate employment law changes and protect their interests.
Sometimes that means helping with a difficult employee issue when it arises. Just as often, it means helping a business put sensible documentation and procedures in place before there is a problem.
We can help businesses review their employment contracts and staff handbooks, update harassment and equal opportunities policies, assess the steps they should be taking to prevent harassment and review probationary, disciplinary and grievance procedures.
We can also advise when a particular employee issue arises, including performance and capability concerns, disciplinary matters, grievances, dismissals, Acas Early Conciliation and Employment Tribunal claims.
If you run an SME or owner-managed business in the New Forest, Hampshire or surrounding areas and are unsure whether your employment arrangements are ready for these changes, speak to our employment law team.
