The Employment Rights Bill, progressing through Parliament in late 2025, introduces day-one rights for all employees, including immediate unfair dismissal protection, statutory sick pay from day one, and enhanced family leave. While well-intentioned, these changes add significant costs and risk for small employers. The British Chambers of Commerce Q4 2025 Quarterly Economic Survey finds that 77 % of businesses are dissatisfied with the pace and scope of employment reforms, with 79 % saying the government has not adequately assessed the impact on SMEs.
For a typical small firm with 10 employees, the combined effect of day-one unfair dismissal rights, removal of the two-year qualifying period, and new family-leave entitlements could add £8,000–£15,000 a year in legal and HR costs – even without any claims. Many owners already report spending 5–10 hours a week on compliance; this will push that higher. 41 % of SMEs say they will reduce hiring or use more zero-hours contracts to mitigate risk (BCC survey).
Large employers can absorb these costs through dedicated HR teams and insurance. Small businesses – the ones that create most net new jobs – cannot. When they hesitate to hire, the economy stalls.
The solution is pragmatic and temporary:
- Delay implementation of day-one unfair dismissal protection and statutory sick pay for businesses with fewer than 50 employees until 2028 – giving two years to prepare and assess real-world impact.
- During the delay, introduce a £1,000 one-off SME Employment Rights Grant per business to cover HR advice, policy templates, and training.
- Estimated cost to the Treasury: £280 million over three years – a fraction of the £1.2 billion projected annual cost of the full Bill to SMEs (OBR 2025 modelling).
This is not opposition to workers’ rights; it is recognition that small employers need time and support to implement changes without unintended job losses. Ireland delayed similar reforms for SMEs by 18 months with minimal disruption. Britain can do the same.
Give small businesses breathing space to adapt – so they can keep hiring and growing.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
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