Workers' rights enhancements to cost dearly

A whole new raft of laws enhancing workers' rights come into force on Saturday (October 1, 2005) that will cost Britain's smaller manufacturers dearly.

A whole new raft of laws enhancing workers' rights come into force on Saturday (October 1, 2005) that will cost Britain's smaller manufacturers dearly.

So says leading business pressure group, The Forum of Private Business (FPB) which champions the case for more than 25,000 private firms nationwide.

* Minimum wage - the FPB's Chief Executive Nick Goulding said he is gravely concerned that the rise in the national minimum rate for adults from GBP 4.85 to GBP 5.05/h will cause businesses real pain as it represents a 40% increase in just five years.

The rate for workers aged 18 to 21 will also rise to GBP 4.25 per hour.

"An FPB survey earlier this year revealed that a massive 64% of the firms believe this further increase in the minimum wage will have a bad or very bad effect on their business.

This figure shows growing unease with the minimum wage comparing starkly with previous FPB research.

In June 2001, an FPB survey of 2,000 members showed that just 24% of firms thought an increase in the minimum wage would have a negative impact.

"Big business can absorb increases in the minimum wage as they employ relatively few staff on it.

Small businesses are hit hardest - and they are already being stung with a range of higher costs, including increased employers' national insurance contributions and rocketing levels of insurance premiums." The original minimum wage was set at GBP 3.60 in 1999.

It is currently GBP 4.85 an hour, and will rise to GBP 5.05 on Saturday.

It is set to increase again in October 2006 to GBP 5.35.

* Employment Law - Tribunals - much tougher laws also come into force enhancing workers rights covering sex discrimination, pension rights and stronger backing for workers at Employment Tribunals, which handed out more than GBP 20 million in compensation claims to workers last year.

The FPB 's national spokesman Rex Garratt said: "Employers will view these changes to tribunals with a sense of utter dread.

Tribunals are already bleeding businesses dry because they are so heavily loaded in favour of employees.

Businesses face legalised blackmail as the costs of defending a case deny them justice from vexatious ex-employees on the make, supported by ambulance chasing advisors who encourage doubtful claims.

Private businesses want to treat their employees fairly, but they need to be alerted to the fact that they are now a prime target for the compensation culture.

This compensation culture has seen a doubling in the amount of compensation awarded in 2004 in the key areas of sex, disability and racial discrimination.

One reason for the spiralling costs is that Employment Tribunals seem to have become even more complex than courts of law, and employers are falling victim to the practice of exploiting political correctness for financial gain." The FPB's employment law specialist, Martin Edwards of North West legal firm Mace and Jones warned: "It will be harder for employers to defend sex discrimination claims by workers at Employment Tribunals in future under this new legislation." Firms paid out more than GBP 3 million in compensation to employees on grounds of sex discrimination last year, according to latest figures from the Equal Opportunities Review, plus a further GBP 3m in disability and racial discrimination claims.

This amounted to a 44% increase in payouts on the previous year.

Sex discrimination at work laws in particular are firmed up, and firms could end up paying out big time in compensation if they discriminate against workers who have undergone a sex change.

The new law also gets tough on firms who refuse to offer a particular job to someone because they have undergone a sex change, or are intending a sex change.

In a bid to prevent smaller firms falling foul of increasingly complex employment law, the FPB, runs a free help line for its members and produces an Employment Law guide available on www.fpb.org.

As part of GBP 120 a year membership, they also provide cover of up to £50,000 in legal fees for companies to fight Employment Tribunal cases.

* A selection of comments from FPB members on the minimum wage - Pat Bowles, of Hibau, Dover, said: "My business is already saddled with mountains of red tape, unfair competition from an uneven playing field in the Far East and rapidly shrinking profits as a result of stealth tax and alterations to the tax regime.

How the hell are we expected to cover the extra costs? An increase in the minimum wage will be the final nail in my business' coffin." A Faulds, of C and A Laundry, Colwyn Bay, said: "High minimum wage levels, especially for untrained, inexperienced people without skills would cripple my company and push up the wages of my experienced staff, who have worked themselves up to what is being suggested as the new minimum wage level.

This is very bad for small businesses." Leigh Ibbotson, of Meniscus, Camborne, Cornwall, said: "It is not the increase that is the problem so much as the knock-on effect for the rest of the wages structure.

We have had to reduce our staff by 20% recently because of this effect." * About the FPB - The Forum of Private Business (FPB) was formed in 1977 and is a pressure group fighting on behalf of private businesses.

The FPB represents approximately 25,000 UK-based businesses employing in excess of 600,000 people, and is a powerful lobbying voice in both the UK and the European Union.

The FPB, as the only full UK member of UEAPME - the organisation that represents small and medium-sized enterprises (SMEs) in Europe - is the most prominent advocate of UK SMEs in Brussels and has a track record of positively affecting legislation prior to its introduction in the UK.

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