Employment law can be a minefield for employers, and with the Employment Rights Act 2025 bringing significant changes throughout 2026 and into 2027, it’s more important than ever to make sure your business is getting things right.
As part of the Employment Rights Act 2025, from January 2027 the cap on unfair dismissal compensatory awards is due to be removed altogether.
For small and medium sized businesses, a costly Employment Tribunal claim, not to mention legal fees, management time, disruption, and potential reputational damage, could have a serious impact.
But it’s not just dismissals that can land employers in hot water with employment law. Failing to comply with other employment legislation can prove costly too.
The good news? Many employment law problems can be avoided with good HR practices, clear policies, and careful planning.
Here are our top tips to keep your business on the right side of employment law.
1. Get your employment documentation right from day one
Employees and workers are entitled to a full written statement of their employment particulars on or before their first day of work. Make sure your documentation accurately reflects working arrangements, including pay, working hours, location, holiday entitlement, sick leave and notice periods.
This should also include key rights and requirements associated with being employed by your business, such as probationary periods, training requirements, benefits, pension, collective agreements, disciplinary and grievance and any other terms relevant to their role. There are different requirements for employees and workers.
A well-written contract helps both parties understand what’s expected of them and can prevent misunderstandings and disputes further down the line.
Make sure your contracts are tailored to your business, legally compliant and reviewed regularly to reflect changes in employment legislation.
3. Maintain comprehensive employment records
It’s important to maintain comprehensive records that, if needed, can evidence your correct and fair treatment of staff members.
These should include key documents such as employment contracts, worker agreements, records of holiday, sickness and other absence, performance reviews, training, and any disciplinary or grievance proceedings.
Having accurate, up-to-date records can be invaluable if an employee or worker raises a complaint or brings an Employment Tribunal claim, helping you demonstrate that you’ve acted fairly and followed the correct procedures.
These records will, of course, need to comply with Data Protection requirements, so make sure personal information is stored securely, only accessed when necessary and retained for an appropriate period.
4. Check crucial details before you hire
As part of the recruitment process, consider obtaining references and checking qualifications, professional memberships and driving licences where relevant to the role.
Depending on the position, you may also need to carry out Disclosure and Barring Service (DBS) checks or other appropriate pre-employment screening, ensuring that any checks are necessary, proportionate and legally permitted.
Remember to check eligibility to work in the UK whenever you take on a new employee, or worker, and in fact you must now check this even for most self-employed contractors.
Getting this wrong can be particularly costly, with civil penalties of up to £60,000 per illegal worker and potentially serious criminal consequences where an employer knowingly employs someone without the right to work.
It’s also important to ensure that all recruitment checks are carried out fairly, consistently and without discrimination.
5. Establish a company culture of respect and value
Proactively establish a company culture of respect and value for people, that promotes fairness and does not tolerate prejudice, discrimination, harassment or bullying.
Creating a positive and inclusive working environment isn’t just good for team morale and retention. It can also help protect your business against costly employment disputes and discrimination claims.
Make sure your expectations around workplace behaviour are clearly communicated, that managers lead by example and that staff feel comfortable raising concerns.
Employers also have a legal duty to take all reasonable steps to prevent harassment, including sexual harassment, in the workplace, so it’s important to take a proactive approach rather than simply relying on a written policy.
Regular training, clear procedures and dealing with inappropriate behaviour promptly can all help create a workplace where everyone feels respected and valued.
6. Ensure health, safety and welfare is competently managed
Ensure that all matters relating to the health, safety and welfare of employees and workers are managed by a competent person who fully understands their responsibilities.
As an employer, you have a legal duty to provide a safe working environment, which includes carrying out appropriate risk assessments, implementing suitable health and safety procedures and providing team members with the information and training they need.
Don’t forget that your responsibilities extend beyond physical safety.
Work-related stress, mental health and wellbeing are also important considerations, and employers should take appropriate steps to identify and manage workplace risks.
Make sure your health and safety arrangements are regularly reviewed and that your staff know how to raise any concerns.
7. Set clear workplace policies, rules and issue guidelines for conduct and performance
Having clear workplace policies and guidelines helps anyone working for you to understand what’s expected of them and ensures that everyone is treated fairly and consistently.
These might include policies covering sickness absence, holiday, conduct, performance, equality and diversity, harassment, flexible working and the use of social media.
