Legislation overload damaging small firms


New research among small and medium-sized businesses has revealed widespread ignorance of recent changes in employment law in the UK as well as growing dissatisfaction with the employment tribunals system.

A survey of 500 companies by the conciliation service Acas has found that a quarter of small and medium-sized employers are not familiar with recent changes in employment law such as the new dispute resolution regulations, changes from the Employment Relations Bill 2003 and new equal pay legislation.

The surveyed also found that many employees are less-than impressed with the way that their bosses communicate with them about employment issues. One in three complained that their bosses only faced up to issues once they had become a problem.

But employers also feel isolated. Nearly a quarter said that they lack the information or skills to deal effectively with workplace-related problems and do not know where to turn to for advice.

Acas regional director, Jerry Gibson, said: “As the makeup of the workforce changes, there is ‘a compelling business need’ for employers to know the ins and outs of employment law as it applies to diversity and gender - or at least to know where to turn for advice.”

Meanwhile, a separate survey from employment law firm Peninsula and Portfolio Payroll paints an even more alarming picture, suggesting that only 13 per cent of employers are aware of any new legislation coming into force this year.

In particular, fewer than a quarter of employers are aware of new Health & Safety and disability regulations that are due to be introduced in the coming year.

"This alarming figure demands that more must be done inform employers of legislative changes and give them a fighting chance," said Peninsula’s Peter Done.

With unhappy staff now able to use up to 26 employment acts and 80 types of complaint against employers, it is no surprise that employers are facing a dramatic rise in the number of disputes that end up in employment tribunals. Peninsula's figures show that tribunal cases have risen by 22,444 over the past year to 127,564.

Another survey by the Federation of Small Businesses (FSB) has found that four out of ten small business owners believe that the tribunal system is now "very unsatisfactory", while a quarter feel the process treats employers unfairly.

According to the FSB, employers are particularly aggrieved that costs are hardly ever awarded against employees who loose their cases – a mere seven per cent of cases won by firms resulted in costs being awarded against employees.

With the burden and cost of red tape increasing, the proportion of those who believe that the government is a friend to British business is also falling. Ministers would do well to note that their 'approval rating' on this issue has fallen by a third since Labour came into power, from 36 per cent to 24 per cent.

The FSB's Alan Tyrell, said that he was extremely concerned about the lack of confidence that small employers have in the tribunal system.

"Tribunals are no longer the quick and relatively straightforward methods of solving workplace disputes they once were," he said.

"The huge volume and complexity of legislation means that most employers seek legal advice before attending a tribunal and so face increased costs.

Peter Done agrees. It is costing employers more "money than ever before" to tackle and implement employment legislation, he says.