Long Read  

Govt employee bill must get the balance right for small businesses

Start-ups often operate with lean teams and require adaptability, and they may struggle to meet these requirements without compromising operational efficiency.

The inflexibility that the bill imposes could inhibit their ability to pivot quickly or scale back during challenging times. Such rigid regulations disproportionately affect small businesses, especially when those businesses thrive on the ability to take risks and move quickly.

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We must be careful about introducing too much bureaucracy because it is not what makes the UK an agile or creative place.

So, as much as the bill's principles are sound, you would hope that the same flexibility and balance it is trying to deliver for workers can be reflected in how the government deals with businesses with different needs.

A few specific, well-targeted measures to assist certain businesses would put them at ease and ensure innovation is not stifled. For example, ‍the rise in annual employment allowance will make a real difference to businesses, alleviating the accumulation of tax rises and regulations specifically for small businesses. 

On top of that, however, further compromise may be needed. For example, finding a middle ground between day one and two years specifically for some kinds of businesses would also work. Six to 12 months, for example, would strike a balance that is not unfair to employees and would not hamper desires to hire as much. 

It is also possible to make changes like this without it looking like they have waved the white flag to their vision of balancing growth with wellbeing or backtracking on the Budget; compromise is not the same as capitulation. 

Balancing the approach

Growth is great, and we all want it, but it feeds off courage and an appetite for risk. Therefore, while this vision for a high-wage, high-growth Britain is both admirable and necessary, for smaller businesses, the government must strike a balance. 

The key challenge will be reinforcing rights while allowing businesses to be flexible and competitive and keep the innovation that has made Britain one of the leading economies in Europe.

This will require further targeted measures to support young businesses and mitigate the impact of new regulations on smaller firms.

Starmer’s vision can become a reality without sacrificing the agility and innovation that drive the economy forward, but as with any sweeping reform, the devil is in the details.

Jean-Philippe Verdier is founder of Verdier & Co