Harassment policies are particularly important and should be supported by appropriate risk assessments and employee training to help prevent harassment and ensure that policies are understood and followed by everyone.
It’s also important that managers understand their responsibilities and apply your policies consistently across the business.
Make sure your policies are regularly reviewed and updated to reflect changes in employment legislation and the way your business operates.
8. Enforce these rules with a Disciplinary Policy
It is a legal requirement to provide employees with written information about your disciplinary procedures, and your Disciplinary Policy should comply with the ACAS Code of Practice.
A clear disciplinary procedure helps you deal with issues such as misconduct and poor performance fairly, consistently and in accordance with the correct process.
This includes carrying out appropriate investigations, giving employees the opportunity to respond to allegations and ensuring they have the right to be accompanied and appeal where applicable.
Failing to follow a fair disciplinary process for employees could leave your business exposed to a costly Employment Tribunal claim, even where you believe you had good reason to take action.
9. Set out a formal Grievance Policy
It is also a legal requirement to provide employees with written information about your grievance procedures, and your formal Grievance Policy should comply with the ACAS Code of Practice, to deal with concerns or complaints raised by employees.
Having a clear grievance procedure ensures employees know how to raise concerns and gives your business a fair and structured process for dealing with them.
Whether a complaint relates to working conditions, treatment by a colleague or concerns about management, it’s important that grievances are taken seriously and investigated appropriately.
Make sure employees know who they should speak to, how the process works and what they can expect.
Handling grievances promptly, fairly and confidentially wherever possible can help resolve problems before they escalate into more serious disputes.
10. Deal with problems and issues as they arise
Deal with matters immediately, fairly and consistently. In the first instance, aim to deal with matters informally, however if matters are significant enough to warrant formal action, do so in accordance with your Disciplinary or Grievance Policies as appropriate.
Whether you’re dealing with poor performance, repeated absence, inappropriate behaviour or disagreements between colleagues, ignoring the problem is rarely the answer.
Addressing concerns early can often prevent situations from escalating and gives everyone involved the opportunity to resolve matters before they become more serious.
Make sure you listen to all parties, keep appropriate records of conversations and decisions, and seek advice if you’re unsure of the best approach.
11. Seek the advice of an expert
HR Consultants are an invaluable service to your business that can save you time, money and help you avoid costly mistakes, whilst legal advice through an expert employment law solicitor is advisable in circumstances of a complex nature.
Having access to professional HR support can help ensure your employment contracts, worker agreements, policies and procedures are legally compliant and that you’re following the correct processes when dealing with employment issues.
This can be particularly valuable for small and medium-sized businesses that don’t have their own dedicated HR department.
And with significant changes to employment legislation being introduced throughout 2026 and 2027, expert advice can also help you understand your new responsibilities and prepare your business for what’s ahead.
If in doubt, always seek expert advice.
12. Download our Employment Rights Act 2025 checklist
Employment law is undergoing some of its biggest changes in decades, thanks to the Employment Rights Act 2025. With changes being introduced throughout 2026 and 2027, it’s essential that employers understand what’s changing, when it’s happening and what they need to do to stay compliant.
We’ve created a dedicated Employment Rights Act 2025 information hub packed with practical advice, key dates, useful resources and answers to frequently asked questions, all explained in plain English.
There’s also a FREE downloadable compliance checklist to help you identify what your business needs to review, update or put in place.
Our top tip? Don’t wait until the changes catch you out!
Visit our Employment Rights Act 2025 information hub, download your FREE checklist and make sure your business is prepared.
Stay on the right side of employment law with Vivo HR
Getting employment law right doesn’t have to be complicated, but it does require the right policies, procedures and practices to be in place.
Taking a proactive approach to HR, keeping up with changes in legislation and dealing with employee issues fairly and consistently can go a long way towards protecting your business from costly mistakes.
And with significant employment law changes on the horizon, there’s never been a better time to make sure your business is doing everything it should.
Need a helping hand?
At Vivo HR, we provide friendly, practical and straightforward HR advice and support to help small and medium-sized businesses stay compliant, manage their people confidently and avoid getting into hot water with employment law.
Whether you need help reviewing your employment contracts and policies, managing a tricky employee situation or preparing for the Employment Rights Act 2025, we’re here to help.
Get in touch with vivoHR today to find out how we can support your business.
