Employment Law Challenges
The UK employment law landscape is shifting fast. Here’s what matters for small businesses—and how to protect your team and your bottom line.
What’s Changing—and Why It Matters
Employment law has seen some of the biggest updates in years, and more are coming. For small businesses without in‑house HR, the combination of new rights, higher wage floors, and evolving case law can create real operational and financial risk.
Here are the key developments driving change:
Day‑one right to request flexible working (from 6 April 2024). Employers must consult before refusing and respond within two months. This is a right to request, not to receive, but process failures carry risk. BBC coverage.
New legal duty to take reasonable steps to prevent sexual harassment (in force from 26 October 2024). Tribunal awards can be uplifted by up to 25% if the duty is breached. Official announcement: GOV.UK.
Holiday pay reforms for irregular‑hours and part‑year workers (for leave years starting on/after April 2024), including lawful rolled‑up holiday pay and 12.07% accrual. Government guidance: GOV.UK and legal analysis via Littler: overview.
Higher statutory wage floors (2025). The National Living Wage rose again in April 2025, with mainstream press reporting business impacts on hiring and costs. See recent coverage by Reuters and related updates.
Employment Rights Bill (2025) proposals under consultation and development, including potential day‑one unfair dismissal rights with probationary periods, reforms to zero‑hours arrangements, and strengthened protections. Business press have covered employer reactions and timelines: Financial Times, Pinsent Masons timeline.
The takeaway: policy is trending towards stronger worker protections and tighter processes—great for people, but demanding for small teams without specialist support.
The Reality: Hard Data on Risk and Cost
The numbers show why getting employment law right matters:
Tribunal and Dispute Exposure
97,958 early conciliation cases (2023–24) – a clear signal of dispute volumes SMEs must be prepared for.
Average unfair dismissal award: £13,749.
Average disability discrimination award: £44,483.
These figures underscore the potential downside of procedural errors, poor documentation, or slow responses. Source: Tortuga’s FSB services data (drawing on official statistics and legal analyses).
Legal and Operational Cost Pressures
Legal advice can typically cost £300+ per hour when sourced privately, and complex cases demand sustained support.
Wage and compliance costs are rising, with press reporting that higher minimum wage rates and NI changes are weighing on hiring intentions in 2025.
For owner‑managers, the time impact is just as significant: handling flexible working requests correctly, consulting, documenting decisions, updating contracts and handbooks, training managers, and maintaining auditable processes.
What the Press Is Reporting Right Now
Flexible working becomes a day‑one right to request (April 2024), shifting emphasis to stronger consultation and faster decisions: BBC News.
New duty on employers to prevent sexual harassment (from 26 Oct 2024), including potential 25% uplifts to compensation for breaches: GOV.UK.
Holiday pay reforms for irregular hours and part‑year workers clarified, with lawful rolled‑up pay options: Littler and GOV.UK.
Minimum wage increases and the squeeze on hiring and pay settlements across 2025: Reuters.
Employment Rights Bill 2025—scope, timelines, and business group reactions: Financial Times and Pinsent Masons.
These developments are real and current—and they all point in the same direction: more rights, more process, and higher expectations of employers.
How FSB Membership Protects Your Business
This is where Federation of Small Businesses (FSB) membership can transform risk into routine compliance.
Practical Employment Law Support, When You Need It
24/7 legal helpline with UK solicitors to guide decisions before they become disputes.
1,400+ legal documents and templates – contracts, policies, and letters aligned with current law.
Employment law support to help you handle flexible working requests, holiday pay rules, investigations, and disciplinary/grievance processes correctly.
Debt recovery assistance and credit checks to stabilise cash flow while you focus on people and operations.
Why This Matters in 2025
Correct process handling reduces the risk of costly claims and awards.
Up‑to‑date policy templates and manager guidance help you comply with new duties (harassment prevention, holiday pay, flexible working) without reinventing the wheel.
Advice worth £300+/hour privately is included in membership—making proactive support affordable.
Membership investment starts at just £195 per year—a fraction of the potential cost of a single claim or procedural mistake.
Special 51st Anniversary Celebration
FSB is celebrating 51 years of supporting UK small businesses with an exclusive limited‑time offer.
£51 discount on first‑year membership for new members joining between 1st–15th September 2025.
Exceptional value: comprehensive business protection, employment law support, legal templates, and expert guidance.
For over five decades, FSB has fought for small business interests—on business rates relief, late payment reform, and employment allowances that have saved UK businesses millions in taxes and regulatory costs.
Secure Your People Policies Today
Don’t wait for a claim letter to land. Protect your business now with the UK’s most trusted small business organisation.
Ready to join 160,000+ UK business owners who choose FSB protection?
The smartest decision is getting ahead of change. With dispute volumes high and rules tightening, FSB membership pays for itself from day one.
Book your 1:1 consultation now to discuss how FSB membership can support your business, your people, and your future.
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