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The Government’s proposed amendments to the Employment Rights Bill have sparked a lot of discussion. While large businesses may have HR departments to sift through the details, small business owners need a clear understanding of what’s coming and how it affects them.

The bill is designed to increase job security, improve working conditions, and put more money in workers’ pockets. But what does this mean for small businesses, which often operate with tighter budgets and more flexible staffing arrangements?

Zero-Hours Contracts & Agency Workers

If your business relies on zero-hours contracts, you’ll need to adjust. The Government plans to ensure that workers – including agency staff – receive contracts that reflect their actual working patterns. Employers will also need to give reasonable notice of shifts and compensate workers if shifts are cancelled at short notice. This aims to prevent exploitative practices, but it also means businesses must plan their workforce needs more carefully.

For small businesses that genuinely require flexibility, this change isn’t a ban on zero-hours contracts, but it does mean treating workers fairly and with more certainty. Clear communication and good scheduling will become even more essential.

Stronger Redundancy Protections

If you ever need to make staff redundant, the penalties for not following proper consultation procedures are increasing. The maximum protective award for failing to consult in a collective redundancy situation will double from 90 days to 180 days’ pay per affected worker.

For most small businesses, collective redundancies (i.e. making 20 or more employees redundant within 90 days) may not be a common issue. However, the message is clear: following redundancy rules properly is vital. If your business grows and you ever need to restructure, ensure you understand your consultation obligations.

Changes to Statutory Sick Pay (SSP)

A key change is that Statutory Sick Pay will be extended to low-paid workers, covering those earning below the current threshold. It will also be payable from the first day of illness.

For small businesses, this means budgeting for potential extra costs. However, a healthier workforce is a more productive workforce. Ensuring employees can take the time off they need without financial distress could reduce the spread of illness in your business and improve overall efficiency.

Regulating Umbrella Companies

If you hire temporary workers through an umbrella company, the Government is tightening regulations to ensure they receive the same rights and protections as directly employed staff. This is a positive move to eliminate bad practices, but it also means ensuring compliance when working with agencies or outsourcing recruitment.

What Should Small Business Owners Do?

Review Employment Contracts – Ensure they reflect actual working patterns and meet the new requirements.

Improve Workforce Planning – Last-minute shift cancellations may come at a cost, so plan ahead.

Budget for Increased Sick Pay Costs – Particularly if you have lower-paid workers.

Ensure Redundancy Procedures Are Followed – Even if you don’t foresee redundancies, understanding the rules is crucial.

Check Your Use of Agencies and Umbrella Companies – Make sure they comply with the new regulations.

These changes may bring some challenges, but they also encourage better employment practices, which can lead to a more engaged and productive workforce. If you’re unsure how these changes will impact your business, now is the time to seek advice and prepare for what’s ahead.

Noel Guilford