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Small businesses lack confidence in their understanding of employment law

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Small businesses are suffering from lack of confidence and awareness of managing employment law, according to new research from the Department for Business, Innovation and Skills (BIS).

The study shows that almost a third (32%) of the total sample report feeling confident in their understanding of employment law and their role as an employer but 34% of respondents feel employment law obligations are ‘not relevant' to their business and a further 20% report that they understand their obligations but worry about getting it right. 

Almost half (42%) of the sample consider it ‘important' to stay up to date but a quarter (25%) admit that they do not keep up to speed with legislation changes. 

A further 28% report they are ‘vaguely aware' of their legal obligations. This group of employers feel that they are unable to find the time to keep abreast of their legal requirements.

The research comes on the eve of the first Corporate Manslaughter and Corporate Homicide case. The upcoming prosecution of Cotswold Geotechnical Holdings (CGH) will start tomorrow.

The company will be the first organisation tried under the Corporate Manslaughter and Corporate Homicide Act 2007 (CMCHA) following an employee's death after an excavation pit he was working in collapsed in September 2008. CGH has entered a 'not guilty' plea and the trial will commence at Bristol Crown Court tomorrow (23 February).

Commenting on the BIS findings, employment relations minister Lord Young said: "We know that running a small business is both challenging and rewarding - and that this combination often fuels a successful enterprise. The essential job of managing employment law need not be one of these challenges.

"This study helps us identify the knowledge gap, and the reasons behind this, to enable us to continue to improve the advice and support we offer. I expect all small businesses to access this help for free on the Business Link website to make sure they know their responsibilities."

The research also found women place a greater emphasis on keeping up to date with employment law compared with their male counterparts, but worry more that they will get it wrong.  Over half (54%) of women report that they feel it is important to keep informed of changes, compared with 38% of males.

Over a quarter of male small business owners (26%) admit they don't keep up to date with employment legislation, compared with a fifth of women (21%). Despite this, over a quarter (26%) of women worry that they will manage it incorrectly compared with 17% of men.

The Government offers free advice and simple online tools on the Employing People section of the Business Link website to help SMEs manage their legal obligations. This advice is tailored to small business owners, to suit different requirements.

As an extension of this, BIS launched a new online tool last September to help SMEs stay up to date on new legislation. The Employment Law Organiser is available to download at www.businesslink.gov.uk/employmentlaworganiser.

The Department for Business's campaign targets SMEs and aims to reduce the administrative burden of employment law, by giving businesses access to free, easy-to-use, tools and information to help them answer a wide range of employment questions.

The free advice and tools are all available for small businesses at www.businesslink.gov.uk/employingpeople.