SMEs need greater understanding of employment regulations

A lack of expertise regarding HR in small businesses could be placing firms at risk, according to new research from Jobandtalent.

The study suggests that there is a lack of knowledge when it comes to hiring practices and employment regulations, driven by a lack of HR resources.

Data from The Pensions Regulator has also revealed that the number of employers who are being fined £10,000 a day for non-compliance of new workplace pension regulations has risen 300% in the last three months.

The study claims these businesses were more likely to have a lack of HR personnel or resources, and were less likely to be aware of their responsibilities.

Just 37% of SME owners reported that they had a good understanding of employee rights and employer regulations.

Those individuals said they regularly checked for law changes, while 25% said they are aware of the current rules but find it difficult to keep up with any alterations.

Some 12% added that they have a very limited to no understanding of the current employment regulations, before even considering what may change in the future.

For businesses that operate on fine margins, or that do not have easy access to finance, they can ill-afford the fines and reputational damage that may result from not meeting regulations.

Although insolvency might be an extreme in this instance, businesses may still need to restructure themselves or find alternative financial options if they are to continue.

Two thirds of those questioned said they did not have a dedicated member of staff to find or attract new talent. Those in the study feel it is up to the business owner to take responsibility for this.

However, this is not entirely beneficial for a business as it means the owner is taken away from other key duties.

One in five people surveyed said that it took between two and five days to complete the hiring process, including registration, tax and insurance, reference checks, payroll registration and pension enrolment.

By Phil Smith

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