Proposed Amendments to the Employment Rights Bill
The Bill, part of the government’s “Make Work Pay” agenda, is, we are told, aimed at enhancing worker protections. Below are the primary amendments tabled during its Committee Stage (completed January 16, 2025) and refined in recent weeks, based on parliamentary updates and statements from Deputy Prime Minister Angela Rayner on March 04, 2025:
- Paid Carer’s Leave: One week of paid leave for employees caring for those with long-term needs, with “caring” potentially becoming a protected characteristic under the Equality Act 2010.
- Kinship Care Leave: Up to 52 weeks of unpaid leave with job protection for kinship carers, such as special guardians.
- Right to Be Accompanied: Employees could bring a certified companion to disciplinary or grievance hearings.
- Workplace Violence Protections: Employers must assess and mitigate risks of violence and harassment, including gender-based issues, under updated health and safety laws.
- Zero-Hours Contract Reforms: Expanded protections for agency workers and others on zero-hours contracts, including notice of shifts and compensation for cancellations.
- Enhanced Sick Pay: Statutory Sick Pay (SSP) as a day-one right, with potential increases in payment levels still under consideration.
- Trade Union Empowerment: Unions gain workplace access rights, supported by a Fair Work Agency to enforce compliance.
- Bereavement Leave Expansion: Two weeks of paid leave for pregnancy loss, broadening existing provisions.
- Probation Period Adjustments: Day-one unfair dismissal rights replace the two-year qualifying period, with a possible lighter dismissal process for initial periods (3–9 months).
- Domestic Abuse Support: Mandatory policies for employers with five or more staff to protect workers affected by domestic abuse.
The Bill is in its Report Stage, with some proposals (e.g., a “right to switch off”) deferred to future codes of practice. You can find real-time updates, at bills.parliament.uk.
How These Changes Could Affect SMEs
SMEs, employing 61% of the UK private sector workforce (BEIS 2023), face unique challenges due to limited resources and narrower profit margins (often around 3–10% vs. 15–20% ). If passed, these amendments would reshape their financial, operational, and administrative landscape:
- Increased Costs: Payroll expenses would rise with paid carer’s leave, enhanced SSP, and bereavement leave. For a firm with 30 employees, boosting SSP could add £5,000–£15,000 annually (assuming 6.4 days absence per worker, CIPD 2023). Zero-hours reforms might increase labor costs by 5–10%, particularly in retail or hospitality, where 66% of such workers are in firms with fewer than 50 staff.
- Operational Challenges: Long-term kinship care leave (up to 52 weeks) and violence prevention measures could disrupt small teams. Replacement costs or training (£50–£200 per employee) may strain budgets, especially for micro-businesses with fewer than 10 staff.
- Administrative Burden: Formalized disciplinary processes, union oversight, and domestic abuse policies would require updates to HR practices. External support (in the region of £500–£1,000 per disciplinary case or £100–£300/hour for legal advice) could overwhelm firms without dedicated teams.
- Specific Impacts:
- Carer’s Leave: Covering absences in a small workforce could necessitate overtime or hires.
- Unfair Dismissal: Day-one rights might deter hiring, with legal defense costs (£8,000–£10,000 per claim) posing risks. Fewer employers will “take a risk” at appointment and the default position if one is unsure of a candidate will be not to appoint – bad for employers and potential employees who just need the chance to demonstrate their fit to the business.
- Compliance: Risk assessments and policies could cost £1,000–£10,000 annually for a medium-sized firm.
Strategic Considerations for SMEs
The government has promised consultations and potential exemptions for smaller firms, but details remain pending as of March 2025. To navigate these changes:
- Budget Proactively: Estimate labour cost increases and, where possible, build reserves.
- Update Policies: Revise HR processes and train staff ahead of deadlines.
- Leverage Support: Engage with local support networks and the Federation of Small Businesses (FSB) for tailored advice.
Conclusion
The Employment Rights Bill is supposed to bolster worker welfare, but they could test employer resilience, especially among SME’s and not-for-profit organisation. While offering protection, it risks reducing flexibility and increasing costs—key concerns for businesses with lean operations. As secondary legislation emerges in 2025, I’ll continue tracking developments to keep you informed. Stay prepared by balancing compliance with competitiveness, and consider how these shifts align with your long-term goals.
If you’re seeking personalised guidance to adapt to these changes, I invite you to contact me directly. As an experienced Employee-Management Consultant, I can assist you in navigating this evolving landscape, ensuring your SME remains compliant and thriving. Reach out today via the contact form for expert support tailored to your business needs.