The UK’s Employment Rights Bill (ERB), introduced in 2024 and set to take full effect by autumn 2026, is being called the biggest shake-up in workplace protections for a generation. And with good reason.
For employees, the benefits are clear: stronger rights from day one. But for employers, particularly high-growth fintechs, this bill brings significant operational and legal challenges that go beyond HR. Restructures, probation periods, onboarding, and contract changes will all need closer scrutiny.
According to Ben Willmott, Head of Public Policy at CIPD, the ERB will have a “seismic impact” on employment practices. It’s time for fintech businesses to get ahead of what’s coming.
What Are the New Risks for Employers?
The ERB introduces several key changes that fintech firms must prepare for:
- Day One rights: Employees will be protected from unfair dismissal from the moment they start work -removing the two-year qualifying period.
- Limits on ‘fire and rehire’: It will become automatically unfair to dismiss and re-engage staff on new terms without consent.
- Increased legal exposure: The risk of claims is set to rise, especially during restructures or early exits.
- Disruption to standard processes: Onboarding, probation, and early performance management will need a complete overhaul.
- Reduced flexibility for agile teams: Especially where pivoting and scaling are common, the bill limits fast structural changes.
Small businesses are already reacting. A 2024 report from the Federation of Small Businesses found that one in three SMEs expected to reduce headcount in anticipation of the bill – while just 10% were planning to hire.
Why Fintechs Need to Pay Attention
Ozge Gurbuz, Legal & Compliance Specialist at EC1 Partners, comments on the changes:
“We’ve seen fintech businesses restructure entire departments – sometimes 200+ employees – within weeks. Under the new legislation, those same moves could carry a serious legal risk if not managed through a properly documented process.”
While the changes demand more planning, they also bring opportunity. Greater employment stability supports stronger cultures and more sustainable growth. The fintechs that adapt early will be best placed to attract and retain.
Unfair Dismissal: What’s Changing?
The most significant shift is the removal of the two-year threshold for unfair dismissal claims. Employees will have legal protection from their first day of employment, meaning poor documentation or loose processes could quickly result in claims.
The ERB also cracks down on contract changes.
Dismissing someone and re-engaging them – or replacing them – with altered terms may now be considered automatically unfair unless a thorough and fair process is followed.
Key Mistakes to Avoid
Avoiding these pitfalls is critical to staying compliant under the Employment Rights Bill:
- Outdated documentation: Contracts, handbooks, and dismissal procedures must be updated to reflect the new legislation – or risk legal exposure.
- Inconsistent processes: Uneven application of performance reviews or probation policies increases the risk of discrimination claims.
- Over-reliance on probation periods: With Day One rights in place, the idea of a “trial phase” in the first few months of employment is no longer legally safe.
- Misclassifying short-term contracts: Even zero-hour or temporary staff will be covered by unfair dismissal protections from day one.
- Untrained hiring managers: Front-line decisions carry legal weight – mistakes at the point of hire or during onboarding can escalate quickly.
What Fintech Employers Should Do Before 2026
With the Employment Rights Bill expected to take full effect by autumn 2026, now is the time to prepare:
- Audit contracts and HR policies: Ensure your dismissal, performance, and grievance procedures align with the new legal standards. Outdated documentation could leave you open to claims.
- Train your line managers: Equip those managing performance and early exits with the knowledge to follow compliant, well-documented processes. This includes giving formal warnings, handling appeals fairly, and managing probation with greater care.
- Embed legal & compliance teams into workforce strategy: For scaling fintechs, restructuring may carry greater legal risk under the new rules. Make sure compliance is built into operational planning, not added after the fact or consult with employment law experts for advice.
- Strengthen your onboarding process: Documentation from Day One will be essential. Make expectations clear, communication consistent, and your paper trail robust.
- Plan ahead for structural changes: Restructuring and team pivots are unavoidable, but they must be handled with more rigour. Now is the time to start building flexible but fair frameworks to avoid rushing when the law changes.
The Long-Term Talent Impact for Fintechs
The Employment Rights Bill isn’t just could become a game changer for long-term talent strategy in the UK. Fintech businesses, particularly those expanding rapidly, will need to shift from a “hire fast, restructure later” mindset to a model based on long-term workforce planning.
As job security increases, candidates will expect more than their pay. They’ll be looking for clear career development paths, leadership transparency, and opportunities for internal mobility. For fintechs, this means that retention strategies will matter more than ever. This may result in further investment in Learning and Development programs, but creating a strong company culture will be key to keeping the best people onboard.
Employer branding will also play a significant role in this new framework. Every day we are reminded how candidates maintain their networks in the Fintech space so companies that are known for fair treatment and transparency will have a competitive edge when attracting new employees. The companies that build trust and make employees feel valued will be better positioned for hiring and retaining their workforce.
Getting Ahead of the Curve
The Employment Rights Bill raises the bar for fair employment practices. For employers, this shift goes beyond legal and compliance frameworks, it will provide an opportunity to build stronger, more resilient teams that are equipped to thrive amongst consistently changing regulations.
By proactively reviewing your policies, upskilling your managers, and ensuring your contracts are up to date, you can stay ahead of the changes and protect your business from potential legal challenges.
With changes coming in 2026, now’s the right time to review your policies and ensure your business is aligned with the upcoming legislation.
