Currently, when new policy and regulations are being developed, it is presumed that those businesses with less than 50 employees may be exempt from certain regulations. This is not a blanket exemption for all businesses within that category, but this default presumption is designed to protect smaller businesses and prevent them from having to use up a large proportion of their resources on regulatory requirements. This then allows the business to spend more of its resources and time on growing the business.

EU regulation regime

Regulatory exemptions are common for smaller businesses, and within the EU regulation regime, these exemptions apply to those firms with up to 250 employees.  

The UK has now taken this a step further by increasing the size of what it considers to be ‘smaller businesses’ to include firms with up to 500 employees as of the 3rd of October 2022. There are also suggestions that this threshold could increase to 1,000 employees in the future.

The reasoning behind this policy update is the findings of the Business Perceptions Survey 2020 (Business Regulation: Business Perceptions Survey 2020 - GOV.UK (, which found that large portions of time and money of businesses were being spent on dealing with regulation. This measure is therefore designed to reduce the overall burden on UK businesses through regulations to encourage and support growth in UK businesses.

Some commentators have suggested that this could jeopardise workers’ protections, which are implemented through regulations. For example, businesses with less than 500 employees would now be presumed to be exempt from the regulations which require firms to report on gender pay gaps and executive pay ratios - these are designed to ensure that workers are receiving a fair wage in relation to their work.

The government has said that the measures are a “proportionate way to ensure workers’ rights and other standards will be protected, while at the same time reducing the burden for growing businesses”.

Contact Our Coporate Solicitors

If you have any more questions or would like more information regarding regulatory exemptions for smaller businesses, you can contact our Corporate Solicitors below.

0161 941 4000