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‘Red tape’ reform for thousands of businesses

PM Liz Truss announced on Sunday plans to cut “red tape” by expanding the definition of a small business.

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Published 6 October 2022

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  • Employment law for employers

Over the weekend, the government announced that businesses with fewer than 500 employees will be exempt from ‘reporting requirements and other regulations’ as part of government plans to boost productivity and promote growth.

PM Liz Truss announced on Sunday plans to cut “red tape” by expanding the definition of a small business.

Many medium-sized businesses, according to a government press release, report spending over 22 days on average per month dealing with regulation.

Small businesses are exempt from certain regulatory and reporting requirements, such as gender pay gap and executive pay ratio reporting.

The government will widen these exemptions to businesses with fewer than 500 employees. The change, which the government says will free an additional 40,000 businesses from expensive and burdensome bureaucracy, applies from Monday 3 October 2022 and is part of a package of reforms intended to “ensure UK business regulation works for the UK economy”.

Although the government has insisted the exemption will be applied in a “proportionate way to ensure workers’ rights and other standards will be protected”, the plans have been met with concern by some.

Frances O’Grady, general secretary of the Trades Union Congress, described the changes as “reckless and cynical deregulation”, representing “real threats to workers”.

Reporting obligations and the requirement to place certain information in the public domain, for example around gender pay gaps, can be an important motivation for businesses to tackle discrimination and improve working conditions. Removing this motivation could detrimentally harm many workers across the UK, but will likely disproportionately impact minority groups.

Extending the threshold to businesses with 1,000 employees, meanwhile, has also been mooted, “once the impact of the current extension is known”.

Only time will tell whether the benefits derived from these reforms by the newly enlarged category of small businesses will outweigh the detriments they may cause workers.

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Shorter Reads

‘Red tape’ reform for thousands of businesses

PM Liz Truss announced on Sunday plans to cut “red tape” by expanding the definition of a small business.

Published 6 October 2022

Associated sectors / services

Authors

Over the weekend, the government announced that businesses with fewer than 500 employees will be exempt from ‘reporting requirements and other regulations’ as part of government plans to boost productivity and promote growth.

PM Liz Truss announced on Sunday plans to cut “red tape” by expanding the definition of a small business.

Many medium-sized businesses, according to a government press release, report spending over 22 days on average per month dealing with regulation.

Small businesses are exempt from certain regulatory and reporting requirements, such as gender pay gap and executive pay ratio reporting.

The government will widen these exemptions to businesses with fewer than 500 employees. The change, which the government says will free an additional 40,000 businesses from expensive and burdensome bureaucracy, applies from Monday 3 October 2022 and is part of a package of reforms intended to “ensure UK business regulation works for the UK economy”.

Although the government has insisted the exemption will be applied in a “proportionate way to ensure workers’ rights and other standards will be protected”, the plans have been met with concern by some.

Frances O’Grady, general secretary of the Trades Union Congress, described the changes as “reckless and cynical deregulation”, representing “real threats to workers”.

Reporting obligations and the requirement to place certain information in the public domain, for example around gender pay gaps, can be an important motivation for businesses to tackle discrimination and improve working conditions. Removing this motivation could detrimentally harm many workers across the UK, but will likely disproportionately impact minority groups.

Extending the threshold to businesses with 1,000 employees, meanwhile, has also been mooted, “once the impact of the current extension is known”.

Only time will tell whether the benefits derived from these reforms by the newly enlarged category of small businesses will outweigh the detriments they may cause workers.

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