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Could New Employment Laws Hinder Small Business Growth?

 

New employment laws aimed at strengthening worker rights could unintentionally stifle the growth of small businesses.

Employment Law Changes

Employment Law changes

The proposed changes, which include abolishing probationary periods, banning flexible contracts, and introducing a “right to switch off” for employees, are causing concern among small and medium-sized enterprises (SMEs).

Burdensome Regulations Threaten Small Businesses

New laws aimed at abolishing probation periods, banning flexible contracts, and introducing the right to disconnect will severely impact small businesses.

 Jacqui Adams, Director at Tick HR, argues that removing probationary periods would be particularly damaging, especially for businesses with fewer than 10 employees. These enterprises are already grappling with record-high insolvency rates and cannot afford the added pressure of increased regulation.

Small businesses often rely on probationary periods to assess new hires’ suitability without committing to long-term employment. Removing this option would make it more challenging for these businesses to manage their workforce effectively. Additionally, banning flexible contracts could stifle the adaptability that small businesses need to thrive in a competitive market.

The introduction of the right to disconnect could impose further operational constraints. For many small businesses, the ability to contact employees outside of traditional working hours is crucial for maintaining productivity and responding to urgent client needs. Restricting this could lead to delays and decreased customer satisfaction.

*58% of small firms resorted to loans last year just to cover operational costs, a significant jump from pre-pandemic levels. Exempting businesses with fewer than ten employees from the probationary period removal, a move that would still cover *74% of the UK workforce, allowing the government to achieve its goals without overburdening small businesses.

Fines Add to the Pressure

Adding to the concerns, a newly established Fair Work Agency (FWA) could impose hefty fines on businesses found violating the proposed worker rights laws.

Emma Jones, founder of small business support platform Enterprise Nation, echoes these concerns, stating that exempting small businesses from these “punitive fines” is crucial for encouraging hiring and economic growth. She emphasises the need for sufficient time, support, and flexibility to help small businesses adapt to the new regulations.

Balancing Worker Rights and Business Growth

While the government’s intention to strengthen worker rights is acknowledged, the potential impact on small businesses, particularly in the face of economic uncertainty and high insolvency rates, raises serious concerns. The focus should be on finding a balance that protects workers’ rights without hindering the growth and sustainability of small businesses, the backbone of the UK economy.

Conclusion

In conclusion, while these regulations may aim to protect employees, they could inadvertently place an unsustainable burden on small businesses, potentially leading to increased closures and job losses. It is essential to find a balanced approach that considers the unique challenges faced by small enterprises.

Support for SMEs

In light of the challenges ahead for SMEs, Tick HR Solutions is committed to supporting these businesses. Tick HR helps simplify HR processes, helping reduce reliance on legal services and minimising associated costs for SMEs.

Contact Tick HR today and let us empower you to build a stronger, more successful future for your business.

*Stats from Employment Hero

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