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Avoid common UK employment law mistakes that lead to costly disputes. A practical guide for SMEs covering contracts, holiday pay, SSP changes, flexible working, probation, redundancy rules and 2026 updates.
Small and medium employers are used to juggling checklists. Payroll, recruitment, line-manager training, etc. But 2026 is different: the rules aren’t just changing, and the way decisions are judged is shifting. That makes everyday choices (flexible-working replies, sickness pay, probation calls) more likely to land a business in trouble, even when managers act in good faith. Below are the practical changes UK SMEs should prioritise now, what they mean in everyday terms, and a short checklist you can action this week. Quick summary From 6 April 2026 , some family and sick-pay rights become day-one entitlements. That affects paternity, unpaid parental leave and statutory sick pay. Statutory Sick Pay (SSP) waiting days are being removed and entitlement rules change — payroll must be ready. Collective redundancy penalties increase: protective awards can double, so consult properly or risk larger fines. These changes are rolling in across 2026; employers should focus on process, documentation and manager training , not just policy wording. What’s changing (and why it matters) 1. Day-one family rights — paternity & unpaid parental leave From April 2026, employees can give notice for statutory paternity leave and unpaid parental leave from their first day of employment. That removes the old 26-week / 12-month service tests and brings more people into scope immediately, which is good for families, but means employers must be ready to process, record and respond to requests from day one. Practical impact: update your parental-leave procedure, train whoever handles returns and leave, and make sure your contractual templates and employee handbook reflect the new eligibility rules. 2. Statutory Sick Pay: waiting days gone, wider entitlement The current three waiting-day rule for SSP is being removed from 6 April 2026, and entitlement rules are being widened (for example, the lower earnings threshold is being removed). SSP rates are also updated for 2026–27. Payroll teams need to be able to pay SSP from day one and to calculate linked periods correctly. Practical impact: talk to payroll/your software provider now. Test scenarios: short absences, linked periods, low-paid staff. Confirm how your payroll will apply the new SSP rules from 6 April. 3. Redundancy and collective consultation: higher protective awards The maximum protective award for failing to consult properly in a collective redundancy situation will increase (reports indicate a doubling to 180 days’ pay). That makes getting consultation, records and redundancy planning right far more important. Practical impact: audit your redundancy playbook, update consultation steps, and ensure you have a clear paper trail showing how decisions were reached and who was consulted. 4. The broader shift: process matters more than ever Across the Employment Rights Act and related reforms, a repeated theme is that tribunals and regulators are looking for defensible processes: consistent handling, documented reasoning and fair communication. That means the smallest missing note in a file, an informal chat that wasn’t recorded, or inconsistent treatment of similar cases can be costly. Practical impact: build manager scripts, standard templates for decisions, and a simple central filing system for HR notes. Train managers to log reasoning, not just outcomes. What SMEs should do this week (practical checklist) Immediate (this week) Talk to payroll: confirm SSP changes will be applied from 6 April 2026 and test a Day-1 absence scenario. Update your parental-leave and paternity-leave procedure to reflect day-one entitlement. Put a ‘how to’ note in the employee handbook and your manager guidance. Identify who handles redundancy consultation and map the steps — confirm who will lead and document each stage. Short term (2–4 weeks) Run a 30-minute manager briefing: how to record decision reasoning, where to save notes, how to respond to flexible-working and SSP queries. (Make it practical, use examples.) Review and update contract templates and staff handbook sections that reference qualifying periods, waiting days or eligibility tests. If you have uncertainties Keep a short list of questions and seek a 15-minute HR/ employment-law clinic rather than overhauling everything at once. Many small fixes (clear wording, a consistent file note template, payroll checks) remove most risk. FAQs Q: Do I have to update every contract before 6 April? A: Not always. Prioritise payroll and policies for SSP and parental rights, and ensure your core contract wording doesn’t contradict the new rules. Plan a phased update for full contract refresh. Q: What happens if I get it wrong? A: For individual disputes, you might face claims (and back-pay for SSP). For collective redundancy failures, protective awards can be materially higher from April 2026, so weak process can be costly. Q: Should I panic and rewrite every policy now? A: No. Start with the high-risk items: payroll SSP, parental-leave eligibility, and redundancy consultation steps. Fix the data and the decision flow; wording and full rewrites can follow on a schedule. Want a hand? If you’d rather not puzzle through the detail alone, we’re running a short, practical webinar that covers these exact points and gives you an immediate checklist to act on. Learn more about it here.
Practical insights to improve offer acceptance and avoid costly delays
If you’ve recruited over the last year or two and found yourself thinking “it never used to be this difficult”, you’re not alone. Between us, Emma and I have spent over three decades working alongside SME business owners, and one thing is clear – recruitment hasn’t suddenly broken, but the way people find, choose and commit to jobs has changed significantly. What used to work on autopilot now needs thought, planning and consistency. The market has shifted – and candidates know it Good candidates are more selective than ever. They’re not just looking at the job, they’re looking at the business behind it. How clear the role is, how quickly decisions are made, and how the opportunity compares to what else is out there all play a part. For SMEs, this can feel uncomfortable. Larger businesses may have brand recognition or bigger budgets, but SMEs often underestimate their own strengths – culture, flexibility, visibility and access to decision-makers – which are hugely attractive when positioned properly. Recruitment works best when you have a river of talent, not a tap One of the biggest challenges we see is businesses only recruiting when they have to. A resignation lands, pressure builds, and recruitment becomes reactive. The businesses that recruit most successfully tend to do the opposite. They are always keeping an eye on the market, always having conversations, and always building a small but steady river of potential talent – even when there isn’t an immediate vacancy. This doesn’t mean constant advertising. It means being visible, knowing who you want to attract, and having a plan for how you’ll engage people when the timing is right. Planning and competitor awareness make a real difference SMEs don’t need to outspend their competitors, but they do need to understand them. Knowing what similar businesses are offering, how roles are being positioned, and where salaries and benefits sit gives you clarity and confidence when you do go to market. It also helps avoid wasted time chasing candidates who were never likely to move. Clear planning upfront – role scope, priorities, budget and decision-making timescales – saves weeks later in the process. A few practical ways SMEs can attract better candidates From our experience, a handful of small adjustments can make a big difference. Being clear about who you want to attract and why they’d choose you. Moving quickly once you meet the right person. Communicating well and keeping candidates informed. And presenting your business honestly and confidently, rather than underselling what you offer. Recruitment isn’t about perfection – it’s about clarity and consistency. Getting back to confident, effective hiring Recruitment will always take time and effort, particularly for SMEs wearing multiple hats. But with the right planning, a steady pipeline of talent and a realistic view of the market, it becomes far more manageable – and far more successful. Good candidates are still out there. The key is knowing who you want, staying visible, and being ready when the right person appears.