3 HR Traps for SMEs Under the Employment Rights Act (Avoid Them)
Employment Rights Act changes aren't 'legal updates' - they're people problems. Discover 3 HR traps UK SMEs fall into - and how to avoid panic, delays, and costly disputes.
If you run a small business, the Employment Rights Act changes will not land as "legal updates". They land as people problems.
Managers panicking. Conversations avoided. Decisions made late. Someone saying "that's not what happened". You doing damage control with a cold cup of tea.
So here are three HR traps I'm seeing more of with SMEs, all tied to the real pressure points in the Employment Rights Act rollout, and what you can do to avoid them without turning your business into a corporate robot.
Quick note: I covered the SSP changes in detail in a separate blog last week, so I won't repeat it here. If SSP is on your radar (and it should be), read that one after this:
LINK: https://kateunderwoodhr.co.uk/blog/legislation/statutory-sick-pay-changes-april-2026-who-qualifies-smes
At a glance: the 3 traps
Trap 1: Probation run on vibes
Trap 2: Flexible working handled badly
Trap 3: "We've got a policy" harassment prevention
Right. Let's go.
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THE HIVE BRIEF
Why small businesses get caught out
Most HR mess isn't caused by bad people. It's caused by:
- managers doing things differently
- unclear expectations
- awkward conversations avoided until they explode
- decisions made when everyone's already annoyed
- no notes, no evidence, and a lot of "but that's not what happened"
- unfair dismissal protection arriving earlier than many SMEs are used to, which changes how you need to handle probation and performance
- flexible working requests being more common and more formal than they used to be
- harassment prevention expectations shifting from "have a policy" to "show your steps"
- you hire quickly because you need help yesterday
- probation becomes "let's see if we click"
- nobody sets clear goals
- nobody gives proper feedback
- then month five or six arrives and someone panics and says, "We need them out."
- someone asks to change hours, days, or where they work
- a manager says "no, we don't do that here"
- or "you're new"
- or "that's not fair on the team"
- and now you've got conflict, resentment, or a grievance brewing
- you've got a Dignity at Work policy somewhere
- everyone assumes that means you're covered
- no training refresh
- no clarity on how to raise concerns
- a complaint lands and everyone panics
- the response is inconsistent, emotional, and badly documented
- earlier unfair dismissal protection changing how probation and performance needs to be handled
- more flexible working requests being treated as normal, not special
- harassment prevention expectations moving from policy on a shelf to real steps in practice
- set 3 to 5 clear outcomes in week one
- do weekly check-ins
- do a midpoint review
- write basic notes
- do not let it drift
- define what good looks like
- tell the person
- check in regularly
- write down what you agreed
- socials and Christmas parties
- WhatsApp groups and jokes that go too far
- customer facing roles where clients cross the line
- lone working
- client sites
- tighten probation so it is not vibes based
- fix flexible working handling so it is calm and documented
- refresh harassment prevention so it is real, not just a policy
- how you do probation check-ins
- how you handle flexible working requests
- what to do when someone raises a concern
- what's changing
- what to update
- what to tell managers
- and the templates and scripts that stop you writing things from scratch at 9pm
The Employment Rights Act doesn't magically create problems. It just turns the volume up on inconsistency.
And if you're thinking, "Kate, we're only 12 people, we don't need all that," I'm going to say this with love:
Small teams need consistency even more, because one problem is suddenly 10% of your workforce and everyone feels it.
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THE BEEHIVE UPDATE
The pressure points that are driving the mess
Here's what's driving the three traps below:
Now the traps.
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TRAP 1
THE STING IN THE TAIL: Probation run on vibes
The signs
This is the classic small business trap. You don't want confrontation. You're busy. So you let things drift.
And drifting is what turns "not quite right" into "this is now a serious problem".
Why it's getting riskier
For years, loads of SMEs have relied on a sense of safety early on in employment. That's tightening. Expectations around fairness, process, and evidence are rising, and managers can't just shrug and say "it's not working" without being able to show why and what they did about it.
