|SMALL FIRMS WARNED NOT TO GET CAUGHT OUT BY TODAY'S CHANGES IN THE LAW
April 6 2011.
A small business support group is urging business owners to be aware of new legislation which comes into effect from today's common commencement date (CCD).
This April's CCD sees a raft of important changes to the law, including increases in statutory sick pay, changes in tax rates and the end of most employers' abilities to forcibly retire staff. However, the Forum of Private Businessis concerned that many small firms may be completely unaware of the changes - and could face prosecution as a result.
The key legislative changes which business owners need to be aware of are:
- An increase in statutory sick pay, taking the weekly amount employers have to pay staff on sick leave from £79.15 to £81.60.
- Alterations to the way National Insurance is calculated and the rates at which it is paid - employers will need to look at this in more detail.
- The effective ending of an employer's ability to issue six-month notifications of retirement using the statutory retirement procedure. The law still gives provision for some businesses to have a set retirement age but only if they can justify it objectively - generally only on health and safety grounds.
- The creation of an employers' right to use positive discrimination as a tie-breaker when making decisions on recruitment and promotion.
Forum Chief Executive Phil Orford said, "When you're busy running your own business, keeping abreast of the latest tweaks to the complex regulatory system can seem like the least of your worries. However, any instances of a business failing to comply with a piece of legislation can have serious financial consequences, no matter how unintended or trivial the breach is. As a result, I would urge all business owners to familiarise themselves with changes to the law and seek professional advice if they are unsure what they need to do to comply."
April's CCD coincides with the release of the latest findings from the Forum's Employment Law Panel.
The qualitative panel is made up a group of specially-selected Forum members and was created in order to provide detailed research into the impact workplace legislation has on smaller employers.
The latest panel report found that its members were generally very positive about the recent release of the 'Employer's Charter'- a Government initiative designed to dispel some commonly-held myths about the rules governing business-employee relations.
Feedback from panel members indicated that, although the measures are already enshrined in law, they found the document very useful in highlighting to employers their own rights and abilities to make 'commonsense' business decisions. The Charter's most popular point with panel members proved to be one pointing out that employers are entitled to ask an employee about their future career plans, including retirement. Another point highlighting the fact that employees can be dismissed for poor performance proved to be the second most popular, followed by one highlighting the fact that employers can ask workers if they are willing to opt out of the 48 hour limit in the European Working Time Directive. However, panel members proved to be very worried about their liabilities and obligations under the forthcoming National Employment Savings Trust(NEST) scheme, which will soon force all employers to contribute towards their employees' pensions. The Forum found that panel members were unsure exactly how they would be expected to comply with the regulations and whether or not their existing schemes would meet the requirements. The complexity of pensions was repeatedly cited as an issue for the smaller employers surveyed, while some expressed concerns over the reduction their employees would see in take-home pay as workers will be automatically enrolled into the NEST scheme.
Employment Panel members were also asked about their views on resolving workplace disputes. It was discovered that panel members were able to resolve the majority of complaints within the workplace internally, without any recourse to third parties. Most of the small employers on the panel also said that they preferred mediation to tribunals and supported recent proposals to cut down on frivolous and spurious tribunal claims. Proposals for Acasto be given a month to resolve complaints through a pre-claim conciliation process were also well-received, though some doubts were expressed over the organisation's ability to cope with the potential demand for such a service.
Mr Orford commented: "Following these findings, we would like to see the principles outlined in the Employer's Charter reinforced and made simpler for business owners to understand, both through the law and via employment tribunals. There should also be greater recognition of the value of resolving workplace disputes internally and informally. Our members appear to take this avenue in the majority of cases, without the cost and disruption of legal action, and the process obviously works for the benefit of both the employer and employee."
Mr Orford added: "It's also apparent that smaller employers need clearer information on their forthcoming obligations under the NEST scheme, and it would be helpful to see some sort of an incentive package created to recompense business owners for the time and money they will be forced to spend administering the scheme."
The Forum helps its members comply with employment law through its 'HR Director'business support solution, which includes access to a HR advice helpline, a comprehensive print and online employment guide, and downloadable HR templates.