Small firms swamped by employment law


The UK's small businesses have been swamped by endless changes in employment law and lack even basic information on their workers’ employment rights.

A wide-ranging survey of more than 700 businesses employing fewer than 250 staff carried out by consultants Consult GEE has found that many employers are unable to answer simple questions about holidays, flexible working, maternity leave, the Disability Discrimination Act or employment contracts.

“Some smaller employers have difficulty in coping with the increasing demands of employment law," said Consult GEE's employment law specialist, Stuart Chamberlain.

"Not only are they unsure of new European directives, some of them are also unaware of the basic information. There has been so much change in recent years that companies should ensure they budget to keep up-to-date. Small employers with fewer than 250 staff account for 99 per cent of businesses in the UK – if employers don’t know the law, their employees will inevitably suffer.”

The research reveals that even basic contractual arrangements are misunderstood by many small employers, leaving them open to the threat of legal action.

For example, a fifth of respondents wrongly believed they could change an employee’s contract, without consent, after terms and conditions had been agreed. Only a third knew that an employee could make a claim if they feel forced to resign after their hours or holiday are changed and a third were also confused about flexible working regulations.

There is also a lack of knowledge about basic employment rights – most alarmingly demonstrated by the two thirds of employers who were unsure about health and safety regulations.

Four out of ten did not know how many weeks a mother can take as maternity leave, while six out of ten had no idea how many weeks a father is entitled to. Only half were even aware how much annual holiday an employee is entitled to.

The possible ramifications of this ignorance were also shrouded in mystery. Despite recent high profile employment disputes that have raising levels of awareness about employment tribunals, two thirds of smaller employers did not realise the potential seriousness of being taken to a tribunal and were unaware that there is no limit to the money that can be award for sex, race or disability discrimination.

However the majority of employers did know that unfair dismissal was the most likely cause of being taken to an employment tribunal and that poor performance is not a valid reason for making somebody redundant.

Nine out of ten blamed their ignorance on the difficulty of keeping up with changes in legislation. Particular complaints included the sheer volume of legislation, too many regulatory changes and inadequate provision of information by government.

Another theme that emerged strongly from the findings is that employers feel that their rights have been continually ebbed away. The widespread perception is that the law bends too far towards enforcing employee rights and leaves little leeway for organisations to discipline under performing staff without being taken to an employment tribunal.

To underline employers' fears, the report points out that firms can now be held to account by their employees for over 70 types of complaint and that the number of cases taken to tribunal in 2000 (130,000) was double the number in 1993.

The Federation of Small Businesses agreed that ignorance is largely due to too many changes in the law: "Small businesses tend not to have HR managers to deal with the wealth of employment law and the continuing changes to it," said the Federation's Juliana Leonard.

"The significant advances in employee rights over the last seven years have left business owners struggling to stay on top of the changes while trying to run a business at the same time."