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Employment Red Tape and Small Businesses

By: Rebecca Lim

A survey by the Federation of Small Businesses (FSB) has revealed that 80% of small businesses deal with the ever more complex issues of employment law by themselves until they hit a problem.

Surprisingly 78% of those surveyed said they dealt with all employment paperwork without help or advice. One thirdsaid they did not know where to get government advice on legislation that affects small businesses.

Perhaps the most important statistic - nearly one third of small business owners said they didn’t take on new staff because of the complexity of employment law. Proof that employment legislation must have some detrimental effect on the economy. Should the Government take more responsibility for ensuring employment law is realistic, practical and understandable?

We have to question whether the ‘one size fits all’ approach to employment law is necessary or desirable. Small businesses need flexibility in order to grow and thrive. Rigid employment legislation makes it difficult for small businesses to prosper, and the whole economy suffers as a consequence.

There should be an ethical relationship between employer and employee, but if the pendulum swings too far towards the employee, the legislation it will not achieve its objective.

The FSB survey asked what aspects of employment legislation were causing problems: half said it was the financial cost of compliance; nearly 40% said it was the increased threat of legal action; around a third said it was the time spent on administration in order to comply; and 15% said that it was the difficulty in understanding the requirements of the legislation.

Clearly it is important to keep legislation as simple and jargon free as possible. The Government should recognise that, taken in isolation, it is relatively achievable to comply with most regulations, but when they are cumulatively applied, the resulting burden creates considerable difficulties for the small business community.

One issue that can cause particular problems for small businesses is maternity pay. Small businesses want to be as flexible as they can with regard to maternity and paternity issues. However, some businesses experience considerable difficulties, both with administration and in relation to continuity of work.

Small businesses can really struggle with the impact of losing a skilled member of staff. A single member of staff will make up a significantly higher percentage of the overall workforce than one individual in a larger organisation. Providing temporary cover and the uncertainty over whether an individual will return to work can cause real problems in a small business.

Holidays are another important issue. Recent legislation has meant that holiday entitlement in the UK is to become 28 days statutory minimum to include Bank holidays.

The minimum had meant employers were allowed to absorb the eight annual Bank holidays into the statutory 20 days – not for much longer.

Although it is important to support a good work/life balance for employees, this steep increase could affect some small firms negatively, many of whom are also trying to meet the extra costs of the National Minimum Wage increase.

Immigration is also an area of growing complication and significance for the small business community. With new member states joining the EU, there is confusion over which workers are legally entitled to work. Nearly 80% of respondents said it was relatively difficult to determine whether a worker is legally entitled to work in the UK. They also considered the Work Permit application procedure to be time-consuming, costly and complex to understand

Article Source: http://www.articlesinsight.com

This article has been written by Rebecca Lim, who works on the website Find A Solicitor

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