UK employment laws preventing SME job growth

Small businesses are being prevented from taking on more staff due to constricting UK employment laws, according to new market research from consultants Citrus HR.

Three-quarters of respondents to the survey admitted keeping abreast of UK employment legislation was a “significant drain on their time”.

Almost two-fifths (39 per cent) of small business respondents said they would be far more inclined to take on more staff if employment law was less complicated; with only a quarter of respondents believing existing employment legislation was at an acceptable level.

While many feel employment legislation is somewhat suffocating, the research also suggests a lack of true understanding of the laws. Less than a third knew the current National Minimum Wage (NMW) – despite risking a fine of up to £20,000 for employers that don’t pay at least NMW rates.

Some of the most difficult employment tasks mentioned by respondents included calculating holiday for part-time staff and those working “casual hours contracts”.

Changes to flexible working rules was another common answer when respondents were asked for examples of a recent legislative change that had made small business employment law compliance more complex.

In addition, almost a fifth (18 per cent) of respondents didn’t know which countries are in the EU, which, according to Citrus, means there is a risk of sanction for not carrying out checks to learn whether workers are legally allowed to work in the UK.

Last month, the Government confirmed it would be doing everything they can to review “burdensome red tape” in key sectors – most notably waste, energy, agriculture, care homes and mineral extraction.

It’s the government’s first step to “axe unnecessary regulation and its poor implementation” by up to £10bn during the five-year period of this parliament.

Sajid Javid, Business Secretary, said: “I’m determined to take the brakes off British businesses and set them free from heavy-handed regulators.

“The government’s pledge to cut £10bn in red tape over the course of this parliament will help create more jobs for working people, boost productivity and keep our economy growing.

“For the first time, these reviews will look not only at the rules themselves, but [how] they’re enforced. We want firms to tell us where red tape is holding them back.”

Date published 27 Aug 2015 | Last updated 27 Aug 2015