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17 December 2018

Good Work agenda must protect labour market flexibility, say small firms

Responding to the launch of the Government’s Good Work PlanFederation of Small Businesses (FSB) National Chairman Mike Cherry, said:

“The Government’s aspiration to protect the flexibility of our labour market is the right one. This flexibility is one of our economy’s great strengths, enabling record levels of employment.

“We welcome the plan’s focus on promoting wellbeing in the workplace and supporting employee engagement. It’s good to see the Government recognising the vital role that small businesses play in creating healthy work environments, which is not only the right thing to do, but also essential to boosting productivity.  

“Equally, it’s encouraging to see the Government and Low Pay Commission embracing FSB’s recommendations regarding one-sided flexibility. This is an issue that needs to be addressed in a manner that works for all parties involved.    

“Any future consideration of employment and tax status alignment must not hinder the flexibility of our labour market or stifle the genuinely self-employed entrepreneurs that push our economy forward. The risks taken by sole traders, and the dynamism they provide, must be properly recognised and rewarded. Clarifications of employment status, in law, need to be undertaken with great care to avoid unintended consequences for the genuinely self-employed.

“FSB succeeded in stopping a hike in National Insurance Contributions for the self-employed last year, and the Government’s decision to once again reject this proposal is one we very much support. To protect UK entrepreneurialism we will continue to protect the genuinely self-employed. This proposal must not be revisited.

“While we believe that transparency is vital, and welcome the principle that workers should be supported in having a greater understanding of their rights at an early stage, we would like to see the government provide some flexibility for smaller businesses in this space. For example, allowing them to issue a statement of rights to workers within a month of them starting work, to take account of the fact that most small businesses do not have a dedicated HR department.

Ensuring that employees have a greater understanding of their rights is a goal that’s important to get right, and small employers will need clear guidance and support to help achieve it. A lot of small employers find employment legislation one of the most complex elements they have to navigate day to day.

The priority of a new labour market enforcement agency should be on helping employers to comply with their obligations, not reaching straight for naming and shaming powers. Small businesses should feel able to ask enforcement agencies for guidance.”