Small business compliance checklist: how to keep up with legislative change

Staying on top of HR compliance can feel like a full-time job in itself.

This year especially, many of us are feeling the pressure, with the first wave of the Employment Rights Act 2025 now in play and more due later this year and in 2027.

For small and medium-sized businesses (SMBs), the pressure is exceptionally high as most don’t have big teams or in-house experts to help manage the change.

If you’re struggling, know that you’re not alone.

To help, we’ve created a compliance change readiness assessment, so you can gauge where your business stands, identify the gaps and build a compliance checklist to support activity.

Compliance change readiness assessment: SME compliance checklist  

Use this tool to see how you’re faring with regulatory change for small businesses.

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Compliance Change Readiness

Gearing up for a major compliance change, or preparing for a regulatory shift? Use our tool to find out how prepared you are – and the steps you still need to take.

Are you ready for the change?

Answer a few questions about your business and the legislation you're responding to — and this tool will show you where the gaps are and exactly what to do next.

1. 1Tell us about your organisation and the area of change
2. 2Work through a tailored readiness checklist
3. 3Get a prioritised action plan you can print and take away

Start assessment

What a small business compliance checklist should include

HR compliance covers a lot more than most people expect.

Before you can stay on top of change, you must know which areas you’re responsible for.

Here are five areas to keep on your radar:

• Employment law: the rules covering contracts, pay, leave and dismissal.
• Health & safety: your duty to protect the wellbeing of everyone at work.
• Sector-specific laws: extra rules that apply to your particular industry, on top of the general ones.
• Data & privacy: how you collect, store and protect personal information.
• Financial: payroll, PAYE, National Insurance and statutory payments.

Why is compliance change so challenging for small businesses?

On average, failure to comply costs UK businesses £1.6 million per year.

That’s a daunting figure.

However, it’s not surprising when you consider just how much legislation you’re expected to keep track of.

From statutory rates and holiday pay to data protection and health & safety, the way you manage people is governed by strict rules.

Worst of all, legislation doesn’t stand still, with new rules and regulations regularly added.

The new Employment Rights Act 2025 is a fantastic example, being described as the most sweeping reform of UK employment law in a generation.

According to the CIPD, legislation like the Employment Rights Act means reviewing policies on induction, onboarding, performance management and contractual probationary periods.

No small task.

Now, the real challenge for small businesses isn’t willingness but capacity.

Without a large HR team and in-house experts, staying on top of every change while also keeping up with day-to-day operations can feel impossible.

How to keep up with legislation changes

Understanding your legislative gaps is one thing, but actually keeping up is a whole different ball game.

Where should you start? How do you move forward?

Here, we’ve broken down managing legislative change into three steps.

1) Build your knowledge

You can’t change what you don’t know, so the first step you need to take is building your knowledge.

Yes, our tool above can help you find immediate gaps, but we want you to be able to leave here feeling confident in the future, no matter what comes your way.

Thankfully, there’s a wealth of free, trustworthy guidance out there every time legislation changes.

Places you should be regularly checking include:

• Chartered Institute of Personnel and Development (CIPD)
• Chartered Institute of Payroll Professionals (CIPP)
• GOV.UK

Additionally, trusted vendors, such as IRIS, also produce a range of content, from guides to webinars, on all the big legislative changes you need to be aware of.

Check out our guide page, blog page, webinar page and follow us on social to make sure you never miss a resource.

Build up a few reliable sources you trust, so nothing important slips by.

2) Update your processes

Once you know what’s changed, the next step is checking and updating your processes accordingly.

In relation to the Employment Rights Act, on a recent webinar, Lizzy Barry, HR Director, advised: “These changes, which are simply the right thing to do as an employer, are things organisations should already be doing, even if they weren’t necessarily legally compelled to do so.” 

We appreciate how busy HR professionals are, so, as a starting point, we’d recommend you set aside time to regularly review your policies, contracts, handbooks and day-to-day procedures.

Rather than a one-off panic each time a major change comes into play, build this in as a recurring task, such as a quarterly review, for example.

Doing so ensures small updates never have the chance to pile up into a much bigger job.

3) Implement reliable technology

Good HR and payroll software does a lot of the heavy lifting for you.

Reputable vendors, such as IRIS, keep their systems updated in line with the latest legislation.

For example, when Statutory Sick Pay (SSP) became a day-one right and the Lower Earnings Limit (LEL) was abolished this April, our systems were already updated and ready to go, making the change easier on customers.

Compliant, regularly updated software helps remove a huge amount of the risk associated with legal compliance for small businesses.

However, the benefits of technology don’t stop there.

Just as importantly, when your HR and payroll systems take care of time-consuming, admin-based tasks, you’re freed up to focus on more important work, such as ensuring your internal processes and procedures are compliant.

Pressure is rising for HR

HR teams are being asked to do more than ever, from managing wellbeing and supporting hybrid working to staying on top of compliance.  

But many are doing it with systems that create more work rather than less.  

We surveyed 300 HR professionals, from entry-level staff all the way up to leadership levels, and the findings were troubling:

• 62% of HR professionals have seriously considered leaving their role in the past 12 months due to unsustainable workloads, inefficient systems and lack of senior support.  
• 59% of respondents stated they are either often or always working beyond contracted hours to keep up with workload.
• 45% are experiencing feelings of being overwhelmed.  
• HR professionals lose an average of half a working day (3.4 hours) each week to poorly integrated systems, and only 28% have a fully or largely integrated HR platform in place. 

What’s striking is that this isn’t about unrealistic expectations.  

HR professionals aren’t asking for the impossible; they’re asking for technology that works properly, integrates smoothly and gives them back the time to do the people-focused parts of their job well.  

That’s a reasonable ask, and it’s one organisations need to take seriously. 

Keeping your business compliant with Staffology HR and Payroll

Where does your business stand after using the compliance change readiness assessment?

For those with gaps, ask yourself: could better software and processes help?

Whether you’re looking for HR software, payroll software or an integrated solution, we can help.

Check out our software brochures below for a detailed look at the systems, or visit the product pages here:

• Staffology HR
• Staffology Payroll

For those looking for added support with their compliance requirements, check out IRIS HR Consulting.

Our HR Consultants work as an extension of your team to keep your business compliant and maximise your workforce’s full potential.

Legal compliance for small businesses: Frequently Asked Questions (FAQs)

When it comes to regulatory changes for small businesses, here are some common FAQs.

Disclaimer: This document is for general information purposes only and does not constitute legal advice; it should be treated as a support document. Every effort has been made to ensure the content is accurate at the time of writing, but details are subject to change. If you require legal advice, please consult a qualified professional.