What SME Employers Need to Prepare for in 2026
For SME employers, these changes are significant. They affect industrial action rules, dismissal risks and family leave rights — all areas that can have operational and financial impact on smaller businesses.
Here’s what you need to know.
Trade Union Law Changes from 18 February 2026
While trade union reform may feel more relevant to larger organisations, SMEs are not immune — particularly those in sectors such as care, education, logistics, manufacturing and transport.
From 18 February 2026, the following changes come into force:
Industrial Action Will Be Easier to Lawfully Organise
- The 40% support threshold in certain important public services will be removed.
- Unions will have to include less information on ballot papers.
- The mandate for industrial action following a successful ballot will increase from six months to twelve months.
- Notice requirements to employers will be reduced.
For SMEs, this means:
- Industrial action could become easier to organise.
- Legal challenges to ballot technicalities will become harder.
- Disputes may last longer due to the extended mandate period.
Increased Protection for Employees Taking Industrial Action
Two important protections are being strengthened:
- Workers will gain new protection from detriment for participating in lawful industrial action.
- The 12-week cap on protection from dismissal during industrial action will be removed.
This significantly increases unfair dismissal risk where employees are dismissed in connection with strike activity.
For smaller employers without in-house legal teams, this raises the importance of getting early advice before taking action during disputes.
Workers (Predictable Terms and Conditions) Act Repealed
The Workers (Predictable Terms and Conditions) Act 2023 — which was passed but never implemented — has now been repealed.
However, similar reforms are expected to be delivered through the broader Employment Rights Act framework. SMEs using zero-hours contracts or variable hours arrangements should continue monitoring developments in this area.
Day-One Paternity and Parental Leave from 6 April 2026
From 6 April 2026, the service requirement for:
- Paternity leave
- Parental leave
will be removed.
This means eligible employees will be able to take these types of leave from the first day of employment.
Why This Matters for SMEs
Smaller businesses often rely heavily on individual team members. Day-one leave rights mean:
- Less time to plan for cover
- Potential short-notice operational gaps
- Increased need for workforce planning
Notice requirements remain in place, but importantly:
Employees can begin giving notice from 18 February 2026 in anticipation of becoming eligible in April.
SMEs should therefore review policies and ensure managers understand the new entitlement before April arrives.
Why SME Employers Should Act Now
For larger organisations, legislative change may be absorbed across dedicated HR and legal teams. For SMEs, the risk is more concentrated.
The 2026 reforms increase:
- Dismissal risk exposure
- Dispute management complexity
- Family leave planning pressures
- Legal compliance obligations
Failing to update policies or mishandling disputes could result in costly Employment Tribunal claims — particularly at a time when tribunal backlogs are already at record levels.
Practical Steps for SME Employers
Now is the time to:
- Review dismissal and disciplinary procedures
- Update family leave policies
- Ensure contracts reflect current legal requirements
- Train managers on industrial action protections
- Seek advice early if trade union issues arise
Proactive compliance is far more cost-effective than defending a tribunal claim.
Employment Law Support for SME Businesses
At Montgomerie Consulting, we specialise in supporting small and medium-sized employers with practical, commercially focused employment law advice.
We provide:
- SME employment law audits
- Policy reviews and updates
- Manager training
- Support during disputes and restructures
- Ongoing HR advisory services
If you would like help preparing your business for the Employment Rights Act 2025 changes, get in touch with our team.