The European Commission’s twin objectives of competitiveness and employability may not be at odds with an increase in the regulatory framework governing employment relations and employment rights across the EU. This chapter assesses the extent to which such claims are valid by looking at recent evidence from the UK where there has been an increase in the volume and complexity of employment legislation on the statute book. This legislation covers a variety of individual employment rights including working time, maternity and parental leave, wage rates and discrimination. The chapter then seeks to explore a range of issues in relation to the development of labour regulation in the EU and the impact of this regulation upon small firms. Research conducted by MORI, commissioned by the Small Business Service on 1,500 firms with 0–249 employees, found that over two-fifths of SMEs considered that the amount of Government regulations had increased since the election of the Labour Government in 1997.