Forum of Private Business - Inform October 2015

Issue 8 Autumn 2015

Fundamentals...

Looking after your staff and your business

Employer essentials

Cyber protection

Smaller firms, happier staff

Cost of doing business

page 2

page 3

pages 4–5

page 7

Getting the basics right makes for a happier workplace, and Forum members have a head start.

As the article on our centre spread shows, smaller businesses have happier, more loyal staff. There is no doubt that better communication and efficient procedures go a long way to promoting this level of job satisfaction, so in this issue we look at the essentials of the employee-employer relationship and reexamine how you can protect your business from cyber crime. The results of our last survey on page 7 show that once again, it is getting more expensive to run a business.

Have your say...

This quarter we are bringing the focus back to our work here at the Forum. We communicate with our members in various ways – via our website, through in.form, via our eNewsletter, on social media and via telephone or letter and we need you to tell us how we’re doing. Please help us improve what we do so we can better serve your business needs.

Complete the survey and return it in the envelope provided or complete it online at www.fpb.org/ referendum214 by 16th November.

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We want to hear from you...

We want to make sure our members get the information they need in the right way, so please respond to our survey to let us know what we are getting right and what we could be doing better.

Remember – we’re here to help and advise you whatever your business challenges.

Call us on 0845 130 1722

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Employer essentials In the second in our series of articles on the basics of your business, we look at your responsibilities as an employer.

Zero-hours contracts As soon as you become an employer, you MUST: 1. Register with HM Revenue and Customs (HMRC) as an employer.

2. Arrange employers’ liability insurance.

3. Check whether your new employee has the legal right to work in the UK. You may have to do other checks as well, for example a DBS check if you work in a field that requires one, e.g. with vulnerable people or children.

Within two months of taking on an employee, you MUST: Give the employee a copy of his or her written terms and conditions of employment and make sure he or she signs a copy. While the law states you have two months it is better to do it as soon as they start (or even in advance).

Make its signed acceptance a condition of employment.

The contract should detail at the very least their job title, place of work, main duties/responsibilities, pay (plus any bonuses, pension, etc.), hours, holiday entitlement and notice period. You must also include details of your discipline and grievance procedures.

Thorny issues Pay Make sure you pay at least the National Minimum Wage, and remember that from April 2016 you will have to pay over 25s the new National Living Wage – £7.20. A recent ECJ ruling that time spent travelling to and from first and last appointments by workers without a fixed office should be regarded as working time may mean that if you have mobile workers you have to pay them travelling time; call our helpline for more information.

Holidays All staff are entitled to time off. Visit our online holiday calculator at fpb.org to check how much, and remember

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to take overtime and commission payments into account when calculating holidays.

Disciplinary procedure Make sure your disciplinary procedure clearly states the grounds for which employees can be dismissed.

These include gross misconduct, being convicted of a criminal offence, unauthorised absence and, in certain circumstances, regular or protracted absence for ill health.

You can’t dismiss someone on the spot unless the circumstances are exceptional. If a disciplinary incident occurs, you need to investigate properly before either issuing a verbal warning, a written warning or dismissing the employee. You should ALWAYS seek advice before taking disciplinary action against an employee – otherwise they could claim unfair dismissal. Ring the member helpline on 0845 130 1722.

Dismissing an employee with less than 24 months service Remember that if you wish to dismiss staff with the minimum risk you should include a clause in the contract of employment to allow you to do so.

Duty of care As an employer, you also have a duty of care towards your employees, meaning you must take all reasonable steps to ensure their health, safety and wellbeing. This entails not only carrying out risk assessments and providing training and any protective equipment, but also ensuring they do not work excessive hours and protecting them from discrimination, bullying or harassment.

Source of advice Our member helpline can assist you to ensure your documentation is spot on. Call us on 0845 130 1722 for advice on issuing documents to your staff. We can also review your contracts and policies*. *Fees may apply

Cyber Protection Ian Cass, the Forum’s Managing Director, looks at keeping your business safe online…

Here at the Forum we have been highlighting the issue of cyber security and protection to our members for over a year now. As well as providing some great practical help and advice through our cyber protection tool, we offer a comprehensive supporting insurance package, so we feel we are really ahead of the game in the advice, support and protection that we offer to our members.

It is interesting to see the growth of the government’s cyber street website, www.cyberstreetwise.com which highlights the need for businesses to make sure they have followed the correct steps and taken precautions to make sure they are secure online. It also highlights the cost of getting it wrong, “UK regulations protecting customers’ personal data are strictly enforced with fines of up to £500,000. In addition to these fines, your business’s reputation could be damaged if customer data is compromised.”

