· 2 min read · Features

SMEs baffled by transient rules

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Changes to employment law affect all companies but are a particular headache for smaller businesses without sizeable resources. HR magazine is campaigning to ‘crush complexity’ in employment law.

You’d be forgiven for feeling a bit lost among the seemingly endless changes to employment law. For large corporates, preparing for revised legislation is a manageable challenge. The CEO and boards have most likely heard a low-level hum of activity from HR departments as they try to work out the best way to administer and communicate the changes to staff. 

But what if you don’t have a dedicated HR department, as in the case of most SMEs? Legislation can’t be farmed out to a separate department – it’s everybody’s problem. This year’s legislation has added more pressure, but the problem is by no means new. HR magazine has been campaigning to ‘crush complexity’ in employment law since late 2011. 

Sara McTrusty, HR manager at MJF Cleaning Services, said: “We go to conferences, seminars and meetings with local law firms and experts to keep abreast of the new employment laws.” 

But this is sometimes not enough. “Often the first we hear about a change is when something’s gone wrong,” she said. “Usually we’re so caught up with day-to-day work we’re not aware of a change until it’s too late.” 

This problem is common to SMEs. The Forum of Private Business receives feedback from its small business members and head of policy Alexander Jackman said the extent of change has been a headache: “There has been new legislation on parental leave every 18 months, on average, since 2004. There’s no incentive to engage with regulation because it will only change again soon. That’s why we’re pushing for a system where changes to specific employment legislation can only take place once every parliament.”

The new rules around flexible working are designed to make arrangements fairer. But when it comes to small businesses, Jackman said they are unecessary and make conversations more arduous. “For a lot of employees in a small business, flexible working is often an easy conversation,” he said. “Now people who know each other well and have never had problems in the past have to go through complex frameworks that waste time.”

Auto-enrolment is another area that has caused sleepless nights as SMEs’ staging dates approach. Laith Khalaf, head of corporate research at investment firm Hargreaves Lansdown, said the Government’s information on the issue was “as good as it could have been”, but the problem is the many changes to the rules since SMEs first started preparing. 

“The ground has shifted beneath everyone’s feet,” he said. “A lot of companies will have had to revisit the issue. Smaller companies had a standing start so are not used to dealing with pensions legislation like this. Many will be compliant at their staging date, but might run into problems further down the line.”

So what can be done to help SMEs navigate these myriad employment law changes? In a word: communication. McTrusty said there has been a lack of information from the Government, with her company having to call in third parties. She calls for a “free portal where small firms can get information quickly”.