Lack of knowledge on current employment law puts UK SMEs at risk of being fined

With only 25 per cent of bosses claiming to know what is required of them when it comes to employment law, Citrus HR is of the belief that SMEs are open to the risk of incurring fines and penalties. 

For example, 30 per cent of employers don’t know the current minimum wage, which could lead to a fine as high as £20,000. Some 18 per cent of smaller business owners also don’t know which countries are and aren’t in the EU, meaning that it becomes harder to properly check that new workers have the right to work in Britain. 

According to the report, calculating holiday entitlement for staff on casual hours contracts was cited as a “particularly cumbersome process”. It explained that SMEs needed to look back at the hours each member of staff worked, including any commission they earned over the last 12 weeks, in order to calculate employee holiday entitlement.  

A large part of the problem, the company claimed, was that employment law changes frequently as a result of new laws passed, and of new cases concluded by British courts. Some 75 per cent of SMEs surveyed said that keeping up with legislation was a drain on time. Yet if business owners don’t keep up with changes, firms could risk breaking the law without knowing it, Citrus HR stressed.

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One recent case highlighted the dangers of “winging it”, as Citris HR claimed many small employers are doing. A tribunal case in May 2015 saw a Manchester employer required to pay an enormous penalty of £16,000 to someone who had never even worked for them. The firm’s error was to have rejected a candidate who refused to work on Saturdays – which the business did because it required all members of staff to work on a Saturday. 

As the candidate was Jewish, the employer’s rejection was deemed to be religious discrimination. If the company had made clear in the job advert that it needed all staff to work on Saturdays, or considered providing the applicant with a shift that allowed Saturday to be one of her two allocated rest days, the penalty could have been avoided. 

The big employment law guide: What to expect in 2015

Employers were also asked to express their views on what they deemed as “the most frustrating” aspects of employment law. Of the laws that employers most wanted to change, paying staff for unused holiday came out on top (37 per cent). 

They also weren’t keen on the removal of the compulsory retirement age (29 per cent), or the ability for employees who get ill while on holiday to reclaim their holiday, and claim sick leave instead (21 per cent).

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