With this in mind I recently spoke at a networking meeting and highlighted some easy actions that SMEs could take to make sure they are doing the right things to protect themselves in the digital age.

•

Get the right mind-set and be proactive. If you are afraid of these issues and avoid taking action, you may end up in trouble. If you ignore it, it won’t go away – take action now!

•

Surround yourself with experts. There are lots of individuals and organisations out there that can help you and in a blatant piece of self-promotion, I believe that the Forum of Private Business offers the best solution.

•

Put effective processes in place. Do you have up-todate policies and do your staff know what they are? If you allow your staff to use company PCs for personal use during breaks, do you have effective security?

What would you do if there were a security

breach? What business processes and procedures do you conduct online – ensure correct procedures are documented. How do you destroy old and out of date information?

•

Keep it simple, don’t overcomplicate things.

•

Utilise technology, there is a lot of information and advice online, use it!

•

Take your online security seriously; the consequences can be costly. Get a senior member of the business team to handle it as a project, get it as right as you can first time and keep on top of developments, phishing scams etc.

•

Use your voice! Small and micro businesses and sole traders make up 98% of the business population and account for 48% of private sector turnover. If you have problems or issues around cyber security feed them back to your MP or to us here at the Forum. We need a system that works for all levels of business – not just the large stock market listed companies – the whole UK business community.

For further information call

0845 130 1722 or email

info@fpb.org

www.fpb.org

3

Smaller businesses have happier staff All the evidence points to the fact that employees at small businesses are happier.

Thomas Parry our Research Projects Manager looks at why.

According to the most recent Business Population Estimates, 74% of businesses in the UK are non-employers, and this figure is rising. As such most issues reported on SMEs tend to be biased towards these sole traders and as a result most of what you hear about SMEs is coloured by this issue and is at best misleading.

Employment One thing that is not in question is that SMEs have a happier workforce. This has been indicated by two different Workplace Employment Relations Study (WERS) surveys – most recently in 2011 – and in 2008 the TUC came to the same conclusion.

The traditional view of SMEs as bad payers is also simply not true – in the depths of the recession 49% of employees in SMEs were happy with their level of pay compared to 41% of companies with more than 250 employees. Satisfaction levels with training and development were similar, despite the assumption that larger firms provide more training. Management was also seen to be better, despite the lower frequency of HR specialists, meetings with senior management or the sharing of information.

Indicator

Small private enterprise (<50 emps)

Large private enterprise (250+ emps)

Share many of the values of my organisation

Agree or strongly agree

70.2

63.3

Feel loyal to my organisation

Agree or strongly agree

84.4

72.9

Proud to tell people who I work for

Agree or strongly agree

75.2

66.6

Strongly agree or agree that managers are sincere at understanding employees' views

Agree or strongly agree

69.6

55.2

Very satisfied or satisfied with sense of achievement

Yes

81.1

71

Very satisfied or satisfied with scope for using own initiative

Yes

82.5

73

Very satisfied or satisfied with training

Yes

57.4

55

Very satisfied or satisfied with opportunity to develop skills

Yes

59.4

51.4

Very satisfied or satisfied with pay

Yes

48.9

40.6

Very satisfied or satisfied with job security

Yes

30.9

39.1

Very satisfied or satisfied with work itself

Yes

80.9

72.5

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In terms of numbers SMEs increased employment by 65% between 1997 and 2007. Employees at small firms take about 3.9 days of sick per year whereas in businesses with over 250 employees, staff take around 7.7 days off per year according to the CIPD. The Institute of Economic Affairs also found that the long-term sick, disabled and other disadvantaged groups are over represented in small firms – even though large private enterprises are four times more likely to have an equality or diversity plan. Despite this, feelings of gloom, unease or worry are far less common in smaller firms and the work-life balance is better.According to the SME Finance Monitor the proportion of small firms anticipating problems with recruitment and retention has doubled in the last year, as larger companies are often able to get the best individuals due to the lack of reporting of the benefits of working for a small firm.

Productivity The textbook answer to the ‘productivity puzzle’ is that larger firms are more productive because they work using greater economies of scale and can employ specialist workers. Yet when you remove the self-employed and the higher churn rates the figures are slightly higher for small and medium-sized employers than they are for larger firms. This is despite all the issues that cause micro employers to spend 10 times more per employee on red tape, increasing tax complexity and where business costs continue to outstrip GDP by quite a margin.

