Help at hand for small firms struggling with employment law
According to the FPB’s recent Referendum survey on the ‘Cost of Compliance’, complying with employment legislation is the costliest administrative burden faced by small businesses in the UK, totalling almost £2.4bn per year.
Now, new figures from the FPB’s members’ helpline service show that more than one in three of all calls in August 2009 related to employment matters – more than any other issue. Redundancy queries amounted to 14% of the total, with calls about dismissals accounting for 7%. Significantly, calls about short-time working amounted to just 2% of the total number. Queries about disciplinary matters made up 12% of all calls to the employment and legal helplines.
On 1 October 2009, business owners will be expected to cope with a raft of legal changes, including those related to employment such as increases in the National Minimum Wage (NMW) and an increase in the cost of redundancy.
“Many firms are worried that they are not following the correct redundancy procedures when they have to lay off staff,” said the FPB’s Policy Representative, Matt Goodman. “Looking ahead to October’s one-off increase in the weekly wage limit used to calculate redundancy payments, they are also concerned that it is becoming a more expensive process.”
He added: “There is a knock-on effect. The increase will also affect other statutory compensation payments, including unfair dismissal awards, compensation for non-compliance with flexible working procedures and compensation should a statement of employment particulars not be provided to an employee.”
Mr Goodman urged entrepreneurs to put in place watertight procedures using the FPB’s newly-updated Employment Guide, which contains guidance on every aspect of employment, and practical help on complying with the law.
The latest available data from the Tribunals Service shows that the number of employment tribunal claims accepted in the UK soared from more than 115,000 in 2005 to almost 190,000 in 2008.
According to the FPB‘s research, money spent by smaller businesses on complying with employment law surpasses the £2.1bn per year spent on health and safety administration and the £1.8bn on tax.
The survey found that smaller-business employers spend £259m per year on work associated with dismissals and redundancy. They spend a further £391m on absence control and management, £237m on maternity, £333m on disciplinary issues, and £1,175m on holidays and any other remaining aspects of employment legislation. The average time per month spent on all of these different aspects of employment law was found to be around 10 hours for each small business.
Companies in the South East were found to spend the most on employment law out of 12 regions surveyed, at £361 million per year. London firms faced the second-highest bill at £332m, followed by £272m for those in the North West. Smaller businesses in the North East were found to face the smallest annual bill for complying with employment law, at £71m.
FPB member Mark Ashton, of Ashton Marketing Services Ltd in Leicestershire, believes the FPB’s Employment Guide can help other business owners to negotiate the minefield of employment red tape.
“I find that, by having it on hand in the office, as a practical guide, it keeps me up to speed with the current employment legislation, as well as good custom and practice [which is] paramount to a manager working in a medium-sized business,” said Mr Ashton.
Julie Tabb of the Cornwall-based environmental engineering company H20K Systems Ltd, which is also a member of the FPB, agreed.
“We have the Employment Guide and the thing we like most about it is that it is easy to use. The FPB doesn’t complicate matters – the Guide is straightforward and anyone can understand it,” she said.
Earlier this year, the FPB launched www.smallbusinesschannel.co.uk to provide entrepreneurs with free, concise, video-based information on business-related issues including employment law.
The site’s content includes advice on employment legislation from the FPB’s employment adviser, Jane Caven, a human resources specialist and non-executive director of the FPB.
For more information about the FPB’s Employment Guide, call 0845 612 6266 or visit www.fpb.org/employmentguide
Did you know:
· The maximum basic award for unfair dismissal is £10,500?
· The maximum compensatory award for unfair dismissal is £66,200?
· Breach of contract claims can cost up to £25,000?
· There is no limit on the amount of compensation tribunals can award in cases of discrimination?
(Source: the Tribunals Service)