The Forum of Private Business is proposing a shake up of regulation to support small business growth, by suggesting government should only regulate once in any one area of employment law every parliamentary term.
Last year, the FPB put the total cost of small and medium-sized business compliance with red tape at £18.2bn and an average cost of £14,800 per small business. This is a significant increase since 2011, despite positive government efforts to reduce the cost of regulation.
According to the company, employment law accounts for £4.7bn of the overall cost of compliance, and whilst firms have been happy with government action to cut the red tape burden on SMEs, concerns remain about the constant change in their duties.
FPB research has uncovered that rules around parental leave have changed, on average, every 18 months since 2002. While firms stress the importance of this entitlement, every time a law changes they have to make sure their staff are trained up, or outsource the administrative burden, with significant cost to the business.
Phil Orford MBE, chief executive of the FPB, said: "The coalition government intended to be the first government in history to reduce – not increase – the overall burden of regulation. There have been some very positive changes to the way regulations are made, tested and implemented, but to date, businesses are not feeling the benefits. This suggests there is a clear mismatch between the positive deregulatory work of the government and the increasing cost of compliance for businesses. This is undoubtedly down to the continuous flux of regulatory change."
To mark the first Common Commencement Date of 2014, which took place yesterday (6 April), the FPB is calling on the government to stop the constant change of employment law to provide businesses with greater certainty and consistency. The FPB is also calling on the next government to clearly set out the desired position on any area of employment law, and commit to regulate in the area just once during their parliamentary term.
Mr Orford continued: "This is not a business group being anti-parental leave or anti-flexible working; it is a business group that is against the constant change in the law and is standing up for the needs of small businesses.
"There have been eight changes to parental leave since 2002 – one every 18 months – so the first party that commits to a more proportionate and consistent approach to employment law after the election will get the praise of our members."
He added: "Businesses want clarity, consistency and certainty. At the moment, too many deregulatory measures are focused within Whitehall processes, rather than addressing the impact at the coalface. Small businesses often lack HR departments to keep on top of changes, so we are proposing a new approach to employment law that is both proportionate and more fair."
The FPB has submitted the proposal to the three party leaders and is presenting the topic to the Regulatory Policy Committee next month.