Significant disparities exist between small businesses with regard to their confidence and awareness of managing employment law, according to new research published by the Department for Business, Innovation and Skills (BIS).

The study, based on responses from over 300 small business owners, shows that:

• Almost a third (32%) of the total sample report feeling confident in their understanding of employment law and their role as an employer; however
• More than a third (34%) of respondents feel that employment law obligations are “not relevant” to their business; and
• A further 20% report that they understand their obligations, but worry that they are not getting it right.

Employment Relations Minister Lord Young observed that:

"We know that running a small business is both challenging and rewarding – and that this combination often fuels a successful enterprise. The essential job of managing employment law need not be one of these challenges.”

He continued: "This study helps us identify the knowledge gap, and the reasons behind this, to enable us to continue to improve the advice and support we offer. I expect all small businesses to access this help for free on the Business Link website to make sure they know their responsibilities."

Commenting on the research findings, Petra Wilton, Director of Policy and Research at the Chartered Management Institute (CMI), added that:

“These findings show that small business bosses take very different approaches to the ways in which they manage their obligations, what really matters is for business leaders to realize that managing employment law is a key responsibility of theirs. No one is asking them to be an expert, but it is essential that they seek out and use appropriate information so that informed decisions can be reached.”

The study also includes an in-depth analysis of variations between male and female employers.

Women place a greater emphasis on keeping up to date with employment law compared to their male counterparts, but worry more that they will get it wrong. Over half (54%) of women report that they feel it is important to keep informed of changes, compared to 38% of males.

Over a quarter of male small business owners (26%) admit that they do not keep up to date with employment legislation, compared to a fifth of women (21%). Despite this, over a quarter (26%) of women worry that they will manage situations incorrectly, compared to 17% of men.

Almost half (42%) of the sample consider it “important” to stay up to date. However, a quarter (25%) admit that they do not keep up to speed with legislation changes.

A further 28% report that they are “vaguely aware” of their legal obligations, but feel that they are unable to find the time to keep abreast of their legal requirements.

The government offers free advice and simple online tools on the Employing People section of the Business Link website, in order to help small and medium-sized enterprises (SMEs) manage their legal obligations.

This advice is tailored to small business owners, to suit different requirements, and aims to reduce the administrative burden of employment law, by giving businesses access to free, easy-to-use tools and information to help them answer a wide range of employment questions.

As an extension of this, BIS launched a new online tool last September, the Employment Law Organiser, to help SMEs stay up to date on new legislation.