This year brings with it a raft of regulation, political and economic changes, all of which will affect businesses of different sizes in different ways from a legal perspective.
For small businesses, complying with business legal requirements can be a minefield, particularly if your business is on the threshold of being required to comply with certain regulations, for example.
Here are just a few of the issues that UK SMEs should be considering in 2018.
Coming into force on 25 May 2018, the regulations are the culmination of four years of lobbying and debate in Europe.
More data is being collected than ever before and individuals are increasingly conscious of privacy issues. In light of this, the GDPR requires organisations to be more transparent; providing individuals with greater rights to hold organisations to account.
What’s more, the fines that will be imposed for breaches of the GDPR are significantly higher than before. Under the new legislation it is possible to be fined up to €20 million or 4 per cent of global group turnover (whichever is higher). Small businesses must have proper policies in place and be proactive to ensure that they don’t incur any penalties.
Don’t be daunted. Organisations that meet current requirements are well-placed to comply with the new rules and while the GDPR presents challenges, it should also be seen as an opportunity. Your customers are increasingly privacy literate; and embracing the changes introduced by GDPR will increase trust and strengthen your brand.
Consumer rights changes
As of 13th January, imposing any surcharge on anyone paying by a credit or debit card or online has been banned in the UK. For consumers this means an end to the extra cost added on at the end of the process of buying something online, such as a flight ticket, or being hit with an added charge when using a card in a small shop.
In 2012, businesses were told these surcharges could only reflect the extra costs they faced for processing these payments. This led to some grey areas, was poorly policed and, at times, ignored. Now, the new ban covers card surcharges of any amount.
For small businesses, this could have a big impact. Any business is within its rights to refuse a method of payment. The question is whether this will affect their custom by doing so, especially as the use of non-cash payments is growing fast.
Corporate governance of private companies
Being privately owned may not be enough to keep your business private. Politicians are pushing for all large companies to show that they live by the same standards that shape listed businesses with publicly-traded shares.
The Financial Reporting Council, guardian of the UK’s corporate governance code wants more powers to pursue directors. One key area of reform includes companies being obliged to assess directors with reference to their duty to have regard to the interests of a company’s employees in their strategic reports, which are filed with the latest annual accounts to Companies House.
Gender pay gap
While SMEs will not directly need to report on their gender pay discrepancies, this is not something that should be ignored.
The new Gender Pay Reporting Regulations carry hidden potential longer-term risks, and therefore should be more than a ‘tick box’ exercise.
For small businesses, the reporting regulations could become relevant for them if, for example, they are suppliers to large corporates which will be required to report on their entire supply chain.
Ignoring it could result in damaged customer relationships. This is therefore a topic which should be high on the agenda for all businesses, with strategic input on how the Company wishes to position itself so that it is best-placed to fish for talent in the shrinking talent pool.
National Living Wage
The UK’s National Living Wage will rise to £7.83 in 2018, as announced in 2017’s Autumn Budget, representing a pay increase of 4.4 per cent for low earners.
The policy hasn’t always been popular with Britain’s small business owners. This year, a Federation of Small Businesses study found that the majority of small firms were reducing their margins to meet their obligations, while one in four had cancelled their investment plans.
Alongside the increase to the National Living Wage, the National Minimum Wage is also set to rise.
Following an increased focus on enforcement in this area, failing to pass on these increases puts employers at risk of being publicly named and shamed or facing financial penalties.
Alongside access to the single market and all the questions its absence raises in terms of the movement of goods and access to services and regulatory issues, EU immigration policy is arguably the most important issue facing employers when the UK leaves the European Union.
Employers are concerned about the potential complexity of new immigration policies, at the cost of checking workers’ status and of playing the role of policy enforcers. Social care, hospitality, agriculture and food manufacturing all employ relatively large numbers of EU migrants and may well be impacted heavily.
With a shrinking pool of available talent, training schemes and apprenticeships could be a good way of nurturing entry level employees to develop their skills and invest in your business. That said, outward migration figures already appear to be on the increase in sensitive areas such as health care, requiring more immediate solutions as well as medium-to-long-term strategies.
Caroline Lavis is an associate at Michelmores.