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What the Party Conference Outcomes Mean for SMEs

The last couple of weeks have been political conference season and the major parties have been setting out their vision for the future. Although supposed to be a forum for members to contribute to policy, in reality they see the senior politicians debating and setting forth their agenda.

In Brighton Mr Corbyn promised a new and kinder style of politics. But will this mean he is kinder to the economy? Will business embrace someone who challenges economic consensus? In fact Mr Corbyn offered little in the way of an economic plan. He said once again that he will challenge austerity, and that he would be unapologetic about his reform of the economy. Whether the nationalisation of some key industries and reformation of the Treasury and Bank of England chimes in with the electorate’s preferences remains to be seen. Probably not if the last election is anything to go by.

One of Mr Corbyn’s ideas is that self-employed people should receive statutory maternity and paternity pay. Few details were given on how this would work, but it would probably involve companies that use self-employed people paying the costs. Given that self-employed people are often, by nature, casual and carry out work for a variety of different companies, it is hard to see how the law would choose which one has to pay. Or maybe all of them will be required to do so. Will we see companies battling it out in the courts over who has to pay, denying the self-employed person pay from either side until the judge makes a decision?

For the Tories, Mr Cameron set out his plans for the next five years (and his potential successors started to audition!). Employment law has mostly taken a back seat with the Conservatives, but shared grandparental leave (SGL) has been announced which the government aims to introduce in 2018 for working grandparents. The consultation starts next year. They mentioned this as a possible policy aim before the election, and it will be yet another form of paid leave which employers have to contend with. There really will be nobody left working at this rate….. Such leave may be fine for big, wealthy companies, but far more difficult for struggling SMEs. Companies that offer enhanced maternity, paternity and SPL pay would have to enhance SGL pay as well to avoid age discrimination. Further, the SGL proposal has drawn criticism from some quarters which says (in summary and please note I am paraphrasing) that dads should be doing more and if grand parents have the right to this leave, young mums will probably just go straight to their mums for child care. I doubt very much that British business will welcome this proposal.

One matter at the forefront of the Conservative conference was the EU referendum and how Britain should tackle whatever result we get. For what seems like the first time, pro-EU David Cameron has said that if he doesn’t get the deal he wants with Europe he wouldn’t rule out campaigning to leave. Nigel Farage needn’t hold his breath on that one, but it has been followed by business leaders fiercely debating the merits of staying or going.

Helena Morrissey, chief executive of Newton Asset Management, said in a BBC interview that she no longer sees the EU as fit for purpose. She argued that we have ceded too much authority over employment and product legislation to Brussels and Strasbourg, and that “it would be a lot easier for Britain to negotiate trade agreements with individual countries” in a similar way to Iceland.

Richard Reed, co-founder of Innocent Drinks, on the other hand argued that his company gets a lot more out of the EU than most people think – free trade with 17 EU countries, 50% of sales to the EU, yet still basing 85% of employees in the UK. Other commercial giants such as Toyota have threatened to consider moving operations out of the UK if we leave.

In a more laissez-faire “third way”, Jeff Immelt, who is the head of GE, told the BBC that for him it would not matter whether Britain is in or out – trade and business will go on in one way or another, and Britain has the right global contacts to manage regardless.

But what would a Brexit mean for Britain’s small businesses? Although the UK abides by a lot of employment law from EU directives and ECJ rulings, there is no guarantee that leaving the EU would cause much immediate change. There would be the opportunity to do so in the future, but any government that presides over a Brexit (particularly with a small majority) will want to reassure pro-EU voters that the loss of EU protection will not affect them negatively.

Changes to the 48 hour rules on working time would likely be gradual rather than instantaneous. Although UKIP, some senior Tories and a few Labour MPs would call for immediate and stern caps on immigration from Europe, businesses that benefit from continental workers will have a voice as well. As someone who sees himself as an international statesman, despite recent comments about controlling immigration, David Cameron may be wary of pulling up the drawbridge. The current skills shortage in Britain, the PM’s wealthy corporate backers, and his centre-ground views are likely to have a bearing on life post-EU.

In summary, both parties are pursuing family-related benefits for individuals – at the expense of employers. Europe remains a key issue which is now being dominated by business leaders. The debate is starting in earnest, so managing directors with a stake in the outcome should speak up now.

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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