Abstract Small and Medium Enterprises (SMEs) play a significant role in employment, poverty alleviation, innovations and economic development in Nigeria but many are still facing sustainability problems associated with poor internal management practices. The overall effects of labour relations on business sustainability of SMEs in Kwara State, Nigeria was explored. The issue was that most SMEs do not pay much attention to workplace communication, employee participation, conflict resolution and employer/employee relationships as factors that contribute to long-term success and survival, and they do pay attention to financial issues, infrastructure and market competition. The study is important as it offers empirical evidence that can help owners, managers, labour practitioners and policy makers in enhancing stability and continuity in the workplace of SMEs. A descriptive survey research design was used. Information was gathered using structured questionnaires filled by the owners, managers, supervisors and employees of the selected SMEs. A total of 300 questionnaires were sent out and 284 valid responses were analyzed in SPSS. Descriptive statistics and multiple regression analysis were used. The findings revealed that the communication between the employer and the employee (β = 0.286, t = 5.447, p = 0.000), employee participation (β = 0.194, t = 3.986, p = 0.000), conflict resolution mechanism (β = 0.247, t = 4.912, p = 0.000), and employer-employee relationship (β = 0.312, t = 6.104, p = 0.000) had significant influence on business sustainability. The model explained 61.0% of the variation in business sustainability (R² = 0.610; F = 109.440, p = 0.000). It was found that labour relations play a strategic role in sustainability of SMEs. It called for better communication, employee participation, a fair dispute resolution process and better relationships between employers and employees. Keywords: Labour Relations, Business Sustainability, SMEs, Employee Participation, Conflict Resolution, Kwara State