With the first phase of the Employment Rights Act (ERA) set to take effect in April 2026, small and medium-sized business owners are being urged to assess their readiness

The recently enacted legislation, which has now gained Royal Assent, introduces a series of significant reforms. Key changes in the first phase include Statutory Sick Pay reforms, day-one entitlement to paternity and parental leave, the establishment of the Fair Work Agency, and updates to trade union processes.

Experts warn that failure to align with the new regulations could leave businesses non-compliant from April. Reviewing current employment policies, handbooks and managerial practices is critical. Many adjustments may be as simple as updating wording, but a full audit of HR processes is recommended to identify gaps and risky practices.

P3 People Management, an HR consultancy, highlights the wider business benefits of preparing for the ERA. “Beyond legal compliance, these changes present an opportunity to refresh policies, streamline processes and strengthen overall people management,” the company said.

To support SMEs, P3 has developed a free online ERA readiness tool. The tool allows businesses to evaluate policy gaps, contract compliance, manager preparedness and opportunities to improve employee performance, helping owners to proactively address potential challenges before the new rules come into force.