Employment Rights Act 2025: April 2026 update

What UK SME employers need to know from April 2026 

The Employment Rights Act 2025 brings in some of the biggest changes to UK employment law in years, with several updates now in force from April 2026. 

While the headlines can feel overwhelming, most of these changes are manageable for SMEs. The real challenge is making sure your day-to-day processes, documentation and people management are up to standard. 

This guide covers the key areas you need to focus on now. 

What has changed from April 2026 

Several important updates are already live and affecting UK employers. These include: 

• Statutory sick pay from day one  

• Increased focus on compliance and record keeping  

• Greater enforcement through the Fair Work Agency  

• Wider expectations around employee rights  

Not all reforms are happening at once, but the direction is clear. Employers are expected to ensure consistency, keep good records and be able to evidence their actions. 

Why this matters for SMEs 

Most employment issues do not come from bad intent. They come from gaps in process or not dedicating sufficient time to managing people.  

Common problems include: 

• Conversations not being written down  

• Policies not being followed in practice  

• Poor tracking of hours or absence  

• Decisions made without clear reasoning  

The new rules increase the risk of these gaps being challenged. For SMEs, this is about tightening how you operate day to day. 

Statutory sick pay from day one 

Statutory sick pay is now payable from the first day of absence rather than day four. 

For most SMEs, the cost impact is relatively small. The bigger issue is making sure sickness is properly recorded and processed. 

You should focus on: 

• Recording all sickness accurately  

• Making sure payroll reflects this correctly  

• Spotting patterns of absence early  

If your process is informal, we recommend you formalise it. 

Record keeping and HR processes 

Good record keeping is now essential. If a decision is challenged, your records are what protect you. 

You should be able to evidence: 

• Hours worked  

• Sickness and holiday and all other forms of time off 

• Probation and performance discussions  

• The reasoning behind key decisions  

If your records are spread across emails and spreadsheets, this make it more challenging to evidence. Many SMEs will benefit from a simple HR system to centralise everything and offer employee self-service. 

Recruitment and probation matter more than ever 

Although some of the biggest changes are still to come, now is the time to improve how you hire and manage new starters. 

This means: 

• Taking more time to recruit the right person  

• Setting clear expectations from day one  

• Holding regular probation check-ins  

• Following up conversations in writing  

If someone is not right for the role, you need to deal with it early and clearly. 

Flexible working needs clear reasoning 

Going forward there will be a requirement to provide more detail and evidence around any refusal of flexible working requests  

f you refuse a request, you need to: 

• Provide a clear business reason  

• Show how it impacts operations  

• Evidence why it cannot work  

You cannot rely on vague responses. Documenting your reasoning is key. 

Third party harassment and workplace behaviour 

From October 2026 there will be a stronger focus on preventing third party harassment. 

Employers should be taking practical steps such as: 

• Providing regular training  

• Having clear reporting processes  

• Setting expectations with clients  

• Risk assessing events and environments  

It is not enough to have a policy. You need to show you are actively educated your workforce and set expectations with third parties. 

Minimum wage and working hours 

Many SMEs unintentionally breach minimum wage rules due to poor tracking of working hours. 

This often happens when: 

• Staff work extra time that is not recorded  

• Shifts change without being logged  

• Timekeeping is inconsistent  

To reduce risk: 

• Track hours accurately  

• Use payroll checks or alerts  

• Regularly review pay against time worked  

The Fair Work Agency 

The Fair Work Agency has been introduced to increase enforcement. 

They can: 

• Investigate complaints  

• Request records  

• Check compliance with pay and working time rules  

This means you need to have: 

• Clear records  

• Organised documentation  

• Confidence in your processes  

What should you do now 

You do not need to fix everything at once. Focus on the basics first. 

Start with: 

• Reviewing your HR processes  

• Improving how you record absence and performance  

• Introducing a simple HR system if needed  

• Tightening recruitment and probation  

• Training managers to document conversations  

• Writing down the reasoning behind decisions  

Small improvements here can make a big difference. 

Final thought 

These changes are about raising standards, not catching employers out. 

For SMEs, the message is simple. If you manage people well, communicate clearly and keep proper records, you will be in a strong position. 

The real risk is not doing the wrong thing. It is doing the right thing without being able to evidence it. 

Need support with the new employment law changes? 

If you are unsure how these changes apply to your business, or you want confidence that your processes are up to standard, we can help. 

At Hybrid Legal, we work closely with UK SMEs to make employment law practical and manageable. From reviewing your contracts and policies to helping you handle tricky people issues, our client partners and in-house employment experts are here to support you. 

Whether you need a quick sense check or ongoing support, get in touch with your client partner or speak to the team today.