Who faces the greatest challenges from the Employment Rights Bill – and how can HR help?

Caroline Green speaks to HR and legal professionals to find out what their biggest concerns are – and how HR can help.

SMEs: High impact, low resources

For small and medium-sized enterprises (SMEs), even small legislative changes can create major disruption. With fewer internal resources, tight budgets and less specialist support, how will they cope with the Employment Rights Bill?

“There does need to be more consideration and practical support developed, particularly for SMEs who will face potential financial impact on some of these changes,” warns Amanda Jenkins, senior people leader. “Infrastructure in local authorities is going to be needed to support business growth.” 

Adrian Tomsa, a chief people officer working in education, highlights a further concern: “For smaller HR departments with less resources and system capability than larger corporates who may be able to absorb some of the strain, the Bill’s increased reporting requirements and action plans could increase workload and risk significantly.”

One of the major changes, extending unfair dismissal protection to day one of employment, will also force all organisations to overhaul probation procedures and tighten documentation, which some SMEs may not have in place already. Employment solicitor Charlotte Yallop notes: “For SMEs, the biggest legal risk is often lack of documentation. Tribunals decide on evidence, and without a paper trail, fairness is hard to prove.”

The importance of paper trails and education

HR professionals can support here, whether working inside an SME or consulting. Focusing on preparing core policy templates, guidance documents and delivering practical training to line managers that reinforces the need for a paper trail is key.  As Melanie Folkes-Mayers, an award-winning people and culture expert, notes, “The main areas that I’m concerned about are getting managers up to speed with the day-one rights and ensuring they are documenting employee interactions.” Encouraging line managers to be proactive in this, rather than relying on HR to police things, will be crucial for successful implementation.

Meanwhile HR consultants like Tracey Salisbury are already supporting clients with proactive education. “We’ve used emails, blogs, webinars and drop-in sessions to make the information accessible to businesses of all sizes and sectors, also factoring in personal preferences, learning styles, neurodiversity etc, with the added opportunity to then ask questions of us and share learning and ideas with the others taking part.”

Melanie is taking a training approach that could work well for organisations of any size. She explains: “Manager briefings and including updates in existing monthly meetings have been working well, as well as sharing changes with financial implications with the payroll team and adding them to the budget for the appropriate financial year.”

Retail, hospitality and fluid workforce sectors: Flexibility under pressure

Changes such as day-one rights, predictable working hours and shift cancellation compensation are designed to protect staff but could disrupt business models built on flexibility. Sectors with transient workforces that rely heavily on casual, seasonal or zero hours contracts, such as retail, hospitality, leisure and tourism, will likely feel the sharp end of these changes.

“As a sector we’ve struggled with the impact from the pandemic and Brexit, and now the Employment Rights Bill makes our recruitment strategy more complicated,” says one HR lead in retail who wanted to remain anonymous. While the Government’s proposed digital identity passport “may be a game-changer for right to work”, the sector is “going to struggle with day-one rights, cancelled shift compensation and zero hour contracts and I’m not sure what the answer is”.

For Nicola Lyons, a strategic HR lead working in the transport sector, both employers and customers will need to come to terms with the changes. She believes that the proposed 2027 legislative shift around zero hours contracts is “an important development which will have a big impact in some sectors. Morally this is the right thing to do. But it will have a wider impact on some ways of working and some large organisations and the customers on the opposite side will need to understand this.”

Nicola adds that the proposed compensation for cancelled shifts is also a good thing. “Once again there needs to be a greater level of protection in general for workers as I believe that in the UK the dial has shifted too much – for example in comparison to European countries. This will impact employers. However, it is important to work ethically and with respect.”

The need to strike a balance

Applying the new rules won’t be straightforward. Adrian agrees reform is needed but urges caution: “The challenge for me with the Bill is how to cement the good practice and negate the opportunities for exploitation, while allowing businesses and employees to navigate the ever-changing economic landscape. For instance, legislation around zero hours contracts could have unintended consequences. While there needs to be a crackdown on their exploitation, in some circumstances such contracts can be beneficial to both the employee and employer due to the flexibility they provide.”

Charlotte agrees that it will be challenging for those whose workforce models depend on agility and highlights the need for “watertight contractual terms and transparent scheduling practices” to navigate these stormy waters.

HR’s role will be to help these employers stay compliant without losing operational flexibility. That means:

• advising senior leaders on strategic recruitment and talent management models, including options such as a shift towards a more permanent staff structure with a matrix approach to manage seasonal workload fluctuations;
• reviewing and updating policies and employment contracts to ensure watertight risk management and compliance;
• mapping where predictable hours claims could arise and developing new strategies for recruitment; and
• upskilling line managers in everything from probation processes to shift scheduling.

Unionised and public sector employers: Structural complexity

Unionised sectors may not necessarily face resource gaps, but change won’t be easy. Renegotiating collective agreements, consulting unions and updating longstanding procedures will take time and diplomacy. Nicola is broadly supportive of new protections. “I think increased protection from dismissal during industrial action represents a fair change,” she says. However, she’s cautious about some strike rule amendments: “Reducing strike notice to 10 days puts more pressure on employers.”

Charlotte also warns, “Unionised employers will need to revisit collective agreements and redundancy procedures. What’s compliant today may not be tomorrow.” And Amanda underscores the need for early action. “Planning and preparing for change through transparent communication and regular engagement with our staff and trade union colleagues is key.”

This communication has been particularly important for those working in Wales. As Amanda explains: “In the public sector in Wales, we are lucky to already have a social partnership expectation in our law, so our systems and processes for consultation, involvement and participation are pretty strong, something I think the Bill aims to replicate across the UK. Practically this involves partnership forums, two-way communication and direct involvement from our labour resource in planning and decision-making.”

Adrian adds: “The reintroduction of a School Support Staff Negotiating Body is interesting. As a trust we follow the national pay scales for most roles, so on paper it would have little impact. However, I believe one of the things holding back the sector is the rigidity of reward practices, and attempts by some to provide flexibility to employees have been blocked. While I am not suggesting I know the answer, further tightening and limiting the options for trusts (if that indeed is where the proposal ends up) in my opinion is unlikely to impact the current recruitment and retention crisis in a positive way.”

What can HR do now to prepare?

Across all sectors, Charlotte stresses that the focus should be on “preparation, not panic. Map your risk areas now, update contracts and policies, and train line managers before the law takes effect.”

That training must be practical, relevant and phased. Tracey’s team has rolled out “bitesize sessions that give an overview of the Bill, followed by further bitesize training on performance management, appraisals and absence management”. This builds confidence where it matters most – among frontline managers responsible for day-to-day implementation.

With significant portions of the workforce at risk of missing the message entirely (especially in SMEs and casual employment sectors), HR has a wider duty. As Tracey puts it, “Change can be difficult for any organisation to navigate, and in a case like this where the changes are significant it is essential that a way is found to communicate to all businesses, including those that may not be aware of the changes (and therefore not compliant).”

HR can lead the way, through training, education and ensuring appropriate attention is paid and risks are managed, so that organisations are ready for what is coming.