Brexit – what does it really mean for SMEs?

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According to the BDO’s employment index, the level of uncertainty surrounding the referendum is putting employers off hiring new employees.

The unease around the outcome is understandable, no one is able to predict the consequences of either way the UK will vote, and so business owners are unable to predict how it will affect their income, employee satisfaction and overall business efficiency. EU legislation is very much intertwined into every UK business.

However, the EU’s role in social and employment legislation is especially extensive, including additional rights for agency and temporary workers and for part-time workers; parental leave; working time; anti-discrimination rules on race, sex, disability, age and sexual orientation; and data protection rights.

Almost every decision small business owners have to make relating to their staff is connected to legislation that was introduced by the EU. This means that after the 23 June, we may see many changes to what we consider to be the workplace norm.

Implications for the workforce

The first step is to look at the foundation that all businesses need to have in terms of their workforce rights. The Citizens Advice Bureau provides clear insights on the notice of dismissal, and part time rights, for example, that are often hurdles many SMEs face.

If the UK was to vote in favour of Brexit, it would take at least two years to leave, and so businesses should ensure they are already in-line with regulations so that they can adapt efficiently. Business owners can then seek advice from experts on what changes may take place to ensure their business doesn’t get burned.

Managing complex employee rights obligations

We often acknowledge the importance of hiring the right people, but unlike large businesses, many SMEs don’t have an HR team to turn to when they need to handle administrative burden around staff management. SME workers are forced to have a wide skill set, with some people having to juggle a diverse range of tasks at one time to keep the business running smoothly.

The ability to multi-task is often a quality we relate to SMEs, but keeping up with changes to regulation can be a full-time job in itself. The daunting thought of having to handle a variety of technical obligations and ongoing requirements from HMRC, for example, without any dedicated HR resource, often means that the paperwork can get pushed to one side in the rush for commercial success. 

The number of employers being fined up to £10,000 a day for not complying with the rules on workplace pensions has shot up by 300 per cent in the first three months of 2016 for example, displaying the difficulty that some businesses are facing when having to change and comply with new regulations.

Finding the right guidance

The fear of not having enough logistical capacity to handle staffing requirements could be easily solved. SMEs should feel empowered by the current offering of technology and tools that can help with recruitment, managing employees, and staff development.

Small businesses often need swift access to the most suitable staff, but lack the means to reach the right candidates, or the skills to deal with the on-boarding process including verifying references, providing employment contracts and managing payroll.

Business owners that have no capacity for in-house, HR or recruitment support should consider using a third party that solves any problems they are currently facing.

Every business has unique needs, but the outcome of the referendum on the 23rd will touch every single company in the UK. Whatever the result of the vote, uncertainty around the future of regulation will follow.

To avoid suffering the consequences, SMEs must take the time to reflect on their current staffing needs and take a proactive approach of finding a solution.

 James Peck is UK country manager at Jobandtalent

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