Louise Lithgow-Dicker, founder of Go HR, is warning small and medium-sized employers that they face significant legal and financial risks as the UK prepares for a surge in employment tribunal claims linked to sweeping legal reforms due between 2026 and 2027.
SMEs could soon be exposed to tribunal payouts averaging £13,000 and legal bills of around £20,000 as 28 major reform proposals move closer to implementation. Day one employment rights and the removal of unfair dismissal compensation caps are among the changes advancing faster than many business owners anticipate.
Louise, who recently interviewed Joe Wicks at BusinessMania in London on building resilient workplace cultures, believes these changes make early HR preparedness essential for small businesses.
“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 shift in workplace legislation in a generation. Expanded day-one rights, stricter redundancy consultation requirements, enhanced flexible working rules, improved protections for carers and parents, and tighter enforcement measures are among the proposals under review. The reforms will create a complex compliance environment that SMEs must understand and adapt to.
Key changes are likely to catch employers off guard. Day one rights will now apply after a six-month probation period, the current £118,000 limit on unfair dismissal compensation will be abolished, and statutory sick pay will begin from day one of illness.
Compounding these challenges, employees will now have six months rather than three to bring tribunal claims. With tribunal delays already reaching 18 months and no costs applied to claimants, experts anticipate a 23% rise in cases.
“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 12 years at the helm of Go HR, Louise is known for pragmatic and commercially grounded advice. She recently resolved a complex long-term sickness matter in two weeks for a client who had spent six months seeking help from a major national provider.
Construction firms — a major segment of Go HR’s client base — face heightened risk. Although they are highly regulated in safety compliance, many fail to issue employment contracts on the first day, an error carrying an automatic penalty.
“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 businesses acting now will be far better positioned. She encourages SMEs to immediately review employment contracts, update policies to reflect incoming legislation, and formalise performance expectations.
“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.
