Employment Rights Bill 2026: changes for trade employers

Overview of the Employment Rights Bill 2026

The Employment Rights Bill of 2026 is set to be a landmark change in employment law, aiming to ensure fairer and more secure working conditions for all employees. As a tradesperson running your own business, it’s vital to grasp these changes and their implications. The bill seeks to bolster employee protections in several key areas, including dismissal processes, flexible working rights, and contract stability, reflecting a broader shift towards safeguarding workers in the modern economy.

Day-one Unfair Dismissal Rights

One of the most impactful changes is the ability for employees to claim unfair dismissal from the first day of their employment, radically altering the previous two-year qualification period. This significant shift necessitates that trade employers pay particular attention to their recruitment practices. Ensuring that your hiring processes are thorough and that new employees are onboarded with clear expectations is now more important than ever. For instance, documenting performance and conduct from day one can help in any future disputes. It's a good idea to regularly review your employment contracts and disciplinary procedures to ensure they align with this new legal framework.

End of "Fire and Rehire" Practices

The bill introduces restrictions on the controversial 'fire and rehire' tactics, which have been used by some employers to alter terms of employment unfavourably. This change is particularly relevant if you rely on zero-hours contracts. For example, if you had a practice of adjusting worker hours based on seasonal demand, the new law will require a more structured approach. Employees working regular hours will be entitled to request a contract reflecting those hours after 12 weeks, compelling you to plan your workforce needs more strategically. Preparing for these requests in advance by analysing past employment patterns can help mitigate potential disruptions.

Zero-Hours Workers' Rights

The shift to more secure employment for zero-hours workers is a central theme of the new bill. As a trade business owner, you might need to reassess your reliance on flexible contracts. If your workers consistently clock similar hours, they will gain the right to a formal contract reflecting this. This change is designed to provide them with greater job security and benefits, but it also means you'll need to anticipate potential changes in your employment costs and obligations. A good practice is to maintain accurate records of employee hours and performance, which can also support you in managing these transitions smoothly.

Flexible Working Requests

The right to request flexible working from the start of employment, initially introduced in April 2024, is further strengthened under the new bill. This development acknowledges the growing demand for work-life balance and could be particularly impactful in trades where non-traditional hours might be less feasible. As an employer, you'll need to assess requests carefully, balancing the needs of your business with those of your employees. Consider the possibility of offering staggered shifts or remote work options where feasible, and stay informed about technology that can facilitate flexible working arrangements in your trade.

Enhanced Statutory Sick Pay

Another significant change is the commencement of statutory sick pay from the first day of illness. Previously, sick pay would only start from the fourth consecutive day of sickness, but under the new law, you must be prepared for immediate claims. This change could have financial implications, especially for small businesses with tight budgets. It's advisable to incorporate potential sick pay into your financial planning and budgeting processes. You might also want to explore insurance options that could help mitigate the financial impact of increased sick pay liabilities.

Trade Union Changes

The bill also makes it easier for workers to join trade unions, which, although not directly affecting small trade firms, could lead to shifts in workplace dynamics. Understanding this change is important as it might influence negotiations and employee relations. Even if union presence is minimal in your trade, being open to dialogue and maintaining transparent communication can help foster positive relationships with your workforce. It's also wise to stay informed about union activities and potential changes that could affect your business in the future.

Practical Implications for Small Trade Firms

The legal adjustments introduced by the Employment Rights Bill 2026 present various challenges and considerations for small trade businesses. The increased hiring risks mean that having a detailed and comprehensive employment contract from the beginning is essential. Clear job descriptions, well-defined roles, and expectations need to be communicated effectively to new hires. Moreover, developing a robust HR process, even if your firm is small, can help you navigate these legal requirements efficiently. This could include regular training on employment law for yourself or any managerial staff, ensuring that everyone is up to date with the latest legal obligations.

New Probationary Period Proposal

The introduction of a statutory nine-month probationary period offers a nuanced approach to assessing new employees. During this time, a simpler dismissal process can be applied, providing a buffer for employers to determine the fit of a new hire. However, this requires careful documentation of performance and reasons for any potential dismissal. Maintaining thorough records of employee performance, conduct, and any feedback given during this period is critical. Such documentation will not only support fair decision-making but will also provide protection against potential legal challenges.

Impact on Hiring Practices

With these changes, the hiring process itself may require adjustments. Prioritising candidates who demonstrate flexibility and a willingness to adapt to new working conditions can be beneficial. Conducting more in-depth interviews and reference checks might also become necessary to ensure the suitability of candidates from the outset. Additionally, offering trial periods or temporary contracts before committing to a long-term hire could become a standard practice to mitigate risks.

Financial Considerations

The financial implications of the Employment Rights Bill 2026 are significant. From budgeting for immediate statutory sick pay to potentially increased wage bills due to more secure contracts for zero-hours workers, small trade firms must plan meticulously. Regularly reviewing financial statements and forecasts will help you manage these expenses. It may also be worthwhile to consult a financial advisor to explore strategies that could offset these new costs, such as adjusting pricing models or seeking efficiency improvements in your operations.

Training and Development

With the evolving employment landscape, investing in training and development for both yourself and your employees can pay dividends. Understanding the legal aspects of employment law and how to apply them in your business is invaluable. Consider attending workshops or courses on HR management, or even bringing in an expert to provide in-house training. Equipping your employees with new skills can also enhance productivity and job satisfaction, which in turn, can help mitigate some of the challenges posed by the new legislation.

Recommended Actions

• Ensure that all employment contracts are meticulously drafted and reflect the new legal requirements.
• Develop clear, detailed job descriptions and communicate them effectively to potential hires.
• Implement a system of regular performance reviews to document employee progress and address any issues promptly.
• Stay informed about changes in employment law by subscribing to relevant updates and attending industry seminars.
• Consider engaging with HR professionals or consultants to review and enhance your current practices.
• Explore insurance options that can help mitigate the financial impact of enhanced employment rights.

For more detailed guidance on hiring, you can refer to our guide on hiring your first employee, which offers practical advice tailored to tradespeople.

Additionally, our day rate calculator can assist in ensuring your project pricing accurately reflects your increased costs and obligations.

For further information on the Employment Rights Bill, please visit gov.uk's page on the Employment Rights Bill.

FAQs

• What is the Employment Rights Bill 2026? This legislation introduces significant reforms in employment law, enhancing rights for employees from the first day of their employment.
• How does the bill affect zero-hours contracts? It limits 'fire and rehire' practices and grants workers the right to guaranteed hours after 12 weeks of consistent work.
• What changes are there to statutory sick pay? Statutory sick pay is now available from the first day of illness, rather than the fourth day.
• What is the new probationary period under the bill? A nine-month probationary period is proposed, allowing for a simplified dismissal process during this time.