Many of you run small and medium sized businesses. We’re aware that some of you, feeling pressure from all sides, are not that keen on all the UK’s employment laws. It is not by chance that the first question asked on the BBC’s referendum debate held on 21 June complained about the amount of regulations “stifling” small businesses.
We understand where such views come from. You’ve spent your life-savings, borrowed twice that, worked 24-7 for the past few years (at least) setting up the business and twice as hard since, and then you find that the law seems to protect your employees more than it protects you. You see yourself as a caring person – but given the risks you’re taking, why, you wonder, do you have to pay the minimum wage and why is it so difficult to dismiss unproductive workers?
These are reasonable questions. What’s surprising is that the answers to them have not been clearer. And that the benefits of having rules on employing workers are often not as obvious as they should be.
So here are just a few illustrations of how employment law need not be so damaging to small businesses. Because we believe that despite the frustrations, being without most of these rules would deprive employers of fundamental commercial benefits.
Getting rid of unproductive or unreliable workers
Businesses often worry that it will be difficult to dismiss bad employees once they’ve started in the role. However, for the most part, dismissal only begins to get hard for employers once an employee has been employed for two years continuously. (There are important exceptions, notably claims for whistleblowing or discrimination.) So our rules allow for quite a long period in fact in which employers have greater flexibility to assess whether an employee is a good hire, and to be able swiftly and cost-effectively to do something about it if they decide that the employee is not.
There’s no such thing as a ‘job for life’ (or an employee entitlement to one)
Let’s assume, now, that an employee has garnered that two-years’ service. Are they guaranteed a job for life? Far from it. There are several fair and lawful reasons to dismiss an employee, including misconduct and poor performance by the employee. Yes, as an employer, you have to genuinely believe in the reason and be able to justify it, and you have to follow a fair procedure before reaching that conclusion. But what’s fair depends on all the circumstances: small employers are not expected to follow as extensive a procedure as a large corporate group.
It’s gone half-past five, boss!
What about working time regulations? In particular, these rules guarantee minimum annual leave allowance, ensure that workers are able to take rest breaks and set limits around requirements for night-working, and they also regulate total hours that can be worked in a week. These rules may be resented by employers on the basis that these limits can reduce a businesses’ potential productivity. However, there is growing support for the view that achieving a work life balance is good for workers’ well-being, which in fact leads to an increase in productivity and greater efficiency, as well as driving employee loyalty to the business.
Likewise with parental rights. These rights are quite detailed; but in essence, they guarantee parents a certain amount of time off from work after their child is born or after they adopt a child; and for some of this period of leave, employers are legally required to pay the worker (at 90% of the employee’s normal salary for the first six weeks; a lower rate for next 33 weeks). It is also worth mentioning that all or most of this paternity payment can be recovered by the employer from HMRC. Small businesses are able to recover the whole 100%.
In the short term, compliance can sometimes be difficult for small businesses. However, most people now agree that a diverse workforce which accommodates parents and encourages mothers back to work has distinct advantages. Moreover, for individuals, having children is amazing, but being guaranteed a “normal” working life again is also very important – and for most of us, it’s also a financial imperative.
On that final issue, it’s interesting to learn of Leadsom’s other commitment: a charity promoting the benefits for children of being able to have a healthy amount of time spent with their primary carer in their early years. There is support for the view that strong early years’ attachment is good for babies, the adults that they become, and society as a whole. It is therefore arguable that enabling time off to care for babies and young children, whilst guaranteeing parents a right to return to work, is good for society. Legal protections that support that goal may very well be highly beneficial for the society that Andrea Leadsom wants to flourish.
Undoubtedly, the law is not perfect – times change and the law is, after all, made and executed by human beings (whether based in Westminster or Brussels). There are those who would argue that sometimes, the law goes too far and exerts unnecessarily onerous duties on small businesses especially.
Whatever you feel about the legal obligations applicable to your business, we’re here to help and to keep things simple and easy. With the added benefit of elXtr, you’ll get access to a host of useful legal solutions and tools, including guides and template materials that you can tailor to suit you. You can also access more personalised advice if required. If you’re a membership organisation and you’d like to find out more about why elXtr is perfect for you, take a look here. If you’re a small business, get in touch and we can let you know your options for how to get access to elXtr today.
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A trade union has called on the Conservative leadership candidate Andrea Leadsom to give guarantees on workers’ rights post-Brexit in the wake of a speech she made calling for people who work in small businesses to have no employee protection at all.