Majority of Small Business Owners Find Day-One Employee Rights Difficult to Implement

A recent survey reveals that 78% of UK small business owners believe implementing new day-one employee rights, proposed under Labour’s Employment Rights Bill, will be a challenge. Only 19% of these businesses feel they have the in-house HR expertise and systems required to handle these changes effectively.

The survey, conducted by BrightHR—a global leader in HR software for SMEs and employment law advisory services—gathered input from 140,000 SME owners across various industries. Respondents were asked about their awareness of and preparedness for over 60 proposed employment law reforms under Labour’s “Plan to Make Work Pay.” These reforms include significant changes, such as new day-one rights, flexible working policies, and statutory sick pay (SSP).

What Are Employee Day-One Rights?

Day-one rights refer to employee protections that would come into effect from the very first day of employment, rather than after a waiting period (like the current two-year qualifying period). Under the proposed reforms, new employees would have the right to:

• Protection from unfair dismissal starting from day one, as opposed to the current system, which requires two years of service.
• Flexible working rights, allowing employees to request flexible working arrangements immediately upon starting their job.
• Enhanced statutory sick pay to provide better security for workers from their first day on the job.

These changes aim to provide stronger worker protections and ensure employees can access benefits and safeguards earlier in their employment.

Key Survey Findings

The survey results indicate that small business owners are significantly concerned about how these reforms will impact their operations. Notable findings include:

• 88% of respondents expressed concerns about their ability to implement the proposed reforms.
• 12% admitted they were unsure which HR policies and processes would need updating to stay compliant.
• 35% of business owners were not aware of the proposed changes to employment law.
• 42% felt that their current HR policies might not even comply with existing laws.

When it comes to preparedness:

• Only 12% of business owners said they know what specific changes would need to be made to align with Labour’s proposed legislation.
• Just 19% felt their HR departments were adequately equipped to implement the necessary policy adjustments.
• 36% of respondents said they were either unsure or unprepared to manage these changes.

Of particular concern is the introduction of day-one rights, with 78% of SME owners agreeing that these changes would be difficult to implement.

Additional Insights from the Survey

Further statistics from the survey shed light on how businesses are responding to the looming legislative changes:

• 60% of business owners said they would likely seek expert advice to navigate the proposed reforms, though only 23% are currently accessing third-party support.
• 57% are closely monitoring news and reading online resources to stay informed about these legislative developments.
• 42% said their biggest concern was the time it would take to make the necessary adjustments.

Expert Opinions

Alan Price, CEO of BrightHR, emphasized that small businesses will face significant challenges due to these reforms. Unlike larger companies, SMEs typically have fewer resources and less in-house HR expertise, making it harder to navigate the wide-reaching changes that Labour’s Employment Rights Bill is expected to introduce. These changes include removing the two-year qualifying period for unfair dismissal, granting default flexible working rights, and placing restrictions on zero-hour contracts.

“Small business owners are particularly concerned about the new day-one rights, especially protection from unfair dismissal from day one, rather than after two years of service,” Price said. “These changes will require substantial adjustments to existing HR policies and processes, as well as a significant investment of time and resources to ensure proper implementation.”

Lucy Cobb, an Employment Law Specialist at BrightHR, also warned of the consequences of non-compliance. “Getting employment law wrong can be costly for businesses, potentially leading to tribunal claims, legal fees, and reputational damage,” she said. Without access to in-house HR teams, small business owners will need to be vigilant about these legal changes and ensure their policies, procedures, and documentation are up to date. She advised SMEs to seek expert legal advice if they are unsure about what specific changes need to be made. Tools like BrightHR’s software can also help provide necessary templates and support for compliance.

Conclusion

As Labour’s proposed Employment Rights Bill moves closer to being tabled in Parliament, small business owners must prepare for these extensive changes. Day-one rights, in particular, will require businesses to reassess their current HR processes to ensure compliance. With many SME owners expressing concerns about the resources and knowledge required to implement these reforms, seeking expert advice and utilizing HR software could provide the support they need during this transition.

Staying informed and proactive will be crucial for SMEs as they navigate the challenges ahead, ensuring they are fully compliant when the new legislation takes effect.

Sources

1. brighthr.com – 78% of small business owners believe it will be ‘difficult’ to implement new employee day-one rights
2. OneAdvanced – Employment Rights Bill: Labour’s new proposals and what you need to know as an employer