Employment law is shifting more in the next two years than it has in the last two decades and we know many SMEs are feeling the pressure. When you’re running lean teams, managing tight budgets and juggling day-to-day operations, these changes can feel overwhelming.
This April will see a number of changes to the regulations, and Claire Butcher and Emma Thompson from HR specialist CE People have advice for SMEs who have to navigate the changes and protect their businesses and their employees.
The month will see the launch of the Fair Work Agency which will be responsible for enforcing minimum wage, holiday pay, agency worker rules and SSP. It will also investigate breaches, issue penalties and bring tribunal proceedings on behalf of workers, and consolidate several enforcement functions into one regulatory body.
Claire said: “April brings changes that are going to be significant for small companies and we want them to know they are not alone. If nothing else, this breakdown of what is happening, what it means to them and how to prepare without panic, will hopefully help, but where additional input is needed, our team is on hand.”
Day-one statutory sick pay
Statutory sick pay (SSP) becomes payable from the first day of absence and the lower earnings limit is removed, meaning all workers qualify.
Many SMEs currently see short, one-off sickness days that aren’t paid due to waiting days, but having to pay for these will create a noticeable cost increase, especially for small teams.
The new rules may increase short-term absence reporting, simply because those days will now be paid. A strong wellbeing strategy and clear absence management process will help maintain a healthy culture.
Emma Thompson said: “Most SMEs don’t experience long-term sickness issues very often, but they do see the odd day here and there. Paying for those days will have an impact, so it’s worth planning ahead.
“This is a great opportunity to double down on wellbeing – simple things like fruit bowls, hydration reminders or movement challenges can genuinely reduce absence.”
Day-one parental and paternity leave rights
Parental leave and paternity leave will become a day-one right, so SMEs may see new starters requesting leave immediately, which can affect onboarding and operational planning – especially in lean teams.
Claire Butcher said: “This is a positive step for families, but SMEs need to be ready. If you recruit based on immediate need, a new starter taking leave straightaway can be challenging. Clear recruitment planning and communication will help minimise disruption.”
Strengthened whistleblowing protections
Employees who speak up about sexual harassment will soon benefit from strengthened protections, ensuring they are better safeguarded from retaliation or unfair treatment.
Minimum wage increases
The new minimum wage levels will be:
- National Living Wage (21-plus) rises to £12.71
- 18-20 rate increases to £10.85
This is another significant payroll increase following the recent rise in National Insurance contributions. It also narrows the pay gap between junior and senior roles, which may require a broader pay review.
Emma said: “This is a big jump for SMEs, and it’s okay to acknowledge that. It’s important to plan ahead, not just for payroll, but for how this affects your pay structure overall. It’s also a good time to think creatively about non-financial benefits and smarter ways to reward your team.
“The rise compresses the gap between junior and senior roles, so it is worth reviewing pay progression, job evaluation, non-financial benefits and retention strategies.”
Right to Work checks
Right to Work checks remain one of the most important legal responsibilities for employers and the rules are tightening.
The Border Security, Asylum and Immigration Act 2025 received Royal Assent in December 2025, and a public consultation has now concluded with a revised Statutory Code expected soon.
Under the Immigration, Asylum and Nationality Act 2006, employers face:
- Up to £45,000 fines per illegal worker (first offence)
- Up to £60,000 for repeated offences
Business will need to review their Right to Work processes and ensure checks are carried out for every worker, regardless of nationality, and keep clear, secure records.
They need to prepare for expanded obligations once the implementation date is confirmed.
Claire said: “The requirements will soon extend to gig economy workers, casual staff and subcontractors. This means SMEs will need stronger processes, clear documentation and more consistent checks.
“The new Fair Work Agency, launching in April, will take responsibility for policing compliance, meaning enforcement will become more centralised and more robust.”
From October 2026, the tribunal claims time limit will change. With the time limit set to double from three to six months for employees to bring claims, SMEs will need clear documentation, consistent processes and stronger record keeping.
Claire said: “Longer time limits mean SMEs need watertight processes. Documentation and consistency will protect you. We may also see more settlement agreements simply because tribunal waiting times will get even longer.”
The October changes also include:
- Collective redundancy protective award increase, with the maximum protective award doubling from 90 to 180 days’ pay
- Voluntary menopause and gender pay gap action plans for organisations with 250-plus employees, but SMEs may choose to adopt early as part of inclusive practice.
Emma Thompson said: “There’s a lot to digest in all these rule changes, but it is important that businesses take action now to make sure they are compliant and ensure their culture remains strong.
“It means contracts, onboarding and manager training will all need updating and there will be higher compliance expectations especially around harassment, flexible working and record keeping.
“These changes can feel like a lot but businesses don’t have to face them alone. Whether you need outsourced HR support, or your internal teams need additional input, CE People is here to help our clients stay compliant while building a workplace where people want to stay.”
For more advice, contact CE People on 01604 805634, email enquiries@ce-people.co.uk or visit our website here.
