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Impact of new employment law not properly assessed PDF Print E-mail
Wednesday, 30 May 2007

The FPB believes some of the assumptions made by Government when making Regulatory Impact Assessments (RIA) do not reflect the realities of running a smaller company.

Employment Relations Minister, Jim Fitzpatrick, set out new paternity leave proposals on Monday, 14 May. Under the plans, if a mother wants to return to work before her child's first birthday, the father will be able to take some, or all, of the second half of the child's first year as paid paternity leave. The FPB is concerned that smaller businesses will be the ones left out of pocket by such changes in legislation.

"A small firm with few employees who are highly skilled or have specialist knowledge of their workplace, will suffer greatly from the absence of one of their workers. It isn't as easy as just recruiting a replacement for the short-term, business may have to distribute that worker's responsibilities around the rest of the workforce. That hits productivity and profitability."

The FPB believes that the problem stems from the Government's approach to employment law, using one rule to suit all. Big business has little trouble adapting to such changes in law, with their larger, more flexible workforce and human resource departments. For smaller firms there is a much higher degree of difficulty dealing with regulations and coping with their practical implications on the business. On Thursday, 17 May the Communities and Local Government Secretary Ruth Kelly said there was ‘no doubt' that Britain's business culture had come to accept flexible working. Stressing her passion for the work-life balance, she said the Government would consider extending the right to flexible working but would always try to take business with it.

The FPB's Campaigns Manager, Victoria Carson, has some serious concerns and said Government must listen to the voice of the small and medium-sized businesses that make up the majority of the private sector. 

"Good business owners recognise the need for flexibility in the workplace and are willing to find solutions to employees' needs, to the benefit of both parties. However, so far the Government has failed to understand that different types of companies have varying degrees of flexibility, one rule cannot be applied to them all because some will undoubtedly lose out as a consequence."

The FPB wants RIA to take into account the extra costs for smaller companies. Miss Carson said that it is a recurring theme: "Only last month the FPB gave evidence to the Cabinet Office regarding the inadequate impact test done in advance of the introduction of age discrimination regulations."

In March 2007 The FPB provided evidence to the Small Business Council Review of Regulatory Impact Assessments which concentrated particularly on the Employment Equality (Age) Regulations 2006 and the Licensing Act 2003. 

The resultant report stated that in both cases consultation and research were too general and insufficiently focused on small business experience to provide a clearer idea of the likely costs to small and medium-sized businesses. It also highlighted the concerns of smaller businesses with regard to not just the immediate ‘bottom line' costs of new regulations but also the implementation of the regulations which created a host of new administrative demands and unexpected and unintended consequences.

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