Skip to main content
Practical employment law information to support your business, from Clover HR

Search

Establishing a successful recruitment process and clear written employment contracts for new employees can have a major impact on your business.

Every business needs to be aware of its obligations under minimum wage and equal pay laws, as well as recent pensions auto-enrolment changes.

You must comply with legal restrictions on employees' working hours and time off, or risk claims, enforcement action and even prosecution.

The right employment policies are an essential part of effective staff management. Make sure any policy is clear and well communicated to employees.

While sick employees need to be treated fairly, you need to ensure that 'sickness' is not being used as cover for unauthorised absence.

Most pregnant employees are entitled to maternity leave and maternity pay, while new fathers are entitled to paternity leave and paternity pay.

As well as undermining morale, illegal discrimination can lead to workplace grievances. Employee discrimination is covered by the Equality Act 2010.

Home, remote and lone workers are becoming increasingly commonplace. Key issues include communication and how to manage and motivate people remotely.

The right approach to consulting with and providing information to your employees can improve employee motivation and performance.

Disciplinary and grievance issues can be a major burden to employers. Putting in place and following the right procedures is essential.

Following the right dismissal and redundancy procedures helps protect your business and minimise the risk of a legal dispute at tribunal.

Employment tribunal claims are a worrying prospect for any employer. A tribunal case is a no-win situation – even if the claim is unjustified.

Small business costs still rising despite slowing inflation

15 October 2024

New research finds that UK small firms are still burdened by high prices and business owners say they are not seeing the benefits of falling inflation.

Nearly half (49%) of small businesses say they have not benefited from falling inflation this year, according to a new poll commissioned by SME lender iwoca. It comes as the latest ONS data is widely expected to show inflation falling below the Bank of England's target rate of 2%.

The research reveals that the cost of doing business is too high for half (50%) of the UK's 5.6 million small and medium-sized companies. Just 15% of SMEs polled say that they haven't experienced cost increases over the past six months. Other key findings show that:

  • 28% of small firms cite soaring energy bills as their biggest cost increase;
  • 23% point to business supplies being more expensive.

With costs going up, nearly half (45%) of small businesses predict that they will have to raise their prices over the next six months:

  • 37% expect their prices will increase by more than 5%, significantly higher than the current rate of inflation;
  • 20% predict a price spike of more than 10% in the coming six months.

"The UK's 5.6 million SMEs have had a tough few years and, despite falling inflation over the past year, the business environment remains challenging. More and more companies expect their prices to rise faster than inflation, and this could have major knock-on effects for the economy." Mark Di-Toro,director at iwoca.

Case study: Lunch'd

Oli Perron is the founder of Lunch'd, a catering company delivering meals to businesses across London, Birmingham, Manchester and Bournemouth in Dorset.

"During the pandemic and up until the end of 2023, the primary expenses for our business have been rising and rising. It's true that inflation and interest rates have been coming down, but our core expenses on everything from food costs, rent, energy and wages to fuel are still way higher than they used to be.

"From 2021 to 2023, food costs skyrocketed by 27% and our energy went up by over 200%. Despite marginally lower interest rates, which in reality still means prices going up and up, we are still feeling massive cost pressures every day ... We try to do everything we can to retain great talent and ensure our chefs are paid fairly too - we won't compromise on this, but it means cost pressures are still high."

Is wage inflation slowing for small firms?

The latest earnings figures from the Office for National Statistics (ONS) indicate that wage inflation is falling across the UK. It reports that: "In real terms, real regular pay growth on the year was 1.9% in June to August 2024, down on the previous three-month period, when it was 2.2%." However, it seems that wage growth among small businesses may be far higher, according to new research by Employment Hero.

Employment Hero's SmartMatch Employment Report uses real-time payroll data from 90,000 employees at UK small businesses. Its data suggests that wages for full-time workers at SMEs grew 8.2% in the past year to September. The growth has accelerated in recent months, with wages increasing by 2.9% between August and September and by 4.1% over the last quarter.

Commenting on the findings, Employment Hero UK md Kevin Fitzgerald said: "This high wage inflation is not sustainable for small and medium businesses long term, and the government is adding huge costs to these employers with its employment package - costs that could send them out of business. While headline inflation has dropped off, the persistent rate of services inflation reflects the real burden of these massively growing wages."

Written by Rachel Miller.

Stay up-to-date with business advice and news

Sign up to this lively and colourful newsletter for new and more established small businesses.