Last year, the Forum of Private Business put the total cost of small and medium-sized business compliance with red tape at £18.2bn and an average cost of £14,800 per small business. This is a significant increase since 2011 despite positive government efforts to reduce the cost of regulation.
Employment law accounts for £4.7bn of the overall cost of compliance, and whilst firms have been happy with government action to cut the red tape burden on SMEs, concerns remain around the constant change in their duties.
Forum research has uncovered that rules around parental leave have changed, on average, every 18 months since 2002. Whilst firms stress the importance of this entitlement, every time a law changes they have to make sure their staff are trained up, or outsource the administrative burden, with significant cost to the business. In fact, it is quite possible that an employer could be managing staff absences under multiple pieces of legislation at the same time. Next year, a further change allowing shared parental leave is also likely to cause further upheaval and cost.
Phil Orford MBE, Chief Executive of the Forum, said:
"The coalition government intended to be the first government in history to reduce – not increase – the overall burden of regulation. There have been some very positive changes to the way regulations are made, tested and implemented, but to date businesses are not feeling the benefits. This suggests there is a clear mismatch between the positive deregulatory work of the government and the increasing cost of compliance for businesses. This is undoubtedly down to the continuous flux of regulatory change."
To mark the first Common Commencement Date of 2014, the Forum of Private Business is calling on the government to stop the constant change of employment law to provide businesses with greater certainty and consistency. The Forum is also calling on the next government – of whichever colour – to set out clearly the desired position on any area of employment law but to commit to regulate in the area just once during their parliamentary term.
Mr Orford said:
"This is not a business group being anti-parental leave or anti-flexible working, it is a business group that is against the constant change in the law and is standing up for the needs of small businesses.
"There have been eight changes to parental leave since 2002 – one every 18 months – so the first party that commits to a more proportionate and consistent approach to employment law after the election will get the praise of our members."
Mr Orford continued:
"Businesses want clarity, consistency and certainty. At the moment too many deregulatory measures are focused within Whitehall processes, rather than addressing the impact at the coal face. Small businesses often lack HR departments to keep on top of changes, so we are proposing a new approach to employment law that is both proportionate and fairer."
The Forum of Private Business has submitted the proposal to the three party leaders and is presenting on the topic to the Regulatory Policy Committee next month.
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