28th May, 2012
The current laws are very much in favour of the Employee, too much so.
Our laws have been devised to help employees, but they have gone to far, to the extent that this good intention has backfired and led to hundreds of thousands of jobs being lost that might otherwise have been saved.
How has this happened.? As a result of draconian laws whereby small firms are faced with ruinous payments to make long serving employees redundant.
Long serving employees hold their employers to ransom, they never resign to move jobs, as they want to cash in on the “equity” in “their” jobs. The longer serving, and often higher paid employees see a tax free windfall-payout as their right, and they are financially motivated not to resign, but to hold-out for a pay-off.
In the meantime, the hard-ppressed business need to cut costs to survive, but cannot afford to pay the redundancy costs to cut back on staff. The preverse reult is that the business is forced into formal insolvency, i.e. for a Company, Liquidation or Administration, or for a sole trader, Personal Bankruptcy.
If the business could have cut back on some staff, the remaining jobs would have been saved.
Once the company is in liquidation, the employees can claim compensation for their statutory entitlements from the National Insurance fund, as managed by the Redundancy Payment Service, a department of the Insolvency Service, part of BERR (formerly known as the DTi).
The employees get their money, with the experienced, skilled staff often moving onto new jobs straightaway, while the shorter serving employees, get less money and often struggle to get a decent new job with training and prospects like the one they just lost.
As usual the system favours older people in many ways, a bit like the pension system and the health service, all biased to favour older generations, while younger people are left in debt, untrained, and long term unemployed.
The scaremongering about Employees being abused is misconceived. Running a small business is a nightmare as soon as you have employees, what with Employment Law and Health and Safety , it is not worth the bother, and is a significant discouragement to individuals starting a business in the first place.
My staff are well paid, trained and given 24 days annual leave plus bank holidays. I don’t force them to work here, they do so willingly. If I can no longer afford to pay them, or no longer require their services, why should I have to pay them compensation, as if I have done something wrong?
The whole system was set up in the early seventies when the world was a different place, and small companies did not play such an important part in our economy, and when their was a distinct divide between owners and workers.
Those days have gone, and small businesses are not capable of supporting the current employment law system, which is outdated and causing job losses every day. It is a disgrace and a scandal and policy makers on the left should wake up the fact that their out-dated dogma is hurting the poorest in society, the very people these out-dated laws were inteneded to protect.
Perhaps if our politicians, particularly those on the left, had ever run their own business, and appreciate the difficulties and pressures, they might adjust their anti-business, anti-enterprise policies, and seek to re-balance our laws to provide more support for business owners.
Without a thriving small business sector, our economy is in deep trouble, and the individuals who have ideas, ambition and drive are the ones who need our support the most.
Alisdair Findlay – Chartered Accountant, Licensed Insolvency Practitioner, Business Owner