Measures need to be adopted to reduce the level of regulation on smaller firms, the CBI has claimed.
Urging the Government to think “small first” when it comes to business regulations, the CBI proposed changes to the rules on tribunals, flexible working and maternity leave.
Although SMEs create some two-thirds of all new jobs, the CBI argued that six out of ten small private and family-owned enterprises complain that employment regulation is a barrier to recruitment.
As a consequence, the Government must recognise the disproportionate impact some regulation has on smaller firms, given their limited human resources capacity, and the informal nature of employment relations.
The CBI’s proposals include: speeding up the tribunals system; providing clear guidance in the absence of a default retirement age; introducing the right to an annual review of flexible working; and to agree a return date with an employee going on maternity leave.
Specifically, the CBI wants the unfair dismissal qualifying period extended to two years as this would reflect the limited HR capacity of SMEs.
The ACAS code needs to be reformed to give greater support to smaller firms.
A package of measures should be introduced to allow firms to manage retirement with confidence in the absence of a default retirement age.
The speed at which employment tribunal claims are resolved should be accelerated through pre-hearing reviews with the power to strike out weak claims, a refundable fee per claim to discourage opportunistic multiple claims and greater efforts to encourage settlement between employee and employer.
In the view of the CBI, firms should also have the right to an annual review of flexible working arrangements, and to redistribute flexible working as employee needs change.
Similarly, smaller employers should be able to ask someone going on maternity leave to specify when they plan to return, with the expectation that this date will be kept to unless employer and employee both agree to change it.
John Cridland, the CBI’s director-general, commented: “Smaller firms are job-creation dynamos. The Government must think small first by tackling regulation which distracts them from growing the business and creating jobs.
“Much employment law fails to recognise that private and family-run firms don’t have dedicated human resource teams and tend to manage staff in an informal way.
“The size and nature of these firms makes them strong advocates of flexible and family-friendly working, and the Government should build on this success.
“If the Government gets the law right for small firms, it gets it right for all firms. Thinking small first would better harness the potential of SMEs, rather than simply exempting some of the smallest from aspects of the law that undermine growth.”