Wage growth among UK SMEs rose sharply to 8.8% in February, as businesses face rising costs and prepare for incoming Employment Rights Bill reforms.
Roy Magara, solicitor advocate and founder of Magara Law, said: “Many organisations are still operating with outdated assumptions about flexibility and probation."
The Bill introduces a series of reforms including a ban on exploitative zero-hours contracts, day one sick pay, and stronger protections against harassment, alongside wider changes aimed at tackling insecure work.
The Bill, which the union movement said delivers on a clear manifesto commitment, has faced repeated opposition in the Lords despite months of debate and scrutiny.
The Lords’ decision means ministers must now review compensation caps for unfair dismissal, creating uncertainty over timing and the impact on businesses.
One in three (33%) said they are not prepared for the changes, which start in October 2026.
Only 17% of HR leaders in companies with more than 500 staff had completed an impact assessment and drawn up an action plan.
A last-minute change to the Employment Rights Bill could worsen the public sector’s lack of readiness, according to Kam Singh, director of law at Invicta Law.
The change is intended to secure parliamentary support for the Employment Rights Bill and represents a significant dilution of Labour’s manifesto commitment.
Employers are bracing for uncertainty as the Employment Rights Bill (ERB) returns to the House of Lords today.
Claire Cole, senior solicitor in Harper James' employment team, said: “It is a very welcome step towards recognising the reality of loss in the workplace."
Helen Dickinson said: "The Government must ensure that any delay to the Bill’s Royal Assent does not result in less consultation or a compressed implementation Roadmap."