Report

Knock, knock

This report from UK think tank the Adam Smith Institute examines the effects of the new union access regime on SMEs.

This report examines the economic impact of the Employment Rights Act 2025 on small and medium-sized enterprises (SMEs). The core of the report argues that the Act’s new provisions—which allow trade unions to demand physical or digital access to workplaces where they are not currently recognized—will impose a significant financial burden on businesses.

The authors, Mitchell Palmer and Jasper Ostle, estimate that these access requirements could cost SMEs up to **£681 million**. While the government has proposed an exemption for firms with fewer than 21 employees, the report highlights that even with this measure, 112,000 businesses would still face a collective cost of nearly £600 million.

The report suggests that SMEs are uniquely vulnerable to these changes because they lack the dedicated HR and legal resources found in larger corporations, making them less capable of navigating complex negotiations or absorbing the operational disruptions of weekly union visits. The authors identify several cost drivers, including legal familiarization, the time spent in arbitration with the Central Arbitration Committee (CAC), and the direct loss of productivity during union activities.

Geographically, the research predicts that major urban centres and business hubs—specifically central London, Manchester, and the South East—will bear the brunt of these costs, with many parliamentary constituencies facing annual burdens exceeding £1 million each.

To mitigate these economic risks, the Adam Smith Institute proposes several policy recommendations aimed at protecting smaller businesses. These include expanding the exemption to include all SMEs (those with fewer than 250 employees) and reducing the frequency of permitted union visits from weekly to fortnightly or monthly.

Additionally, the report suggests that unions should only be granted access if they already have at least two members employed at the site and that all union activities should be restricted to lunch and rest breaks to minimize interference with business operations. T

The authors conclude that without these amendments, the new regime risks stifling growth and placing an unsustainable strain on the UK’s small business sector.