Regulation, Regulation and Regulation

1 June 2001



Small businesses are stifled by ever growing tax and employment legislation. Robin Rhodes says there is dismay and resentment at the administrative burden.


The value of a dynamic small business sector to the health of a modern economy is now universally recognised. Politicians of all persuasions have increasingly focussed their honeyed words on small and medium-sized enterprises (SMEs).

However, at the sharp end of these businesses there is increasing dismay and resentment at the administrative burden placed on them. This burden is constantly growing and is now perceived as a real disincentive to both starting and expanding small businesses.

This year’s budget claims to recognise the problem by extending user-friendly VAT rules, by starting a review of corporate taxes with smaller businesses to be the main beneficiary, and by extending the 5% additional payment for the administration of statutory maternity pay to many more smaller businesses.

But that hardly makes up for the heavy demands of being a tax collector whose remit has been further expanded recently to include working family tax credit. Neither does it eliminate the concern that these benefits may in future become a charge on the employer, just as statutory sick pay and statutory redundancy pay turned out to be.

Burdens and frictions

It is in the area of employment law that the biggest burdens and frictions arise for SMEs. In the last 18 months we have seen new laws for parental leave and time-off for dependants in addition to substantial new rights to part-time working. We know now that there are to be further changes to maternity leave/pay and parental leave/pay, with the ink barely dry on the earlier legislation on these benefits.

It’s not just the volume of legislation and regulation, but its complexity and the almost perpetual process of change that makes small employers so downhearted. Their gloom is made all the worse when employees demand their new-found rights, even when it seems clear they do not qualify.

In the current compensation culture, the Citizens Advice Bureaux and “no-win no-fee” lawyers have never been busier. Complex regulations on a wide range of new “family-friendly” rights often lead to serious frictions in small businesses.

The introduction of the Working Time Regulations in 1998 was a disaster for employee relations, with the most bureaucratic regulations being introduced with immediate effect. Guidance for employers was not easily available and ambiguous when it was.

Government departments are getting better at providing advice through both telephone help lines and on the internet. They are at last producing short leaflets and guides which provide an intelligible summary of some of the new laws and regulations.

The recent exercise of extending rights for parents at work, is a case in point. The significant changes will not be made until 2002 and 2003, allowing employers the time to understand and prepare for them.

Guidance

Real efforts are to be made to integrate guidance from different departments, a pack is to be developed (like the maternity plan produced with the Fairness At Work white paper) to help employers and employees work together to understand and agree arrangements for maternity leave.

Flow charts are to be drawn up showing the various stages and approvals necessary for maternity leave, parental leave and time-off for dependants.

Finally, existing guidance is to be rewritten in the form of a rights and responsibilities charter for maternity and parental leave.

If all this happens well in advance of any new regulations, and the seductive words deliver real practical benefits, then it is to be welcomed.

There are two further developments which give real hope for the future for small businesses in this sea of regulation.

The first is the Small Business Service, launched in April 2000, which has as its main objective the building of an enterprise society in which all small businesses thrive and achieve their potential. One of its specific aims is to mitigate the impact of regulations on smaller businesses.

The service is now working with all government departments to ensure they “think small first” when considering new regulations. It has already produced a number of employment rights fact sheets which are excellent summaries of a dozen or so areas of employment law. The service emphasises the importance of the internet for such guidance and information in future, and has published a good general guide to employing staff in small firms, identifying and describing the most important regulatory requirements.

The second important development has been completely ignored by the press, but is nevertheless significant.

  Difficult decisions

Small employers have great difficulty in deciding whether an employee’s absence is genuine or not, and the widening variety of rights for time-off doesn’t help. Ill health, injury at work (or not?) and disability (the exemption from the provisions of the Disability Discrimination Act for employers of fewer than 15 staff may well disappear very soon, if the recommendations of the Disability Rights Commission are accepted) present very difficult decisions. It is often the case that fellow employees think someone is “swinging the lead” but an employer has no reliable evidence on which to support any disciplinary action. If the employer considers taking action, he faces a “ lose-lose” situation, damned if he does, and damned if he doesn’t.

Seeking advice from an employee’s own GP is rarely a route that provides useable information. Increasingly employers need the advice of an independent medical source, with a strong preference for someone with experience in occupational health.

NHSplus

The Employment Medical Advisory Service (based at HSE offices) can be very helpful, but it is a pleasure to report that the NHS is now obliged to provide occupational health services to small- and medium-sized firms. This is called NHSplus and will identify occupational health services which are available from the NHS (for a charge). Not only can sickness absence problems be tackled with more information, but it opens up a wide vista of guidance to employers on health problems at large, not least the management of stress at work.

If I have moved from the criticism of over-regulation to over-enthusiasm about the new systems of support for smaller businesses, forgive me. The problem has clearly been recognised, Whether any genuine and practical solutions to these problems for small businesses are actually delivered can only be judged by the passage of time - would that the Sale Of Goods Act applied to politicians!




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