Innovation As you can see from the innovation figure below, firms with 10 to 49 employees show lower indicators of innovation, except where it matters – in producing a product that is new to market or a product that is new to market.

Part of this is simple – smaller employers are more likely to react quickly to opportunities and work with others to ensure that this is achieved. In contrast there is a mentality in some larger firms that is to wait until the market has been defined or made large enough to be interesting.

Small private enterprise (<50 emps)

Large private enterprise (250+ emps)

Share many of the values of my organisation

70.2

63.3

Feel loyal to my organisation

84.4

72.9

Proud to tell people who I work for

75.2

66.6

Strongly agree or agree that managers are sincere at understanding employees' views

69.6

55.2

Very satisfied or satisfied with sense of achievement

81.1

71

Very satisfied or satisfied with scope for using own initiative

82.5

73

Very satisfied or satisfied with training

57.4

55

Conclusion So if you know anyone looking for employment who wants to work in an innovative, productive workplace where they will get the skills they need and have a good work-life balance, bosses who listen to them, a reasonable pay packet and work for a company that they can be proud of, suggest they look at a business with that employs under 250 people. Best of all, if they are Forum members then you know that they value their staff and the financial health of their business.

www.fpb.org

5

News from our policy team

Budget The Forum continues to highlight the issues arising from the Conservative Budget, with the dividend tax and the National Living Wage proving to be of real concern to members. These are likely to cause significant problems as businesses acclimatise to the new system. A freedom of information request from the Forum has indicated that there was no impact assessment on businesses for the dividend tax and this needs to change as there is no point pushing one department to make cuts in compliance while another increases it.

Regulation is a blunt tool and should be used carefully.

We argued on behalf of our members that the living wage increases were unnecessary as wage inflation has started to impact on number of industries already as the results of last quarter’s Referendum survey show.

Productivity There has been a renewed interest in productivity and the Forum replied to a consultation on the subject, arguing that the decision had already been made in the Budget that the issue was the underutilisation of labour rather than looking wider at other issues. We argued that business owners need to be given the right tools to do the job and then be left to do it. One of the biggest drags on business growth and entrepreneur motivation is having to do those little tasks like completing compliance forms or chasing up overdue payments.

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Enterprise Bill Currently going through parliament is the Enterprise Bill; there are a few interesting measures in there to try and incentivise regulators to help reduce red tape and become more customer focused. The part that has hit the headlines is the government’s plan to appoint a Small Business Commissioner to help small business resolve supply chain disputes with other larger businesses. The lack of strong legislative powers behind the role means that the impact is largely going to be symbolic and we would expect that the reporting requirements of the UK’s largest businesses from 2016 on payment terms may have a greater impact on late payment.

Business Advisory Group A common complaint from our members and other small firms is that the government does not understand the culture and needs of small businesses. We wrote recently to the Prime Minister regarding the make-up of the Prime Minister’s Business Advisory Group which lacks any business representation from anyone operating a business with fewer than 500 employees to highlight this oversight.

We were delighted to hear back that the Prime Minister ensures that he receives good counsel from meetings with trade associations including the CBI!

The cost of doing business

96%

of SMEs think fair treatment of their own suppliers is important.

SMEs already unfairly disadvantaged by rising costs and red tape are held back from growing by bad business practices.

Running a business is getting more expensive...

Costs are rising faster for SMEs than the rest of society

86%

5.7%

SME inflation

of businesses have seen an increase in costs over the last 12 months

0.1% Inflation

2015

2014

The most costly areas for SMEs are:

77% energy

60%

insurance

50%

marketing

54%

support

How can the government help?

84% of businesses aren’t passing this rise on to customers

50%

energy

17%

27%

Reform business rates

Reduce red tape

16% 19%

Targeted tax incentives

Reduce the cost of employment

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The Forum will be exhibiting on

The Business Show 2015 The Business Show is a free business exhibition which offers a wealth of opportunity, advice and information crucial for ongoing business growth within a challenging economy.

Europe’s largest event for SMEs, the Business Show takes place at Olympia, London on 3rd & 4th December 2015.

The event is packed with 250 seminars, 350 exhibitors, 170 masterclass sessions, 5 networking areas, 2 funding features and much more all aimed at helping you grow your business.

Stand 572 so please come over and say hello!

Our partnership with The Business Show means that we can offer members an exclusive discount if you want to exhibit at the event. If you want to sell to 25,000 SME owners and start-ups, please contact steve.todd@prysmgroup.co.uk or call 0117 9304927 and quote FPB for all the details.

We look forward to seeing you there.

Tickets are completely free– register at greatbritishbusinessshow.co.uk.

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