Even now, there are day one risks that don't care about probation at all, like discrimination or whistleblowing. When you have no notes and no clear reasons, people fill in the blanks. You don't want that.
Do this instead (simple, not corporate)
1) Week one: set 3 to 5 clear outcomes
Not "do well". Real things you can measure.
Examples: accuracy, customer tone, deadlines, attendance, following process.
2) Weekly check-ins (10 minutes)
Same questions every time:
What's going well? What's been hard? What support do you need? What's the focus this week?
3) Midpoint review
Do not wait until the end.
If probation is 3 months, review at 6 weeks.
If it's 6 months, review at 3 months.
4) Notes, not novels
Write down: what happened, what good looks like, what you agreed, and the next check-in date.
5) If it's not working, don't drift
Dragging it out is not kind and it is not safe. Make a decision, and make it properly.
Even if you don't change anything else, please don't let probation drift. Drifting is what creates the mess.
LISTEN: Hiring isn't Tinder
If the "we'll see if we click" approach is sounding a bit familiar, I did a full podcast episode on this called Hiring isn't Tinder. It's basically me saying: stop swiping right on "they seem nice" and start hiring and running probation like it matters, because it does. Listen here:
https://podcast.kateunderwoodhr.co.uk
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TRAP 2
THE POLLEN PANIC: Flexible working handled badly
The signs
Flexible working requests are not going away. People's lives are complicated. Childcare is expensive. Caring responsibilities are real. Commuting costs are painful. People are more informed than they used to be.
The trap isn't the request.
The trap is making it personal.
Do this instead (calm and sensible)
1) Don't react, run the process
Even if you think the answer is no, you still talk it through properly.
2) Ask better questions
What exactly are you asking for?
From when? Temporary or permanent?
What problem are you trying to solve?
What impact do you think it has on the role?
What alternatives would also help?
3) Consider options before you decide
Sometimes a flat no is lazy.
A trial period, a small tweak, or different days can solve it without damaging delivery.
Tiny truth: a short trial period saves a lot of arguments.
4) Document it
Request, discussion, decision, reasons.
That's what protects you and keeps it fair.
5) Communicate like a grown-up
Even when you say no, the tone matters.
"No because I said so" creates conflict.
"No because here's the business reason and here's what we can offer instead" creates respect.
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TRAP 3
THE HONEY TRAP: "We have a policy" harassment prevention
The signs
This is one of the biggest shifts. The expectation is moving from "react when something happens" to "show you took steps to prevent it".
Do this instead (without turning into a corporate robot)
1) Do a quick risk check
Where could harassment realistically happen in your business?
Customer-facing roles, socials, lone working, client sites, late shifts, WhatsApp groups.
2) Make reporting simple
People don't report when it's confusing or they think nothing will happen.
Give two routes: their manager and an alternative contact.
3) Train managers on what to do and what not to say
Most damage happens in the first conversation.
Managers need a script and confidence.
4) Set behaviour expectations for socials and messaging
A lot of complaints start outside "normal work" but still count.
5) Keep records clean
Not gossip. Not opinions. Facts and actions taken.
This isn't about being dramatic.
It's about protecting your people and protecting your business.
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THE HONEYCOMB PLAYBOOK
If you only do five things
1) Give managers a probation structure (goals, weekly check-ins, midpoint review)
2) Stop vibes-based performance decisions, set expectations early
3) Treat flexible working requests as a process, not a personal debate
4) Refresh harassment prevention in real-life terms (risk check, training, reporting routes)
5) Write basic notes as you go, because future you will be grateful
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THE WORKER BEE FAQs
Do I need to panic about the Employment Rights Act?
No. Panic is not a strategy. The win is getting your basics consistent so your managers are not freestyling when something gets awkward. That is what creates the mess.
What are the biggest Employment Rights Act changes for SMEs?
The ones that create the most day to day friction tend to be:
If you get those three areas tidy, you remove a lot of risk and a lot of noise.
Is this just an HR issue?
No. It is a business issue. The fastest way to lose time and money in an SME is people problems handled badly. You do not need an HR department, you need a simple process and managers who follow it.
