With the first wave of the new Employment Rights Act coming in to force next month, and many SME leaders grappling with conflicting advice and expensive solutions, people management expert Charlotte Dean, founder and managing director of P3 People Management, offers advice for SME leaders.
“One of the most common concerns I hear from small business leaders is that preparing for the Employment Rights Act 2025 (ERA) will be expensive and disruptive. In most cases, it doesn’t need to be either and there is a genuine opportunity here to turn ERA compliance into building a stronger, more profitable business.
“Every people management challenge is also a business challenge, and the ERA is no different. Yes, there are compliance requirements, but there’s also a real opportunity here to refresh your policies, sharpen your processes, and build the kind of business where your people and your performance go hand in hand.
“For most of the SMEs we work with, the gap between where they are and where they need to be is much smaller than they’ve been led to believe. A business owner came to us recently having been quoted nearly £2,000 for entirely new ERA-compliant employment contracts. When my team reviewed what the business already had in place, just a few straightforward amendments were all that was needed.
“My advice is don’t try and tackle everything at once. Begin with an honest audit of where you currently stand. Look at your contracts, your employee handbook, and your absence records. Then ask whether your managers truly understand what’s changing, because even the best-written policy won’t protect you if the people applying it don’t know what’s expected.
“Further ERA changes are planned for October 2026 and throughout 2027, so the work you do now will continue to pay dividends. With the right support, the ERA is an opportunity to build practical HR solutions that help your people to thrive, and your business to grow.”
Charlotte and her team have developed a free ERA Readiness Tool, specifically designed to help small business leaders audit their current HR practices. They will then receive a personalised readiness score and a tailored action plan, so they can see clearly what to prioritise, manage their risk, and build manager confidence ahead of April.
What’s changing, and what does it mean for your business?
The Employment Rights Act 2025 has received Royal Assent. The first wave of changes takes effect in April 2026, and for SMEs, where small teams and the cost of getting things wrong are already facts of life, here are three areas that deserve your attention:
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Statutory Sick Pay from day one. The three-day waiting period is gone. From April, SSP applies from the first day of absence at 80% of usual earnings or the statutory rate, whichever is lower. If your sick pay policy still references a waiting period, this is one of the simpler changes to make, but you’ll also want your absence data in order so you can understand the real cost to your payroll.
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Day-one paternity and parental leave. Employees will no longer need a qualifying period to access these rights. For small finance teams, it’s worth thinking about cover planning and making sure your handbook reflects the new entitlements.
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The Fair Work Agency. A new enforcement body will have powers to investigate and pursue non-compliant employers. For businesses already operating under FCA oversight, an ERA action is the last thing you need. Getting the basics right is straightforward, and a far less costly route than enforcement.