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Current employment law is hurting small business

Current employment law is bad for small business in the UK, according to research by citrusHR.

When asked whether current employment law was a factor when considering taking on more staff, the response was surprisingly strong. A huge 39% of small businesses surveyed said they would take on more staff if employment law was made simpler.

Employment law is difficult for small employers to understand– only 25% said that they find it acceptable in its current state. And their lack of knowledge leaves them open to serious risks of errors which could incur serious fines and penalties.

As many as 30% of employers surveyed don’t know the current National Minimum Wage, for example, putting them at risk of a fine which could be as high as £20,000. And 18% of smaller employers don’t know which countries are and aren’t in the EU, meaning they could very easily not check properly that new workers have the right to work in Britain. Again this puts them at serious risk of large penalties

Calculating holiday entitlement for staff on casual hours contracts is one example of a particularly cumbersome process; small firms need to look back at the hours each member of staff worked and any commission they earned over the last 12, or in some cases 13, weeks just to calculate their holiday entitlement.

75% of small businesses surveyed said that keeping up with legislation was a significant drain on their time. Yet if small firms don’t keep up with changes, they risk breaking the law without knowing it.


Some of the most frustrating aspects of employment law that small employers want to change include:

  The fact you aren’t allowed to pay people for unused holiday unless they leave (37%)
  The removal of the compulsory retirement age (29%)
  People who get ill while on holiday can reclaim their holiday, and claim sick leave instead (21%)
  Women on maternity leave continue to accrue paid holiday whilst not actually in work (14%)

Despite the very significant risks of not complying with employment law, many employers feel unable to keep up with it themselves yet don’t seek help from an HR service.

·   40% of smaller employers surveyed said they did not use HR support
·   Of these, 45% incorrectly believe they are too small to need it – despite admitting that they don’t understand it
·   50% of those not using any HR support said they didn’t use any simply because they have never had to

Some of small businesses’ reluctance to seek help with HR is understandable. Much of the support aimed at small employers has been seen as expensive and cumbersome. 36% of small firms don’t currently use HR support for exactly this reason.

Today, though, new HR services mean that affordable help is available. Small employers can now get expert support at dramatically lower cost without needing to commit for more than one month. And the government is publically committed to reducing the burden of red tape on Britain’s small businesses. This survey suggests a number of good places for them to start.