Both Luke Johnson and Lord Young have called on government to reduce
the legislative burden on small businesses this month. At the
moment, the hot topic is employment law. New research shows that
88% of managing directors find the current legislation far too
complex. Smarta spoke to three entrepreneurs and employment expert
the "HR Headmistress" to get the latest from the
front line of business.
The new research, commissioned by career management consultancy
Right Management, surveyed 250 business owners on issues pertaining
to employment law. The
results showed that over three quarters of MDs find the legislation
far too complex. In addition, 67 percent believe that pay and
benefits legislation will cause problems over the next few years
and 72 percent think they spend too much time on HR issues.
Jayne Carrington, MD of Right Management, is using this body of
evidence to petition government to reduce the legislative burden on
SMEs. Carrington says: "We have spent considerable time talking to
companies about managing the talent they have. SMEs need more time
to focus on those fundamental issues. If the Government is looking
to the private sector to grow and generate jobs, it needs to make
life easier for those running SMEs and simplifying legislation
would mean companies can focus on growing and strengthening their
businesses for job and wealth creation for the economy."
Jamie Waller, CEO of ethical debt management and enforcement
company, JBW Group, believes that the Coalition is drowning small
businesses in employment law red tape. "How can small businesses
become the fuel to drive the recovery if they have to deal with
government decisions such as abolishing default retirement age and
the creation of new flexible working rights?" he asks.
"Pension legislation will come into play in 2011 and this will
require management. HR and finance departments of small
businesses will be held accountable and will need to ensure the
business compliance. Who is going to pay for this? This is a
typically ill-thought issue that the government believes will
benefit people. The truth is small business will probably get rid
of a member of staff to finance the additional management
time."
"HR Headmistress" Kate Russell is one of the UK's foremost
employment experts and author of 101 Tips for
Employers. She believes that the raft of legislation will
actively discourage small business owners from employing more
staff. "There's been a steady stream of legislation giving rights
to employees," she says. "Three recent examples, namely the Agency
Workers Regulations, additional paternity rights and the EU's
proposed 20-week maternity at full pay, are threatening SMEs
willingness to employ staff.
"At a time when there's particular pressure placed on the
private sector to fill the unemployment gap, it's never been this
costly to employ people. SMEs are likely to find the proposed
new rights absolutely prohibitive. There is already a marked
trend to outsource labour, cutting out the cost of
employment. If the Government want the private sector to
offer employment, business owners must be allowed to work
cost-effectively."
Another bugbear for UK businesses is the introduction of a
compulsory pension scheme for qualifying employees from 2012. This
will increase pensions contributions from small businesses by
3-4%.
Ruel Taylor, director at Mobilefun.co.uk, says: "Controlling variable
costs is a key concern for most small business, with salary being
one of the largest cost areas. Such legislation may have a
negative impact on a small businesses' recruitment strategy as new
employees become eligible from day one of employment, and an
employer is responsible for a 3% contribution of the employees'
salary to the scheme."
Taylor continues, ""While in a slow - if recovering - economy we
are being encouraged to create job opportunities for the
unemployed masses generated by the downsized public sector,
yet the cost of the existing workforce has increased adding no
direct benefit to the employer."
The consensus from the small business community is this: If you
want us to save the UK economy, and employ the scores of people
left jobless by the public sector cuts, stop making employment
financially unviable and time-consuming.
Have you been affected by the new employment legislation?
Have your say below.