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The 2015 General Election: Energy & Business Part III

Disclaimer: The opinions expressed in this series are entirely those of your correspondent.

Employment legislation is already fairly unwieldy, and despite a traditionally pro business administration in charge, (Vince Cable excepted), the level of legislated activity and obligations on employers have grown not so slowly but very surely in recent years.

From April 2015 alone we will see 9 new or amended pieces of employment law, affecting all businesses SMEs and FTSE 100 alike.

These obligations range from Shared Parental Leave, Paternity Leave, and Parental Leave to Statutory Sick Pay and Fit for Work Schemes.

But despite this range of new employer burdens, and their sometime questionable employee benefit, the Labour party are proposing a significant extension to one of these already newly legislated employer obligations.

Ed Miliband, (it always seems to be him doesn’t it), has called for, nay, promised the implementation of a “Father’s month”. And that month doesn’t come cheap.

Miliband is proposing to re-introduce Paternity Leave, even though from April 2015, in the name of increased flexibility, that concept had been planned to have been subsumed into Shared Parental Leave.

The intention was that:

From April 2015 employers would need to be prepared to accept that both parents could share maternity leave once their child was born. Mothers would still have to take the first two weeks of maternity leave. However after that point, the parents could share the remaining leave and pay in whichever way suits them.

Whilst not necessarily welcomed with open arms, most businesses accepted that policy change as a fair and flexible way of extending maternity and paternity leave whilst minimising any additional employer burden.

But Miliband doesn’t see things that way and wants to go further.

As a result Labour have announced a new policy that will see fathers given a month’s paid leave as well as an increase in the minimum level of paternity (shared parental leave) pay on top of their right to shared parental leave.

Under the proposals, all fathers’ paternity entitlement will be doubled to four weeks paid leave, while paternity pay will also be increased to at least £260 a week.

Miliband claimed:

“At the same time as women are under pressure in their careers, more fathers want to play a hands-on role in childcare particularly in those first crucial weeks of a child’s life but are frustrated by out-dated laws and entitlements.

“At the heart of Labour’s plan, is the belief that Britain succeeds when modern working families succeed.” *

* as long as by working and succeeding it doesn’t involve you becoming ‘successful’ as then you are a bad bad person.

Unsurprisingly Miliband’s latest cheap vote crusade was met with dismay by the business lobby.

John Longworth, Director General of the British Chamber of Commerce said:

“Businesses have already had to absorb over half a dozen changes to parental leave in the last decade.

“This constant instability raises costs for business and generates uncertainty when it comes to taking on new staff.

“It also raises the spectre of a dad being off for a month, returning to work for a couple of weeks, and then asking for shared parental leave as soon as he is eligible — which could be hugely disruptive to small and mid-sized firms whose success depends on the talents and contributions of each employee.”

At a time of urgent deficit cutting the policy is estimated to be likely to cost Labour an additional £150m per year to fund, crucially however this does not take account of the efficiency, productivity and continuity losses wrought upon SMEs.

Longworth echoed this saying:

“Expansions of parental leave may win votes, but come at a real cost to business. For that reason, they must be assessed as part of the wider costs to business by any future government — not simply added to an already high cost base.”

It is curious that Miliband’s policy focus again is on the SME and not big business.

Having announced his plans for a “statutory right” for employees to be given first option to buy their SME businesses from their bosses at a time of their choosing, it is difficult to see just what small business has done to offend the Labour party.

That businesses don’t vote is true, but of course small businesses aren’t faceless, number led organisations, they are by and large driven by the tenacity, will and passion of individuals, those same individuals who can and DO vote. Miliband would surely be well advised to remember this.

Undoubtedly the flexibility of shared parental leave is a boon to new parents, but crucially whilst that increases disruption it does not in itself raise costs to SMEs over and above what was already there. Miliband’s policy however is different, not only will paternity leave be re-introduced for a longer period and on full pay. The very cost of the shared parental leave will also be significantly increased.

Quite how small business are supposed to manage around these operational challenges and cash flow and profit draining policies is another matter entirely.

A cynic would suggest this is a sure fire route to full employment. Employing four people for each job, should, with a bit of luck and family planning, ensure businesses can continue to operate, that is until the money runs out, the business closes and four people for every role are forced onto state benefits.

At least that will be one less SME fat cat however. Ed will be pleased.


MP 12/2/15