Louise Lithgow-Dicker, founder of Go HR, is warning SMEs across the UK to prepare urgently as a major programme of employment law reform threatens to bring a sharp increase in tribunal claims, with projections suggesting a 23% surge over the next two years.
With 28 reforms proposed — including immediate employment protections and the removal of the cap on unfair dismissal compensation — small businesses could soon face tribunal payouts averaging £13,000, in addition to legal costs of around £20,000. Many SME owners, Louise warns, are unaware of just how dramatically the regulatory landscape is shifting.
Louise recently interviewed fitness entrepreneur Joe Wicks at BusinessMania in London, where they discussed the importance of strong internal culture. She says the coming legal changes make that focus more important than ever.
“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 significant update to UK workplace law in a generation. Proposed measures include greater employment rights from day one, enhanced redundancy consultation processes, strengthened flexible working provisions, and tougher penalties for non-compliance. Additional updates would extend carers’ leave, improve family leave, and refine off-payroll rules, creating a far more complex environment for employers to navigate.
Several reforms are likely to surprise SMEs. Day one rights will apply after a six-month probation, the current unfair dismissal cap of £118,000 will be abolished, and statutory sick pay will apply from the very first day of absence.
The extension of the tribunal claim window to six months — double the previous limit — adds further strain to an already overwhelmed system, with hearings taking up to 18 months. Without financial deterrents for claimants, specialists expect case numbers to rise quickly.
“The headlines are very scary and confusing for SME owners, who often don’t know who to turn to for reliable support,” Louise said.
With her 35 years of HR experience and 12 years leading Go HR, Louise has become known for straightforward, practical guidance that balances legal compliance with commercial reality. In one recent instance, she resolved a complex long-term sickness issue in two weeks — a problem a national HR provider had been unable to address over six months.
The construction industry, a key segment of Go HR’s clients, faces heightened risk. While these businesses are typically strong on safety compliance, they often fail to issue employment contracts on day one — an error that can immediately cost 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’s message to SMEs is clear: preparation must begin now. She recommends reviewing employment contracts, updating key HR policies to align with proposed changes, and ensuring staff performance expectations are fully documented and communicated.
“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.”
To learn more about the new changes and how to navigate them safely, visit www.gohr.co.uk/contact-us.
