SMEs raise concerns about Make Work Pay plan

The government has released details of its Make Work Pay Bill; however, this has been met with some concern from the UK’s smaller sized businesses.

The government describes its Make Work Pay plan as a ‘core part of the mission to grow the economy, raise living standards across the country and create opportunities’.

The Federation of Small Businesses (FSB) however, believe that the legislation risks deterring small employers from taking a chance on someone who has had a significant period out of the workplace, shutting those doors and deepening social exclusion.

Tina McKenzie, Policy Chair at the Federation of Small Businesses, explained, “This legislation is rushed job, clumsy, chaotic and poorly planned – dropping 28 new measures onto small business employers all at once leaves them scrambling to make sense of it all. Beyond warm words, it lacks any real pro-growth element and will increase economic inactivity, seriously jeopardising the Government’s own 80 per cent employment target.

“There are already 65,000 fewer payroll jobs since Labour took power, and the new Government is sending out a troubling signal to businesses and investors.

“Plans to give day one unfair dismissal rights to new employees will add to the risks associated with hiring people. That increased risk will inevitably deter small employers from taking on new people, for fear of facing an employment tribunal simply because a new recruit turns out to be unsuited to the role. That’s bad for jobs, and a barrier to growth and investment. A vague reference to a statutory probation period, with no detail of what that would look like, won’t reassure small employers.”

Tina added, “Small firms are the ones most likely to give opportunities to people furthest from the labour market, such as those returning after long-term health issues or caring responsibilities. This legislation risks deterring small employers from taking a chance on someone who has had a significant period out of the workplace, shutting those doors and deepening social exclusion.

“The added employment costs the proposed legislation will inevitably bring will also jeopardise job creation, which will in turn be a brake on growth and investment.

“The Chancellor has the opportunity to lead the way in adding a pro-business, pro-employment element to Make Work Pay in her upcoming Budget. This should include a rise in the Employment Allowance, pegging it to future rises in the National Living Wage. It should also include the reintroduction of the small business rebate for Statutory Sick Pay.

“When it comes to proposals on zero-hours contracts, the forthcoming consultation must factor in the needs of seasonal small businesses and already-struggling sectors such as hospitality and tourism.

“Sufficient time should be taken to avoid this becoming a hastily cobbled-together Act of Parliament. We look forward to more engagement and the start of a full consultation on each individual measure to ensure the voice of small employers is heard.”

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