30 July 2015

Complying with employment law is the greatest outlay for businesses in terms of compliance, according to a new survey.

The Forum of Private Business (FPB) found that the overall cost to UK companies of dealing with employment law is £5.9 billion, with tax compliance costing £5.7 billion, and health and safety £4.2 billion.

Compliance is costing the country’s 1.2 million micro, small and medium-sized employers £20 billion in terms of actual costs, with the level of opportunity costs being more than double that at £41 billion, according to the FPB.

In terms of salaries paid, the cost of compliance is put at £14,900 per company.

The Forum’s survey found that, despite continued promises by the Government to reduce the amount of time and money businesses spend on compliance, the average SME now spends more time making sure it is within the law than it did in 2013.

Although compliance costs small firms 10 times what it costs large companies, the Forum found that time spent on compliance is now a greater issue for its members than the associated costs.

With senior management having to deal with administrative tasks, the perceived costs (opportunity costs) of compliance rise as businesses struggle to grow.

Changes to flexible working have been particularly problematic for micro businesses, with shared parental leave highlighted as a real area of concern, the survey found.

Businesses with more than 50 employees have seen an increase in time spent on holidays, salaries and other employment issues, most notably pension auto-enrolment.

Commenting on the findings, Ian Cass, the FPB's Managing Director, said the research showed that the deregulation agenda has not been effective. The impact of legislation being removed from the statute books has been cancelled out by other legal changes and by reluctance on the part of businesses to change their procedures.