If you are feeling the pressure, you’re not alone. Many UK business owners, including smaller accountancy firms, are grappling with what the changes in the Employment Rights Act 2025 will mean for them in practical terms. Research by ICAEW ahead of the Spring Statement in March 2025 found that three quarters of respondents expected the Act to increase employment costs, and 53% said it would likely reduce their plans to hire permanent staff. 

But preparation rather than panic is key. Against a backdrop of conflicting advice, small and often straightforward amendments can help businesses to stay on the right side of the law, ensure a smooth transition and minimise risks.

Review existing contracts and policies

Audit your employment contracts to ensure they comply with the new statutory rules, particularly the changes around statutory sick pay (SSP), zero-hours contracts and flexible working provisions, says Nicole Whittaker, Associate Director of HR Consultancy at Peninsula. 

“The key step is to review and update your existing policies to reflect the new rights, for example the introduction of day one entitlement to paternity and parental leave from 6 April 2026. Many firms will already have these frameworks in place, so the task is simply to ensure they align with the updated legislation,” Whittaker says.

Make sure your internal documents are up to date and reflect how the business actually operates, advises Charlotte Beeley, Senior Associate of the Employment team at JMW Solicitors. “Any mismatch between what is written down and what happens in practice can create problems in a dispute. A straightforward review of contracts and handbooks now can prevent that.”

Comply with statutory sick pay changes

Changes to SSP coming in April are one of the biggest and most immediate changes to prepare for, with entitlement beginning from the first day of absence for all workers, regardless of earnings. The rate of SSP will be calculated at 80% of usual weekly earnings or the flat rate, whichever is lower. 

Helen Watson, Head of Employment Law at Aaron & Partners, says: “For accountancy practices, where workloads are often deadline-driven, this makes it even more important to have clear absence reporting procedures and consistent management oversight to maintain service levels while remaining compliant.”

Update the staff handbook

Lisa Branker, Head of Employment and HR at solicitors Beecham Peacock, says a common mistake is to incorporate policies and procedures directly into employment contracts. “This needs to be avoided and instead included in a staff handbook. Keeping policies in a separate handbook means they can be updated as legislation changes, without needing a consultation process every time.”

Audit your record keeping

In a surprise move, the commencement date for the new duty for employers to keep and retain annual leave records was recently confirmed as 6 April 2026. “This does not leave employers with much time to audit how they record workers’ annual leave entitlement and pay and consider where there may be gaps that need to be addressed,” says Luke Bowery, Head of the Employment team at Burges Salmon. 

Strengthen recruitment processes

The qualifying period for unfair dismissal claims is being reduced from two years to six months from 1 January 2027, but it will impact the employees you are hiring now. Florence Brocklesby, founder of Bellevue Law, says robust recruitment processes are needed to ensure that the right people are hired in the first place.

Firms should expect more scrutiny of decisions made within the first year and adjust their processes accordingly, Beeley says. “That means strengthening the recruitment process with clear role descriptions, defined interview processes, and enhanced pre-employment checks. Where decisions are made informally or without clear reasoning, it becomes harder to defend them later.”

Managing probation periods

Active management of probation periods is critical. Reviewing your probationary periods and how they operate — including how they are covered in your policies and contractual wording — will also be key. “If you currently have a six-month probation period then look at reducing this, for example to three months, to ensure you still have enough time to assess your new hires before they automatically gain this right,” Whittaker says.

Duty to prevent harassment

Another key development is the strengthened duty on employers to take proactive steps to prevent harassment, including from third parties such as clients and suppliers. “For accountancy firms, where staff regularly interact with clients and external stakeholders, this means bespoke risk assessments, reviewing and updating terms and conditions, policies and training staff,” Watson says. Regular education, messaging and visual reminders are essential. Firms should also ensure there are clear confidential reporting channels in place to address concerns sensitively, quickly and effectively. Monitoring and evaluation will also be crucial.

Unfair dismissal

The removal of the cap on compensation for unfair dismissal will be particularly significant for employers, such as accountancy firms, with many higher-paid employees.  Removal of the cap is likely to lead to a change in approach to the management of senior employees and high earners, perhaps with a more procedure-driven approach taken than is currently the case, Bowery says.

Train your managers

Managers are often the first point of contact for leave requests. Make sure they are properly trained and understand the updated redundancy and dismissal procedures, particularly in light of changes to unfair dismissal rules, Whittaker says. “The risk for getting things wrong will increase significantly with the launch of the Fair Work Agency, so provide training on handling flexible working requests, including documenting any reasons for refusal and how to follow the appropriate consultation processes.”

ICAEW has produced an Employment Rights Act timeline that explains which changes come into effect and when in 2026 and 2027.