Firms flounder in employment law mire

Fresh figures from the Federation of Small Businesses (FSB) reveal the increasing pressure faced by employers due to the recent deluge of changes to employment legislation.

The research analyses phone calls made to the FSB’s free legal helpline on employment issues in 2005 and shows an increase of around 30 per cent in the number of queries directed to the ‘lobbying and benefits group’. Call traffic is up from 55,036 in 2004 to as high as 70,943 in 2005 and, as with the previous year, most calls came from employers who were vexed by the law surrounding disciplinary procedures.

The largest increases in calls related to two major issues: the formalities regarding dismissal (a 174 per cent increase from 2,771 to 7,583 calls) and grievances (up 118 per cent from 1,122 to 2,442 calls).

See also: Employment law for business owners – Ignorance is no defence if you fall foul of employment legislation and it can have disastrous consequences. Stewart Masterton sheds some light on the common pitfalls.

Sandy Harris, FSB Members Services Chairman blames the rise in confusion on the fact that ‘there are at least 26 Acts of Parliament on employment issues and it is tough for small firms to deal with all their requirements’.

‘Our members want to protect their staff, their most important asset,’ says Harris, ‘they need assistance from the Government to do that by simplifying the rules and reducing the burden of compliance.’

Whilst Harris is careful not to request a full repeal of all legal safeguards for employees, it seems clear that ‘without a simplification of employment law, small firms’ growth will continue to be stifled’.

Managers are devoting an increasing amount of time to employment law issues

Figures from a recent study by the Economic and Social Research Council show that 42% of managers have seen the number of unfair dismissal cases grow. Not only are businesses spending more time sorting out employment issues, but one in six of those surveyed said they are spending more money on legal advice compared to three years ago.

More problems could also arise from recent changes in employment legislation. The Employment Act 2002 details a number of new legal precedents employers will have to grapple with over the next 12 months, ranging from the rights of fixed term workers and new mothers to an overhaul of dismissal and disciplinary procedures.

The report accuses employers of being slow to react to the new policies and concludes that “managers still fail to give a high enough priority to improving the family-friendly and employee-friendly practices which would develop motivation and encourage job retention.”

Small business owners should ensure they are fully aware of the changes in employment law – non-compliance can lead to any unfair dismissal award increasing by up to 50%.

But changes in employment law could ultimately benefit employers, according to Keven McCavish, a partner at solicitors Shoosmiths.

“Although the amount of new legislation may look daunting, employers should take heart. Whilst the implementation of new human resource policies and procedures and, in some cases, contracts of employment, will be necessary to ensure compliance, in the long run some of the changes should prove to be extremely advantageous for employers,” says McCavish.

Related Topics

Employment Law

Leave a comment