Go HR founder Louise Lithgow-Dicker is advising small businesses to act now as the UK prepares for a significant rise in employment tribunal cases, with claims expected to increase by 23% once extensive employment law reforms take effect between 2026 and 2027.
Small businesses could soon be faced with average tribunal payouts of £13,000 along with legal fees of around £20,000. With 28 proposed changes — including new rights from day one of employment and the removal of limits on unfair dismissal compensation — SMEs will face a far more demanding compliance environment than many currently anticipate.
Louise, who recently joined Joe Wicks on stage at BusinessMania in London to discuss people-first leadership and workplace culture, believes the timing of these reforms makes it essential for SMEs to secure proactive HR support without delay.
“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 is set to introduce the most sweeping changes to workplace regulation in decades. Proposals include expanded worker protections from day one, more rigorous redundancy consultation obligations, improved flexible working rights, and new enforcement mechanisms. Further reforms would broaden carers’ leave, modernise family leave, and update off-payroll rules — creating a substantial compliance burden for small businesses.
Some of the biggest shifts are likely to surprise SME owners. Day one rights will instead be applied after a six-month probation period; the current £118,000 cap on unfair dismissal awards will be scrapped; and statutory sick pay will be payable from the first day of illness.
The extension of the tribunal claim window from three to six months adds further pressure. With tribunals already carrying an 18-month backlog and no financial risk for claimants, experts expect case volumes to climb sharply.
“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 35 years of HR experience and more than a decade running Go HR, Louise has earned a reputation for pragmatic, commercially grounded advice. She recently resolved a complex long-term sickness matter in just two weeks — a case a national HR provider had spent six months unable to progress.
Construction firms, a major part of Go HR’s client base, face particular challenges. Although they excel in safety and regulatory compliance, many fail to meet basic HR requirements such as issuing employment contracts on day one — a mistake that carries an automatic penalty equal to four weeks’ wages.
“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 stresses that the most prepared businesses are already taking steps rather than waiting for the reforms to pass. She advises SMEs to immediately review all contracts, assess policies against the forthcoming legislation, and set clearer expectations around employee performance.
“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.
