Go HR founder Louise Lithgow-Dicker is urging small business owners to prepare urgently, as the UK is set to experience a potential 23% rise in tribunal cases due to a sweeping series of employment law reforms arriving between 2026 and 2027.
SMEs across the country are facing a significant shift in regulatory obligations, with 28 proposed changes that could leave unprepared employers exposed to tribunal awards averaging £13,000 and legal fees of around £20,000. Among the most notable reforms are new day one employment rights and the scrapping of the cap on unfair dismissal compensation — changes many business owners have not yet fully recognised.
Louise, who recently interviewed fitness entrepreneur Joe Wicks at BusinessMania in London on the topic of building strong internal cultures, says the volume and timing of these reforms make early HR intervention crucial for smaller employers.
“Small business owners spend thousands on their external brand but very little on their internal culture,” Louise said. “Joe Wicks gives his team a full hour for exercise on top of lunch breaks because he understands that looking after people protects the business. That’s exactly the culture-first mindset SMEs need right now, especially with these legal changes coming.”
The Employment Rights Bill represents the most extensive overhaul of workplace law in decades. Current proposals include immediate worker protections from day one, stronger redundancy consultation obligations for larger organisations, expanded flexible working entitlements, and new enforcement mechanisms designed to drive greater compliance. Additional reforms would extend carers’ leave, update family leave, and refine off-payroll rules, creating a more complex framework for small employers to navigate.
Several elements of the Bill will come as a surprise to many SMEs. Day one employment rights — originally planned for instant rollout — will instead be applied after a six-month probation period. The current £118,000 limit on unfair dismissal awards will be removed entirely. Statutory sick pay will also be due from the first day of absence.
Meanwhile, the period in which an employee can lodge a tribunal claim has doubled to six months. With tribunals already facing an 18-month backlog and no cost deterrent in place for claimants, analysts expect a sharp rise in disputes.
“The headlines are very scary and confusing for SME owners, who often don’t know who to turn to for reliable support,” Louise said.
After 35 years in HR and more than a decade running Go HR, Louise has developed a reputation for realistic, commercially aware advice. She recently helped a client resolve a long-running sickness case in two weeks — a matter the business had spent half a year attempting to fix with a large national HR firm.
The construction industry, a key focus area for Go HR, faces particular danger. While these businesses excel in health and safety compliance, many fail to meet basic employment law requirements such as issuing written contracts on the first day — an oversight that carries an automatic penalty of four weeks’ pay.
“They come to me saying: This employee is unproductive and disruptive, I need them gone,” Louise said. “Our job is to give them options, explain the consequences, and help them sleep at night instead of spending weekends worrying about ‘people’ problems.”
Louise notes that her most proactive clients are already preparing rather than waiting for the law to change. She advises all SMEs to start by reviewing employment contracts, assessing policies against upcoming reforms, and setting clear performance standards.
“With the right preparation, these changes don’t need to be scary,” Louise added. “Businesses that take action now can actually come out stronger. But those who put their heads in the sand will find themselves in tribunal hearings costing £30,000-plus and taking 18 months of their lives.”
