2025 Employment Law Changes Small Businesses Can’t Ignore

Let’s be real, employment law isn’t always the most exciting thing to think about, especially when there are so many other things you need to manage and grow your business. But ignoring it? That’s risky. And in 2025, keeping up just got harder. With the Labour Government trying to make their mark on the employment landscape, big legal changes are on the horizon, and they could seriously impact how you run your business. 

Here's what you need to know and what to do to protect your business from hefty fines and employee claims. 

What’s Changing in 2025? 

Several legislative updates are expected to roll out this year, shaking up the way businesses manage employees: 

• Shorter Qualifying Period for Unfair Dismissal 

The two-year threshold for protection against unfair dismissal is set to disappear. This means that any employee will be able to make a claim for unfair dismissal right from the end of their probationary period if you do not follow a full and fair process. 

• Statutory Probation Periods 

The good news is the likely recommendation in line with the removal of the 2-year threshold is that there may be a standard nine-month probation period (but both these changes are still in consultation).  

• Flexible Working from Day One 

Businesses will now need to consider flexible working requests right from the first day of employment. 

• Zero-Hours Contract Protections 

 Workers may gain the right to guaranteed hours if they have been working regularly (most likely for a period of 12 weeks). There will also be rules around giving reasonable notice for and changes to shifts and obligations to make payments for shifts cancelled at short notice. 

• Fire and Rehire Restrictions 

This means that stricter rules will be put in place regarding changing the terms and conditions in contracts of employment.  

• Sick Pay from Day One 

Employees will qualify for statutory sick pay immediately when they fall ill, rather than having to wait until the 4th day as they currently do. 

Why Should You Care? 

If you're a small business owner, these changes could spell trouble if you're not ready. Imagine hiring someone and only a few months later facing an unfair dismissal claim, because you didn’t follow the correct process when asking the employee to leave due to poor performance. Or struggling with operational headaches when an employee requests flexible working right off the bat. And how are you going to manage your increased wage bill with employees taking more time off sick knowing they will be entitled to more SSP?  

The point is these aren’t just “big business” problems. They affect you too. 

What Can You Do? 

Here are some practical steps you can take to get prepared and stay compliant: 

• Review Your Contracts 

 Make sure employment contracts reflect the new legal requirements. Make sure they include transparent probationary terms and clauses for flexible working Ensure they also cover all the statutory leave entitlements that employees are entitled to.  

• Update Your Policies 

Revamp your HR policies to comply with the changes around zero-hours contracts and flexible working. A policy that worked last year may no longer be legal with the coming changes. 

• Train Your Managers 

They need to understand how to navigate probationary periods effectively, handle flexible working requests fairly and manage absence effectively Understanding the importance of documenting conversations, even informal ones, is going to be critical to ensure that they protect your business from any potential claims.  

• Audit Dismissal Procedures 

Tighten up dismissal processes to reduce legal risks ready for the new unfair dismissal rules. 

• Seek HR Support 

Employment law is tricky, and DIY solutions can be costly. Working with HR experts ensures your business stays protected and lets you focus on what you do best, running and growing your business. 

Don't Risk It. Get Expert Help 

Employment law changes can feel overwhelming but ignoring them is like playing with fire. A single claim could cost thousands, damage your reputation and potentially close it down before it even really gets off the ground.  

HR support isn’t just about paperwork, it’s about peace of mind and protecting your business from mistakes. 

Need help with this year's legal minefield? Let Dakota Blue Academy guide you through the changes and keep your business compliant. Subscribe to one of our plans, when you choose the Premium Plan, you’ll get the genuine, tailored support, not the generic, cookie-cutter advice you get from faceless helplines.