In a recent survey by the Forum, members told us that the cost of compliance is on the increase – up 4% from 2014 to be exact, causing businesses to lose out on an estimated £38.6bn when you factor in the cost of lost opportunities (you can download the full report here and an infographic summary).
in 2015 the figure is £20.0bn
No surprise there you might think. But it’s worth looking closer at what is causing it to rise.
Since 2013 we have seen a drop in the use of consultants by 6% over the two years, but an increase in internal costs at 13%. However Forum members spend 15% less on employment law compliance then other, similar sized businesses.
Changes are dependent on the laws being introduced - 2014 saw an increase in external consultants because of the complex nature of the law changes.
The reduction ius also down to the improved offering that the Forum has now introduced to support its members.
However, small businesses can’t rest on their laurels for too long as the introduction of pensions auto enrolment is the next big change on the horizon they will have to deal with (our research showed that 10% of businesses hadn’t even started the process* july 2014
Top tips for dealing with compliance
1. Be prepared (and prepare early)
With big law changes, especially those with ongoing costs like auto enrolment, the key is to prepare well in advance. There is an inevitable cost, but it can be reduced and have less impact on your business of you’re prepared and budget appropriately.
Part of this will be getting the right software in place. Most major providers of payroll software will include updates to deal with big changes like RTI and auto enrolment as standard.
2. Stay up to date
The main impact of red tape, members told us, wasn’t money but time (40%). Staying up to date, understanding and then reflecting changes in your business processes can all take time. And the amount of conflicting information can be baffling. It pays to find one or two trusted sources of information who will ensure that you know about law changes and key dates well before they happen. Forum members can of course access our helpline on 01565 626001 to find out which law changes affect them, or you can stay up to date through our regular newsletter.
3. Take advice before you act
The average cost of defending a claim at employment tribunal is £9,000 and the average health and safety fine £19,000. Getting advice as possible is the best way to stay on the right side of the law and avoid legal fees and fines. Ensuring all advice is insured will protect you from potential costs should the worst happen.
4. Shop around
Outsourced compliance services are just like any other service you buy in – you can always look for better value for your money. Services like those provided by the Forum combine employment law, health and safety, tax and contract advice with insurance. This option can be a lot more cost-effective than paying lawyers and separate consultants.
If you’re single-handedly running your business and managing all legal compliance, the time may have come to share some of that responsibility with others in your organisation, for example by appointing a Health and Safety Officer or HR manager. This doesn’t mean you’re not responsible but it could free up some of your time to chase business opportunities.
What help do businesses need?
One message from the report is clear, businesses welcome consistency and clarity, and 40% would rather see laws change only once every five years.
We will take this feedback straight to government and policy makers who we urge to look for alternatives for regulation (or to justify why there aren’t any) and to apply a new test for legislation based on how recently the law was last changed.
The Forum can also support you practically with insured advice on employment law, health and safety, tax and contracts, and regular updates through our member newsletters and guides. (this blog was originally published in July 2014 with updates being made to the content April 2016