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Making the EU work for SMEs

The European Parliamentary election results have, to quote every newspaper in circulation, caused an “earthquake” across Europe. UKIP are hailing a victory, David Cameron is citing the results as evidence that people want real action on EU reform, and even the socialist Francois Hollande has had to admit that his electorate’s decision to send the National Front to Brussels means reform will be needed.

The results have been widely described as protest votes and perhaps they are. It would be worrying to think that a single platform party could be voted in to form a national government, but strange things do happen. Having made its point, the electorate may revert to its normal voting pattern and the furore may well blow over, but the UK’s membership of the EU and the EU’s impact on business has been a sore spot for a long time.

The European elections rarely stay in the papers for long, partly due to their regular low turnout. Nevertheless the Conservatives want to use this as a pretext for launching a programme of reform before the promised referendum in 2017. But what would that reform involve? We hear plenty of “we will renegotiate with the EU” but very little about what success would look like. How are we to decide in 2017 if we don’t know whether the government has renegotiated successfully or not?

Key findings of a report complied by YouGov and Business for Britain found the following.

  • By 46% to 37% of businesses sampled British businesses say that the costs of complying with the Single Market outweigh the benefits of being in the EU.
  • British business leaders want to see nine key areas of regulatory competence currently under the remit of Brussels returned to the UK Government.
  • By 66% to 26% of businesses sampled British business leaders support holding a referendum on the EU.
  • By 56% to 23% of businesses sampled British business leaders believe that ‘meaningful change’ of our EU relationship requires treaty change and would like to see Britain’s relationship with Brussels changed to focus on trade.

The full report is found at

One area that the report concluded needed to be reviewed is employment law. The EU has a lot of power over employment law and sets out minimum requirements for working and employment conditions as well as stating what information employers have to provide workers.

Briefly, here are three possible areas that Britain to negotiate on that would undoubtedly help SMEs who are the bedrock of employment in this country:

  • Abolish or reduce the effect of the Working Time Directive. At present, UK companies have to follow directives on working time from the unelected European Commission. Even with extra powers for the European Parliament, there will be very little say for SMEs in decisions. If the power to determine working hours were repatriated to national parliaments, this could change quite significantly with enough lobbying and joint effort. In particular, it would help companies who at the moment take people on in very senior positions and then find they refuse to work more than 48 hours per week.
  • Restrict most EU regulations on business to the UK companies that actually export goods and services to the rest of the EU. At present, although a relatively small number of companies export to the rest of the EU, all have to abide by the many regulations on the products they sell. Why should this be? Why can’t national parliaments decide on the rules within their own countries and come up with bilateral agreements with the non-EU countries they export to?
  • Reduce the number of European Commissioners, and the amount of money that has to go to the Commission, to increase democratic accountability and encourage businesses to have a stronger say in creating more practical law which balances employment rights with employment itself.

The proposed unelected EU President Jean-Claude Juncker once outlined his style as being to “decide on something, leave it lying around and... if no-one kicks up a fuss, because most people don’t understand what’s been decided, we continue step by step until there is no turning back.” He also said that “when it becomes serious, you have to lie.” This is not the style of leadership UK businesses need in an unelected European post. OK our politicians try it from time to time but always with the risk that they could be held to account and always with Freedom of Information and at least some Parliamentary scrutiny to give businesses and individuals a chance to scrutinise the proposals themselves.

On the last count nearly 60% of UK businesses favoured staying in the EU, but only 8% favoured doing nothing. The majority favoured a referendum following a serious renegotiation of powers. If these three issues could be on the list it could significantly aid both the practical running of businesses and increase free competition for Britain.

In the meantime, wise employers will take advice, manage robustly and in a timely fashion.

Vive le HR advice!

Russell HR Consulting provides expert knowledge in HR solutions, employment law training and HR tools and resources to businesses across the UK.

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