What is the biggest mistake SMEs make under the Employment Rights Act?
Letting managers do their own thing. One manager is soft, one is strict, one avoids conflict, and suddenly everything feels unfair. Consistency is the whole game.
Do I need to rewrite all my policies?
Probably not. Most SMEs do not need a mountain of policies. You need a few clear rules that people actually use, plus manager scripts so nobody says something daft in the heat of the moment.
How do I stop probation becoming a slow motion car crash?
Treat probation like part of recruitment, not a waiting room.
Drifting is the number one cause of hiring regret.
What if the employee is nice but not good enough?
You can still manage that. Nice does not equal capable. Be clear early, offer support, set expectations, and make a decision before you are angry. Once you are angry, you will say something you regret.
What if I have never done performance management properly?
You are not alone. Start simple:
That is it. No corporate theatre required.
Flexible working requests are increasing, what do I do?
Do not react, run the process.
Ask what they want, why, and what alternatives might work. Consider a trial period. Then decide and document it. The request is not the problem. The way it is handled is the problem.
Can I just say no to flexible working in an SME?
Sometimes, yes. But a flat no with no conversation is where it goes wrong. You need a sensible business reason and a record that you considered it properly. Even when the answer is no, your tone matters.
What if flexible working would annoy the rest of the team?
That is a communication issue, not a reason to ignore the request. Be clear on what is agreed, why, and how workload will be managed. Fair does not always mean equal. It means explained and consistent.
We have a dignity at work policy, is that enough for harassment prevention?
Not anymore. A policy helps, but the expectation is steps in practice. That means managers know what to do, people know how to report, and you have thought about where risk actually sits in your business.
What counts as harassment risk in a small business?
The usual hotspots are:
If you can name the risk, you can reduce it.
What should managers do if someone raises a concern about bullying or harassment?
Listen, take it seriously, do not promise outcomes, and do not start investigating in the corridor.
Thank them for raising it, explain the next step, and keep notes. The first conversation is where most businesses accidentally make it worse.
What should I write down and where do I store it?
Write down what happened, what you agreed, and what you did next. Keep it factual.
Store it securely in your HR system. Do not keep sensitive notes on post-it notes, handover diaries, or random spreadsheets. If it is personal data, treat it like it matters, because it does.
Will the Employment Rights Act create more grievances and tribunals?
It can if businesses are inconsistent and reactive. The law changes do not create drama on their own. Messy management creates drama. Clear process reduces it.
I feel like I am walking on eggshells with all this, what is the easiest starting point?
Pick one:
Any one of those will reduce risk immediately.
What is the simplest thing I can do this week to reduce Employment Rights Act risk?
Book 30 minutes with your managers and agree:
Then write it down in one page. That single page will save you hours later.
Where does Cake, Coffee & Compliance fit into this?
If you want someone to keep an eye on the changes, translate them into plain English, and give you templates and scripts so you are not reinventing the wheel at 9pm, that is what Cake, Coffee & Compliance is for.
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THE SWARM CONTEXT
Where Cake, Coffee & Compliance fits
If you're reading this thinking, "I get it, but I don't have time to keep up with all of it," that's exactly why Cake, Coffee & Compliance exists.
It's bite-sized, plain English, and focused on:
Prefer to listen instead of read? This episode is a good starting point: Hiring isn't Tinder (aka stop swiping right on "we'll see if we click").
https://open.spotify.com/episode/5HnTsZf99cRb8xk4kFZTKh
And if you want the sickness angle specifically, here's the separate SSP blog I mentioned:
LINK: https://kateunderwoodhr.co.uk/blog/legislation/statutory-sick-pay-changes-april-2026-who-qualifies-smes
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THE FINAL BUZZ
The Employment Rights Act isn't scary because it's complicated.
It's scary because it punishes inconsistency.
If you want to avoid the three traps:
Get clear.
Get consistent.
Stop managers freestyling.
Kettle on, standards up.
About Kate Underwood
HR consultant and founder of Kate Underwood HR. Providing HR Support for Small Businesses for over 10 years; in Hampshire, Dorset and across the UK.