The Small Business, Enterprise and Employment Act 2015 is being referred to increasingly as simply the Small Business Act, and much of the focus is indeed on SMEs.
Overall, we think the Act is going to be great for SMEs – but not without some effort; and if you are an employer, much of the burden will fall on you. Doesn’t that always seem to be the way?
We’re going to give you a quick rundown of the highlights, and show how the simple step of making a Staff Handbook can ensure that you are, and remain, compliant, and that your staff-related costs are incurred sensibly.
The impact of the Small Business Act on employers
Why is the Act good for business?
Although only one part of the Act specifically deals with employment issues, the whole of the Act affects SMEs as employers. If the Act is designed to promote growth and create jobs – which it most definitely is – then there is a simple equation:
If things go well, the equation turns into the cycle you can see at the top of this post. (Without the confusion in the middle.)
And then you’re going to need to make sure that your business is equipped to manage its staff fairly, reasonably and – above all – lawfully. And that’s where the Staff Handbook comes in.
How is the Act good for business?
The big boosts for SMEs intended by the Act come in the form of
- more avenues to funding and investment
- streamlining and simplification of company registration and filing requirements
- wider access to public sector contracts.
It’s not all plain sailing
At the same time there are measures which tighten, rather than loosen, the governance of business. For example, widening the scope of directors’ disqualification, by broadening the sanctions available against a director and increasing the time limits by which an action can be brought, may be necessary but is just as likely to constrain rather than liberate the small business community.
And there are some changes which are rather two-edged, such as the measures to reform insolvency procedures: the red-tape around insolvency has been reduced, and even if the direct financial benefit of these will accrue to creditors and regulators, the practical benefits will be felt by all. But at the same time, other provisions actually increase the framework of insolvency regulation.
Whichever angle you approach from, the Act is likely to lead to employment being a bigger part of your business planning.
Part 11 – Employment provisions of the Act
Part 11 is one of the most under-reported aspects of the Act. Apart from a few sector-specific sections there are only a few provisions here, but they carry considerable impact. These are not provisions which exclusively affect SMEs – far from it – but as is so often the case, the impact of changes to employment law is felt most keenly by that part of the private sector with comparatively low turnover per business – where staff are employed in numbers of twos and threes, or dozens, rather than thousands.
Once again we stress that the measures themselves may well be necessary. For example:
- closing loopholes relating to discrimination against whistleblowers
- beefing up transparency in equal pay reporting
- stiffening the penalties for failure to pay the minimum wage
- removing exclusivity in zero-hours contracts, so as to unlock a shackle from employees who might earn nothing from their employer, but not be permitted to seek work elsewhere.
Conscientious employers don’t object to these, but it isn’t wrong for a small business to take a look, for example, at the price tag of having a zero-hours contract with someone who might not be available for that essential piece of work when they are needed.
Similarly, employers should be paying the minimum wage – no contest about that. But the minimum wage is just about to face a series of hikes, all of which will carry a cost.
Reducing the indirect cost of employment
The cost of employing staff is a massive one for any business – and consists not only of the direct costs of salary, national insurance and any other direct benefits but of the indirect costs of looking after the staff, ranging from managing premises, providing equipment and above all having compliant and robust internal processes.
Small business proprietors blench at the bureaucratic burden of creating and maintaining all the policies and procedures they think they should have. You can spend your life (and your money) hacking your way through the jungle of employers’ responsibilities before you even get your head round what they are. But it can – if you’re smart – be also be much easier than you might think.
Get yourself a good Staff Handbook
A good Staff Handbook covers everything from an equal opportunities statement, flexible working policy, family-related rights, grievance and discipline, whistleblowing, bribery – all the things that (whether you like it or not) apply to you as an employer.
A great Staff Handbook will be tailored to your needs, while staying compliant with the requirements that employers have to observe.
A really great Staff Handbook can be
- created in a few minutes
- composed of the elements you choose from a list of component policies and procedures
- created by answering a handful of straightforward questions online that suit your business size and structure
- downloaded at the touch of a screen or the click of a mouse.
The Staff Handbook we have created at Simplify the Law is exactly that.