Employment law a big headache for small businesses

The Federation of Small Businesses has highlighted the stress and pressure on small businesses caused by employment legislation.

The FSB says that small business owners - who do not have a Human Resources Department - fear that asking a question of a regulator will lead to an aggressive official enquiry when advice would ensure compliance with the law much more easily.

The Federation’s legal helpline (run in association with Abbey Legal Services) receives an average of 240 calls a day, or ten an hour, from FSB members struggling with employment law. Here is a breakdown of the enquiries made in the first part of 2006:

• Age discrimination legislation enquiries has seen an 871% increase in calls as the new requirements begin to hit the small business radar. This is also the case for religious discrimination.

• New statutory grievance and disciplinary procedures have resulted in a 40% rise in disciplinary enquiries and a 112% increase in grievance calls to the helpline.

• A large increase in enquiries regarding part-time workers is due to a rise in rights for part-time workers recently. This has led to them being a less attractive option for small firms – a clear example of legislation reducing employment opportunities, especially for vulnerable people such as mothers returning to work and the elderly.

• Abbey Legal also report an increase in enquiries around civil procedures because many small firms are choosing to litigate themselves to recover debts or dispute contracts.

Intellectual property rights enquiries are also on the rise. Small firms are, by their nature, innovative (60% of commercial innovations come from small businesses) and they need advice on how to protect their inventions.

Dr Murray Fairclough, Managing Director Abbey Legal Services, said:

“Employment law is so hard for small businesses to cope with. Small firms already spend an average of 28 hours a month filling in forms. This disincentive to employ people, built in to the sheer weight and complexity of employment law, and it is a threat to the UK economy.

Thirteen million people are employed by small businesses, over half of the private sector workforce. To hold them back is to hold the UK economy back and the Government has to address that through a lighter regulatory touch.

We have had calls from business owners in tears because they want to follow the law but it is too complicated or time-consuming to get to grips with. There is no-one in official agencies who can be trusted to advise them without triggering an enquiry as well. The FSB legal helpline fills that information gap and is a very useful source of information to members.”