On 1 October 2009, business owners will be expected to cope with a raft of legal changes, including those related to employment such as increases in the National Minimum Wage and an increase in the cost of redundancy. In response, the Forum of Private Business (FPB) has launched an Employment Guide to help small businesses comply.

According to the recent FPB Referendum survey, complying with employment legislation is the costliest administrative burden faced by small businesses in the UK, totalling almost £2.4bn per year. Now, new figures from the FPB members' helpline service show that more than one in three of all calls in August 2009 related to employment matters -- more than any other issue. Redundancy queries amounted to 14% of the total, with calls about dismissals accounting for seven per cent. Calls about short-time working amounted to just two per cent of the total number; disciplinary matters, 12%.

"Many firms are worried that they are not following the correct redundancy procedures when they have to lay off staff," said the FPB's policy representative, Matt Goodman. "Looking ahead to October's one-off increase in the weekly wage limit used to calculate redundancy payments, they are also concerned that it is becoming a more expensive process.

"There is a knock-on effect. The increase will also affect other statutory compensation payments, including unfair dismissal awards, compensation for non-compliance with flexible working procedures and compensation should a statement of employment particulars not be provided to an employee," he added.

The latest available data from the Tribunals Service shows that the number of employment tribunals in the UK soared from more than 115,000 in 2005 to almost 190,000 in 2008.

According to the FPB's research, money spent by smaller businesses on complying with employment law surpasses the £2.1bn per year spent on health and safety administration and the £1.8bn on tax. The survey found that small business employers spend £259m per year on work associated with dismissals and redundancy. They spend a further £391m on absence control and management, £237m on maternity, £333m on disciplinary issues, and £1,175m on holidays and any other remaining aspects of employment legislation. The average time per month spent on all of these different aspects of employment law was found to be around 10 hours for each small business.

Companies in the South East were found to spend the most on employment law out of 12 regions surveyed, at £361 million per year. London firms faced the second-highest bill at £332m, followed by £272m for those in the North West. Smaller businesses in the North East were found to face the smallest annual bill for complying with employment law, at £71m.

For more information about the FPB's Employment Guide, call 0845 612 6266 or visit www.fpb.org/employmentguide

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