Be a law enforcer
1 October saw changes to employment law. If you fail to adhere to the changes you could be in for a nasty shock as Matt Goodman from the Forum of Private Business explains.
This year, the main changes to employment legislation introduced on October's Common Commencement Date (CCD) included an increase in the rate of the national minimum wage. Having increased by more than 60% in the past decade, the national minimum wage, championed as a protection for workers, can, as we know, often be a barrier both to recruitment and, as a result, business growth. But the rules must be abided by. The minimum wage, which dictates the minimum hourly rate that must be paid to employees, has increased to ?5.80 for workers aged 22 or above, ?4.83 for those aged between 18 an 21 and ?3.57 for employees aged between 16 and 17 years old.
In addition, the limit on a week's wage used to calculate statutory redundancy payments has risen from ?350 to ?380. The increase will affect other statutory compensation payments, including:
. compensation for non-compliance with flexible working procedures
. the basic and additional awards for unfair dismissal
. compensation where an employer has failed to consult a trade union or elected employee representatives when it intends to make 20 or more employees redundant;
. compensation for failure by an employer to allow an employee to be accompanied to a disciplinary or grievance hearing;
. compensation for failure by an employer to give a statement of employment particulars;
. compensation for an employer's failure to comply with its duty to notify an employee of either the date on which it intends to retire them or their right to make a request not to retire on that date.
For those of you already struggling amid continuing credit restrictions, late payment and bad debt, these changes make things just a little more difficult.
"Many firms are worried that they are not following the correct redundancy procedures when they have to lay off staff," said the Forum of Private Business's (FPB's) policy representative, Matt Goodman. "Looking at October's one-off increase in the weekly wage limit used to calculate redundancy payments, they are also concerned that it is becoming a more expensive process."
According to recent research from the FPB (a business support and lobby group), complying with employment legislation is the costliest administrative burden faced by small businesses in the UK, totaling almost ?2.4bn per year and surpassing the ?2.1bn per year spent on health and safety administration and the ?1.8bn on tax.
The survey found that smaller-business employers spend ?259m per year on work associated with dismissals and redundancy. They spend a further ?391m on absence control and management, ?237m on maternity, ?333m on disciplinary issues, and ?1,175m on holidays and any other remaining aspects of employment legislation. The average time per month spent on all of these different aspects of employment law was found to be around ten hours for each small business.
Other figures, this time from the FPB's members' helpline service for August 2009, show that more than one in three of all calls 2009 related to employment matters - more than any other issue. Redundancy queries amounted to 14% of the total. Calls about dismissals accounted for 7%. Queries about disciplinary matters made up 12% of all calls to both employment and legal helplines.
The FPB, which earlier this year launched www.smallbusinesschannel.co.uk in order to provide entrepreneurs with free, video-based legal information and advice on business issues, publishes an annually-updated Employment Guide to help small firms comply with the law. Go to www.fpb.org/employmentguide.